2023-004 U.S. Department of Education Passed-through the Commonwealth of Massachusetts Department of Elementary and Secondary Education Special Education Cluster – ALN(s) 84.027 & 84.173 COVID-19 - Special Education Cluster – ALN(s) 84.027X & 84.173X Criteria: Per 2 CFR section 200.344(a), a subrecipient must submit to the pass-through agency, no later than 90 calendar days after the end date of the period of performance, all financial, performance and other reports as required by the terms and conditions of the Federal award. Condition: Final financial reports were not filed in a timely manner for a Special Education Cluster grant. Cause: A lack of a formal review process for grants in prior years. Effect: The School is not in compliance with federal grant reporting requirements. Questioned Costs: None Repeat Finding from Prior Year: Finding 2022-001. Recommendation: We recommend that final financial reports be completed and submitted to the pass-through agency within the prescribed deadlines. Views of Responsible Official: Management agrees with the finding.
2023-007 U.S. Department of Education Passed-through the Commonwealth of Massachusetts Department of Elementary and Secondary Education COVID-19 – Education Stabilization Fund – ALN(s) 84.425D & 84.425U Significant Deficiency in Internal Controls over Compliance Criteria: Per 2 CFR section 200.344(a), a subrecipient must submit to the pass-through agency, no later than 90 calendar days after the end date of the period of performance, all financial, performance and other reports as required by the terms and conditions of the Federal award. Condition: Final financial report revenues and expenditures were overstated in the Town’s general ledger. Cause: Reconciliations are not properly performed to Town’s general ledger. Effect: The Town’s general ledger balances do not properly reflect federal grant balances. The reporting submitted to the pass-through agency was deemed to be accurate. Questioned Costs: None Repeat Finding from Prior Year: No Recommendation: The School should reconcile the final financial reports to the Town’s general ledger prior to submission. Views of Responsible Official: Management agrees with the finding.
2023-007 U.S. Department of Education Passed-through the Commonwealth of Massachusetts Department of Elementary and Secondary Education COVID-19 – Education Stabilization Fund – ALN(s) 84.425D & 84.425U Significant Deficiency in Internal Controls over Compliance Criteria: Per 2 CFR section 200.344(a), a subrecipient must submit to the pass-through agency, no later than 90 calendar days after the end date of the period of performance, all financial, performance and other reports as required by the terms and conditions of the Federal award. Condition: Final financial report revenues and expenditures were overstated in the Town’s general ledger. Cause: Reconciliations are not properly performed to Town’s general ledger. Effect: The Town’s general ledger balances do not properly reflect federal grant balances. The reporting submitted to the pass-through agency was deemed to be accurate. Questioned Costs: None Repeat Finding from Prior Year: No Recommendation: The School should reconcile the final financial reports to the Town’s general ledger prior to submission. Views of Responsible Official: Management agrees with the finding.
2023-007 U.S. Department of Education Passed-through the Commonwealth of Massachusetts Department of Elementary and Secondary Education COVID-19 – Education Stabilization Fund – ALN(s) 84.425D & 84.425U Significant Deficiency in Internal Controls over Compliance Criteria: Per 2 CFR section 200.344(a), a subrecipient must submit to the pass-through agency, no later than 90 calendar days after the end date of the period of performance, all financial, performance and other reports as required by the terms and conditions of the Federal award. Condition: Final financial report revenues and expenditures were overstated in the Town’s general ledger. Cause: Reconciliations are not properly performed to Town’s general ledger. Effect: The Town’s general ledger balances do not properly reflect federal grant balances. The reporting submitted to the pass-through agency was deemed to be accurate. Questioned Costs: None Repeat Finding from Prior Year: No Recommendation: The School should reconcile the final financial reports to the Town’s general ledger prior to submission. Views of Responsible Official: Management agrees with the finding.
Finding 2023-014 – Noncompliance with Reporting Requirements Over Federal Grant – Coronavirus State and Local Fiscal Recovery Funds (Repeat Finding – 2022-014) PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Condition: In the review of fifty-five (55) expenditures for federal programs, five (5) instances were noted where the expenditures were not correctly reported on the Coronavirus State and Local Fiscal Recovery Funds compliance reports. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are properly reported in accordance with federal compliance requirements. Effect of Condition: This condition could result in noncompliance to grant requirements. Recommendation: OSAI recommends the County gain an understanding of the requirements for this program and implement internal controls to ensure compliance with these requirements. Management Response: Chairman of the Board of County Commissioners: The Board of County Commissioners will take measures to ensure future compliance with all requirements of federal grants. Criteria: Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds (10. Reporting.) reads as follows: 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropriate, your organization needs to establish controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. See Part 2 of this guidance for a full overview of recipient reporting responsibilities. Further, 2 CFR § 200.329 Monitoring and Reporting Program Performance (c)(1) reads as follows: The non-Federal entity must submit performance reports at the interval required by the Federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes. Reports submitted annually by the non-Federal entity and/or pass-through entity must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. Alternatively, the Federal awarding agency or pass-through entity may require annual reports before the anniversary dates of multiple year Federal awards. The final performance report submitted by the non-Federal entity and/or pass-through entity must be due no later than 120 calendar days after the period of performance end date. A subrecipient must submit to the pass-through entity, no later than 90 calendar days after the period of performance end date, all final performance reports as required by the terms and conditions of the Federal award. See also § 200.344. If a justified request is submitted by a non-Federal entity, the Federal agency may extend the due date for any performance report.
Finding 2022-013 – Lack of Internal Controls and Noncompliance with Reporting Requirements Over Federal Grant Coronavirus State and Local Fiscal Recovery Funds (Repeat Finding – 2022-013) PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $-0- Condition: The County has not established internal controls to ensure the correct expenditure category is used for reporting payments to the grant administrative contractor. The quarterly reports improperly classified payments totaling $177,465 to a contractor as a ‘Revenue Replacement’ expense instead of using the ‘Administrative’ expense category. Also, the quarterly reports improperly classified payments totaling $386,056 for the Resurrection House as a ‘Revenue Replacement’ expense instead of using the ‘Negative Economic Impact’ expense category as stated in the agreement with the Board of County Commissioners. This entity was also not reflected as a Beneficiary in the quarterly reports. Further, subrecipient agreements for the following pass-through entities were signed and approved by the Board of County Commissioners; however, the entities were not reported as subrecipients in the quarterly reports: • Grady County Fairgrounds • Town of Rush Springs • Grady County Rural Water #2 • Grady County Rural Water #6 Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: This condition resulted in noncompliance to grant requirements. Recommendation: OSAI recommends the County gain an understanding of the requirements for this program and implement internal controls to ensure compliance with these requirements. Management Response: Chairman of the Board of County Commissioners: The Board of County Commissioners will take measures to ensure future compliance with all requirements of federal grants. Criteria: Accountability and stewardship should be overall goals in management’s accounting of federal funds. Internal controls should be designed to monitor compliance with laws and regulations pertaining to grant contracts. Title 2 CFR § 200.303(a) Internal Controls reads (a) reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Controls Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds (10. Reporting.) reads as follows: All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropriate, you organization needs to establish controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. Further, 2 CFR § 200.329 Monitoring and Reporting Program Performance (c)(1) reads as follows: The non-Federal entity must submit performance reports at the interval required by the Federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes. Reports submitted annually by the non-Federal entity and/or pass-through entity must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. Alternatively, the Federal awarding agency or pass-through entity may require annual reports before the anniversary dates of multiple year Federal awards. The final performance report submitted by the non-Federal entity and/or pass-through entity must be due no later than 120 calendar days after the period of performance end date. A subrecipient must submit to the pass-through entity, no later than 90 calendar days after the period of performance end date, all final performance reports as required by the terms and conditions of the Federal award. See also § 200.344. If a justified request is submitted by a non-Federal entity, the Federal agency may extend the due date for any performance report.
2023-003 U.S. Department of Education Passed-through the Commonwealth of Massachusetts’ Department of Elementary and Secondary Education COVID-19 – Education Stabilization Fund – ALN 84.425 Criteria: Per 2 CFR section 200.344(a), a subrecipient must submit to the pass-through agency, no later than 90 calendar days after the end date of the period of performance, all financial, performance and other reports as required by the terms and conditions of the Federal award. Condition: Two final financial reports due during the prior fiscal years were not submitted. Cause: A lack of formal reconciliation and review process for grants. Effect: The District is not in compliance with reporting requirements. Questioned Costs: None Repeat Finding from Prior Year: Yes; Finding 2022-002. Recommendation: The District should implement procedures to verify that reports are completed and submitted to the oversight agency within the prescribed deadlines. Views of Responsible Official: Management agrees with the finding.
2023-003 U.S. Department of Education Passed-through the Commonwealth of Massachusetts’ Department of Elementary and Secondary Education COVID-19 – Education Stabilization Fund – ALN 84.425 Criteria: Per 2 CFR section 200.344(a), a subrecipient must submit to the pass-through agency, no later than 90 calendar days after the end date of the period of performance, all financial, performance and other reports as required by the terms and conditions of the Federal award. Condition: Two final financial reports due during the prior fiscal years were not submitted. Cause: A lack of formal reconciliation and review process for grants. Effect: The District is not in compliance with reporting requirements. Questioned Costs: None Repeat Finding from Prior Year: Yes; Finding 2022-002. Recommendation: The District should implement procedures to verify that reports are completed and submitted to the oversight agency within the prescribed deadlines. Views of Responsible Official: Management agrees with the finding.
2023-003 U.S. Department of Education Passed-through the Commonwealth of Massachusetts’ Department of Elementary and Secondary Education COVID-19 – Education Stabilization Fund – ALN 84.425 Criteria: Per 2 CFR section 200.344(a), a subrecipient must submit to the pass-through agency, no later than 90 calendar days after the end date of the period of performance, all financial, performance and other reports as required by the terms and conditions of the Federal award. Condition: Two final financial reports due during the prior fiscal years were not submitted. Cause: A lack of formal reconciliation and review process for grants. Effect: The District is not in compliance with reporting requirements. Questioned Costs: None Repeat Finding from Prior Year: Yes; Finding 2022-002. Recommendation: The District should implement procedures to verify that reports are completed and submitted to the oversight agency within the prescribed deadlines. Views of Responsible Official: Management agrees with the finding.
2023-003 U.S. Department of Education Passed-through the Commonwealth of Massachusetts’ Department of Elementary and Secondary Education COVID-19 – Education Stabilization Fund – ALN 84.425 Criteria: Per 2 CFR section 200.344(a), a subrecipient must submit to the pass-through agency, no later than 90 calendar days after the end date of the period of performance, all financial, performance and other reports as required by the terms and conditions of the Federal award. Condition: Two final financial reports due during the prior fiscal years were not submitted. Cause: A lack of formal reconciliation and review process for grants. Effect: The District is not in compliance with reporting requirements. Questioned Costs: None Repeat Finding from Prior Year: Yes; Finding 2022-002. Recommendation: The District should implement procedures to verify that reports are completed and submitted to the oversight agency within the prescribed deadlines. Views of Responsible Official: Management agrees with the finding.
2023-003 U.S. Department of Education Passed-through the Commonwealth of Massachusetts’ Department of Elementary and Secondary Education COVID-19 – Education Stabilization Fund – ALN 84.425 Criteria: Per 2 CFR section 200.344(a), a subrecipient must submit to the pass-through agency, no later than 90 calendar days after the end date of the period of performance, all financial, performance and other reports as required by the terms and conditions of the Federal award. Condition: Two final financial reports due during the prior fiscal years were not submitted. Cause: A lack of formal reconciliation and review process for grants. Effect: The District is not in compliance with reporting requirements. Questioned Costs: None Repeat Finding from Prior Year: Yes; Finding 2022-002. Recommendation: The District should implement procedures to verify that reports are completed and submitted to the oversight agency within the prescribed deadlines. Views of Responsible Official: Management agrees with the finding.
Assistance Listing 14.267 Continuum of Care Program Condition: For two out of 51 tested transactions, the Office of Homeless Services (OHS) charged to the grant a total of $63,816 in expenditures that were incurred after the established period of performance. Also, an additional three expenditure transactions were not liquidated within 120 calendar days after the end date of the period of performance; however, we are not questioning costs related to these transactions, as they are otherwise in compliance with period of performance regulations. Funding for this program is received from the U.S. Department of Housing and Urban Development. Criteria: Per 2 CFR section 200.403(h), costs must be incurred during the approved budget period. Also, per 2 CFR section 200.344(b), unless the federal awarding agency or pass-through entity authorizes an extension, a non-federal entity must liquidate all financial obligations incurred under the federal award no later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the federal award. Effect: Failure to incur expenditures and liquidate financial obligations within the required time period can result in noncompliance for the program as well as questioned costs and repayment obligations. Total expenditures of $63,816 incurred after the period of performance are considered to be known questioned costs. Cause: For most of the transactions noted in the condition, period of performance issues were the result of the timing of vendor invoice submissions. Additionally, OHS expenditure review procedures did not detect the noncompliance. Recommendation:We recommend that OHS improve the efficiency of communications with their vendors to stress the importance of timely invoice submissions. OHS should also strengthen expenditure review procedures to detect future noncompliance. Views of the Responsible Officials and Corrective Action Plan: OHS agrees with the issues outlined, which stem from the delayed processing of invoices and untimely payments. These challenges are largely the result of longstanding issues with over-allocations and the need to catch up on processing a backlog of documents. We appreciate you bringing this to our attention, as it provides an opportunity to refine our procedures and put in place measures to prevent these issues from recurring in the future. This feedback will be valuable as we work to improve our processes and enhance our ability to manage workloads more effectively. Contact Person: Jerome R. Hill, Director of Compliance, Office of Homeless Services, 215-686-0371, 215-520-3556
Assistance Listings number and name: 21.023 COVID-19 - Emergency Rental Assistance Program Award numbers and years: ERA-2101070596; January 8, 2021 through September 30, 2022; ERA2-0165, May 10, 2021 through September 30, 2025 Federal agency: U.S. Department of the Treasury Compliance requirement: Period of performance Questioned costs: None Condition—Contrary to federal law and regulations, the Department of Economic Security (Department) inappropriately recorded $278,245 in its financial system as Emergency Rental Assistance Program (ERAP) 1 costs, meaning costs for its first ERAP grant, up to 311 days past the allowable award period, despite reporting to the federal agency that it spent all available advanced award ERAP 1 monies during the allowable award period.1 Specifically, we scanned the financial system for transactions recorded after ERAP 1’s allowable period of performance ended on September 30, 2022, and identified 872 direct administrative costs that were unobligated and inappropriately recorded as ERAP 1 costs, including: • $144,721 for 740 employee compensation and related expenses between 14 and 224 days past the allowable period. • $133,524 for 132 professional, communication, and community services expenses between 136 and 311 days past the allowable period. Although these transactions were recorded as ERAP 1 costs in the Department’s financial system, the Department paid for these costs with ERAP 2 monies. We compared the transactions to documentation supporting the amounts the Department reported to the U.S. Department of the Treasury in its ERAP 1 closeout report submitted in January 2023 and verified that the Department did not include these transactions in the amount it reported as ERAP 1 costs. After bringing this to management’s attention in May 2024, the Department recorded a correcting journal entry in its financial system to record these transactions as ERAP 2 costs. Effect—The Department’s inappropriately recording $278,245 as ERAP 1 program costs in its financial system past the allowable period without having ERAP 1 grant funding available to spend when instead it paid for these costs with ERAP 2 monies increased the risk that the Department could have inappropriately spent future advanced ERAP 2 program monies and would have to repay the federal agency. Additionally, the Department is at risk that this finding applies to other federal programs it administers. Cause—Department grant-management closeout procedures were not followed, and the Department also lacked procedures for expenditures made during the liquidation period, which is 120 days after the period of performance ends. Specifically, Department management reported it did not follow grant-management closeout procedures to deactivate the grant in the financial system to prevent further activity after the liquidation period due to a lack of staffing and influx of COVID-19 pandemic monies. Further, the Department’s grant-management closeout procedures lacked a review-and-approval requirement for expenditures during the liquidation period to ensure the monies were appropriately obligated and allowable. Criteria—Federal law allows program costs to be incurred during the period of performance to provide financial assistance and housing stability services to include rental assistance, utility assistance, and rental and utility arrears through September 30, 2022, for ERAP 1 (15 U.S.C. 9058a[e][1]).1 In addition, federal regulation and U.S. Department of Treasury guidance requires funds to be obligated prior to the end of the award period for administrative costs to support program closeout activities. These funds may be expended during the liquidation period, which is up to 120 calendar days after the end of the period of performance.2 Also, the Department’s grant-management closeout procedures require grants to be deactivated in the financial system by the liquidation period deadline. Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Ensure program costs are properly recorded in the financial system during the period of performance and only obligated costs are spent during the liquidation period. Specifically, closeout activities, such as direct administrative costs, must be obligated prior to the end of the award period and must be spent within the liquidation period, or 120 calendar days after the period of performance ends. 2. Allocate sufficient resources, such as staffing, to perform essential grant closeout functions such as deactivating a grant in the financial system when the liquidation period has ended to help prevent inappropriate charges. 3. Update existing grant closeout procedures to require a review and approval of grant expenditures during the liquidation period to ensure they are allowable and properly obligated prior to the period of performance end date. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 ERAP was established by Section 501 of Title V, Division N, of the Consolidated Appropriations Act of 2021 (Public Law No. 116-260) in response to the coronavirus pandemic and to provide financial relief to help keep individuals who rent housing in their homes and provide financial assistance to landlords who rely on rental income. This finding and related questioned costs are related to the initial program referred to as ERAP 1 (ERA-2101070596). ERAP 2 was established by Sec. 3201 of Title III, Subtitle B, of the American Rescue Plan Act of 2021 (Public Law No. 117-2) and has a period of performance beginning on May 5, 2021, and ending on September 30, 2025. 2 The applicable federal requirements related to period of performance can be found in the Code of Federal Regulations at 2 CFR §200.344(b) and U.S. Department of Treasury Emergency Rental Assistance (ERAP1): Closeout Resource Updated January 3, 2023. Retrieved 7/8/2024 from https://home.treasury.gov/system/files/136/ERACloseoutResource_1-5-23.pdf
Assistance Listings number and name: 21.023 COVID-19 - Emergency Rental Assistance Program Award numbers and years: ERA-2101070596; January 8, 2021 through September 30, 2022; ERA2-0165, May 10, 2021 through September 30, 2025 Federal agency: U.S. Department of the Treasury Compliance requirement: Period of performance Questioned costs: None Condition—Contrary to federal law and regulations, the Department of Economic Security (Department) inappropriately recorded $278,245 in its financial system as Emergency Rental Assistance Program (ERAP) 1 costs, meaning costs for its first ERAP grant, up to 311 days past the allowable award period, despite reporting to the federal agency that it spent all available advanced award ERAP 1 monies during the allowable award period.1 Specifically, we scanned the financial system for transactions recorded after ERAP 1’s allowable period of performance ended on September 30, 2022, and identified 872 direct administrative costs that were unobligated and inappropriately recorded as ERAP 1 costs, including: • $144,721 for 740 employee compensation and related expenses between 14 and 224 days past the allowable period. • $133,524 for 132 professional, communication, and community services expenses between 136 and 311 days past the allowable period. Although these transactions were recorded as ERAP 1 costs in the Department’s financial system, the Department paid for these costs with ERAP 2 monies. We compared the transactions to documentation supporting the amounts the Department reported to the U.S. Department of the Treasury in its ERAP 1 closeout report submitted in January 2023 and verified that the Department did not include these transactions in the amount it reported as ERAP 1 costs. After bringing this to management’s attention in May 2024, the Department recorded a correcting journal entry in its financial system to record these transactions as ERAP 2 costs. Effect—The Department’s inappropriately recording $278,245 as ERAP 1 program costs in its financial system past the allowable period without having ERAP 1 grant funding available to spend when instead it paid for these costs with ERAP 2 monies increased the risk that the Department could have inappropriately spent future advanced ERAP 2 program monies and would have to repay the federal agency. Additionally, the Department is at risk that this finding applies to other federal programs it administers. Cause—Department grant-management closeout procedures were not followed, and the Department also lacked procedures for expenditures made during the liquidation period, which is 120 days after the period of performance ends. Specifically, Department management reported it did not follow grant-management closeout procedures to deactivate the grant in the financial system to prevent further activity after the liquidation period due to a lack of staffing and influx of COVID-19 pandemic monies. Further, the Department’s grant-management closeout procedures lacked a review-and-approval requirement for expenditures during the liquidation period to ensure the monies were appropriately obligated and allowable. Criteria—Federal law allows program costs to be incurred during the period of performance to provide financial assistance and housing stability services to include rental assistance, utility assistance, and rental and utility arrears through September 30, 2022, for ERAP 1 (15 U.S.C. 9058a[e][1]).1 In addition, federal regulation and U.S. Department of Treasury guidance requires funds to be obligated prior to the end of the award period for administrative costs to support program closeout activities. These funds may be expended during the liquidation period, which is up to 120 calendar days after the end of the period of performance.2 Also, the Department’s grant-management closeout procedures require grants to be deactivated in the financial system by the liquidation period deadline. Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Ensure program costs are properly recorded in the financial system during the period of performance and only obligated costs are spent during the liquidation period. Specifically, closeout activities, such as direct administrative costs, must be obligated prior to the end of the award period and must be spent within the liquidation period, or 120 calendar days after the period of performance ends. 2. Allocate sufficient resources, such as staffing, to perform essential grant closeout functions such as deactivating a grant in the financial system when the liquidation period has ended to help prevent inappropriate charges. 3. Update existing grant closeout procedures to require a review and approval of grant expenditures during the liquidation period to ensure they are allowable and properly obligated prior to the period of performance end date. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 ERAP was established by Section 501 of Title V, Division N, of the Consolidated Appropriations Act of 2021 (Public Law No. 116-260) in response to the coronavirus pandemic and to provide financial relief to help keep individuals who rent housing in their homes and provide financial assistance to landlords who rely on rental income. This finding and related questioned costs are related to the initial program referred to as ERAP 1 (ERA-2101070596). ERAP 2 was established by Sec. 3201 of Title III, Subtitle B, of the American Rescue Plan Act of 2021 (Public Law No. 117-2) and has a period of performance beginning on May 5, 2021, and ending on September 30, 2025. 2 The applicable federal requirements related to period of performance can be found in the Code of Federal Regulations at 2 CFR §200.344(b) and U.S. Department of Treasury Emergency Rental Assistance (ERAP1): Closeout Resource Updated January 3, 2023. Retrieved 7/8/2024 from https://home.treasury.gov/system/files/136/ERACloseoutResource_1-5-23.pdf
Assistance Listings number and name: 21.023 COVID-19 - Emergency Rental Assistance Program Award numbers and years: ERA-2101070596; January 8, 2021 through September 30, 2022; ERA2-0165, May 10, 2021 through September 30, 2025 Federal agency: U.S. Department of the Treasury Compliance requirement: Period of performance Questioned costs: None Condition—Contrary to federal law and regulations, the Department of Economic Security (Department) inappropriately recorded $278,245 in its financial system as Emergency Rental Assistance Program (ERAP) 1 costs, meaning costs for its first ERAP grant, up to 311 days past the allowable award period, despite reporting to the federal agency that it spent all available advanced award ERAP 1 monies during the allowable award period.1 Specifically, we scanned the financial system for transactions recorded after ERAP 1’s allowable period of performance ended on September 30, 2022, and identified 872 direct administrative costs that were unobligated and inappropriately recorded as ERAP 1 costs, including: • $144,721 for 740 employee compensation and related expenses between 14 and 224 days past the allowable period. • $133,524 for 132 professional, communication, and community services expenses between 136 and 311 days past the allowable period. Although these transactions were recorded as ERAP 1 costs in the Department’s financial system, the Department paid for these costs with ERAP 2 monies. We compared the transactions to documentation supporting the amounts the Department reported to the U.S. Department of the Treasury in its ERAP 1 closeout report submitted in January 2023 and verified that the Department did not include these transactions in the amount it reported as ERAP 1 costs. After bringing this to management’s attention in May 2024, the Department recorded a correcting journal entry in its financial system to record these transactions as ERAP 2 costs. Effect—The Department’s inappropriately recording $278,245 as ERAP 1 program costs in its financial system past the allowable period without having ERAP 1 grant funding available to spend when instead it paid for these costs with ERAP 2 monies increased the risk that the Department could have inappropriately spent future advanced ERAP 2 program monies and would have to repay the federal agency. Additionally, the Department is at risk that this finding applies to other federal programs it administers. Cause—Department grant-management closeout procedures were not followed, and the Department also lacked procedures for expenditures made during the liquidation period, which is 120 days after the period of performance ends. Specifically, Department management reported it did not follow grant-management closeout procedures to deactivate the grant in the financial system to prevent further activity after the liquidation period due to a lack of staffing and influx of COVID-19 pandemic monies. Further, the Department’s grant-management closeout procedures lacked a review-and-approval requirement for expenditures during the liquidation period to ensure the monies were appropriately obligated and allowable. Criteria—Federal law allows program costs to be incurred during the period of performance to provide financial assistance and housing stability services to include rental assistance, utility assistance, and rental and utility arrears through September 30, 2022, for ERAP 1 (15 U.S.C. 9058a[e][1]).1 In addition, federal regulation and U.S. Department of Treasury guidance requires funds to be obligated prior to the end of the award period for administrative costs to support program closeout activities. These funds may be expended during the liquidation period, which is up to 120 calendar days after the end of the period of performance.2 Also, the Department’s grant-management closeout procedures require grants to be deactivated in the financial system by the liquidation period deadline. Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Ensure program costs are properly recorded in the financial system during the period of performance and only obligated costs are spent during the liquidation period. Specifically, closeout activities, such as direct administrative costs, must be obligated prior to the end of the award period and must be spent within the liquidation period, or 120 calendar days after the period of performance ends. 2. Allocate sufficient resources, such as staffing, to perform essential grant closeout functions such as deactivating a grant in the financial system when the liquidation period has ended to help prevent inappropriate charges. 3. Update existing grant closeout procedures to require a review and approval of grant expenditures during the liquidation period to ensure they are allowable and properly obligated prior to the period of performance end date. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 ERAP was established by Section 501 of Title V, Division N, of the Consolidated Appropriations Act of 2021 (Public Law No. 116-260) in response to the coronavirus pandemic and to provide financial relief to help keep individuals who rent housing in their homes and provide financial assistance to landlords who rely on rental income. This finding and related questioned costs are related to the initial program referred to as ERAP 1 (ERA-2101070596). ERAP 2 was established by Sec. 3201 of Title III, Subtitle B, of the American Rescue Plan Act of 2021 (Public Law No. 117-2) and has a period of performance beginning on May 5, 2021, and ending on September 30, 2025. 2 The applicable federal requirements related to period of performance can be found in the Code of Federal Regulations at 2 CFR §200.344(b) and U.S. Department of Treasury Emergency Rental Assistance (ERAP1): Closeout Resource Updated January 3, 2023. Retrieved 7/8/2024 from https://home.treasury.gov/system/files/136/ERACloseoutResource_1-5-23.pdf
Assistance Listings number and name: 21.023 COVID-19 - Emergency Rental Assistance Program Award numbers and years: ERA-2101070596; January 8, 2021 through September 30, 2022; ERA2-0165, May 10, 2021 through September 30, 2025 Federal agency: U.S. Department of the Treasury Compliance requirement: Period of performance Questioned costs: None Condition—Contrary to federal law and regulations, the Department of Economic Security (Department) inappropriately recorded $278,245 in its financial system as Emergency Rental Assistance Program (ERAP) 1 costs, meaning costs for its first ERAP grant, up to 311 days past the allowable award period, despite reporting to the federal agency that it spent all available advanced award ERAP 1 monies during the allowable award period.1 Specifically, we scanned the financial system for transactions recorded after ERAP 1’s allowable period of performance ended on September 30, 2022, and identified 872 direct administrative costs that were unobligated and inappropriately recorded as ERAP 1 costs, including: • $144,721 for 740 employee compensation and related expenses between 14 and 224 days past the allowable period. • $133,524 for 132 professional, communication, and community services expenses between 136 and 311 days past the allowable period. Although these transactions were recorded as ERAP 1 costs in the Department’s financial system, the Department paid for these costs with ERAP 2 monies. We compared the transactions to documentation supporting the amounts the Department reported to the U.S. Department of the Treasury in its ERAP 1 closeout report submitted in January 2023 and verified that the Department did not include these transactions in the amount it reported as ERAP 1 costs. After bringing this to management’s attention in May 2024, the Department recorded a correcting journal entry in its financial system to record these transactions as ERAP 2 costs. Effect—The Department’s inappropriately recording $278,245 as ERAP 1 program costs in its financial system past the allowable period without having ERAP 1 grant funding available to spend when instead it paid for these costs with ERAP 2 monies increased the risk that the Department could have inappropriately spent future advanced ERAP 2 program monies and would have to repay the federal agency. Additionally, the Department is at risk that this finding applies to other federal programs it administers. Cause—Department grant-management closeout procedures were not followed, and the Department also lacked procedures for expenditures made during the liquidation period, which is 120 days after the period of performance ends. Specifically, Department management reported it did not follow grant-management closeout procedures to deactivate the grant in the financial system to prevent further activity after the liquidation period due to a lack of staffing and influx of COVID-19 pandemic monies. Further, the Department’s grant-management closeout procedures lacked a review-and-approval requirement for expenditures during the liquidation period to ensure the monies were appropriately obligated and allowable. Criteria—Federal law allows program costs to be incurred during the period of performance to provide financial assistance and housing stability services to include rental assistance, utility assistance, and rental and utility arrears through September 30, 2022, for ERAP 1 (15 U.S.C. 9058a[e][1]).1 In addition, federal regulation and U.S. Department of Treasury guidance requires funds to be obligated prior to the end of the award period for administrative costs to support program closeout activities. These funds may be expended during the liquidation period, which is up to 120 calendar days after the end of the period of performance.2 Also, the Department’s grant-management closeout procedures require grants to be deactivated in the financial system by the liquidation period deadline. Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Ensure program costs are properly recorded in the financial system during the period of performance and only obligated costs are spent during the liquidation period. Specifically, closeout activities, such as direct administrative costs, must be obligated prior to the end of the award period and must be spent within the liquidation period, or 120 calendar days after the period of performance ends. 2. Allocate sufficient resources, such as staffing, to perform essential grant closeout functions such as deactivating a grant in the financial system when the liquidation period has ended to help prevent inappropriate charges. 3. Update existing grant closeout procedures to require a review and approval of grant expenditures during the liquidation period to ensure they are allowable and properly obligated prior to the period of performance end date. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 ERAP was established by Section 501 of Title V, Division N, of the Consolidated Appropriations Act of 2021 (Public Law No. 116-260) in response to the coronavirus pandemic and to provide financial relief to help keep individuals who rent housing in their homes and provide financial assistance to landlords who rely on rental income. This finding and related questioned costs are related to the initial program referred to as ERAP 1 (ERA-2101070596). ERAP 2 was established by Sec. 3201 of Title III, Subtitle B, of the American Rescue Plan Act of 2021 (Public Law No. 117-2) and has a period of performance beginning on May 5, 2021, and ending on September 30, 2025. 2 The applicable federal requirements related to period of performance can be found in the Code of Federal Regulations at 2 CFR §200.344(b) and U.S. Department of Treasury Emergency Rental Assistance (ERAP1): Closeout Resource Updated January 3, 2023. Retrieved 7/8/2024 from https://home.treasury.gov/system/files/136/ERACloseoutResource_1-5-23.pdf
Finding Number: 2023-005 Program: Research and Development Cluster Federal Agency Name: Department of Agriculture, National Science Foundation, Environmental Protection Agency, Department of Homeland Security, Department of Commerce,Department of Defense and Department of Health and Human Services. Federal Award Year: July 1, 2022 – June 30, 2023 Federal Assistance Listing Numbers: 10.310, 47.041, 47.070, 66.469, 97.077, 11.609, 12.901, 93.913 Finding Type: Significant deficiency and non-compliance Compliance Requirement: Period of Performance Criteria Unless the federal awarding agency or pass-through entity authorizes an extension, a non-federal entity must liquidate all financial obligations incurred under the federal award not later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the federal award (2 CFR section 200.344(b)) In accordance with 2 CFR 200.303(a), non-federal entities 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. Condition During our testing of period of performance, we noted that 8 out of 20 transactions tested for grants closed out in FY23 had transactions posted to the grant more than 120 days after the close out of the award or the end of the period of performance. After reviewing the full population of grants that ended during FY23 we noted a total of 8 grants and 47 transactions that were posted to the grant more than 120 days after the close out of the award or the end of the period of performance. Specifically, we noted for 38 of the 47 transactions posted late were to move costs off the grants for a total of ($39,006) and 9 transactions were to add expenses to the grants for a total of $27,266. Cause In discussing this with the University, there was not adequately designed internal controls to ensure grants are closed out timely in accordance with the federal regulations, primarily in times of turnover in staff in the office of sponsored research. Effect Unsupported costs could be charged to a grant after the close out period. Questioned Costs ALN Amount 10.310 $ 1,092 47.041 3 47.070 628 66.469 543 97.077 25,000 Total $ 27,266 Statistical Sampling Our sample was not and was not intended to be statistically valid. Identification of Whether the Audit Finding was a Repeat Finding This was not a repeat finding Recommendation We recommend that the University implement a more thorough and detailed process and related internal controls to ensure that grants are closed out timely.
Finding Number: 2023-005 Program: Research and Development Cluster Federal Agency Name: Department of Agriculture, National Science Foundation, Environmental Protection Agency, Department of Homeland Security, Department of Commerce,Department of Defense and Department of Health and Human Services. Federal Award Year: July 1, 2022 – June 30, 2023 Federal Assistance Listing Numbers: 10.310, 47.041, 47.070, 66.469, 97.077, 11.609, 12.901, 93.913 Finding Type: Significant deficiency and non-compliance Compliance Requirement: Period of Performance Criteria Unless the federal awarding agency or pass-through entity authorizes an extension, a non-federal entity must liquidate all financial obligations incurred under the federal award not later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the federal award (2 CFR section 200.344(b)) In accordance with 2 CFR 200.303(a), non-federal entities 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. Condition During our testing of period of performance, we noted that 8 out of 20 transactions tested for grants closed out in FY23 had transactions posted to the grant more than 120 days after the close out of the award or the end of the period of performance. After reviewing the full population of grants that ended during FY23 we noted a total of 8 grants and 47 transactions that were posted to the grant more than 120 days after the close out of the award or the end of the period of performance. Specifically, we noted for 38 of the 47 transactions posted late were to move costs off the grants for a total of ($39,006) and 9 transactions were to add expenses to the grants for a total of $27,266. Cause In discussing this with the University, there was not adequately designed internal controls to ensure grants are closed out timely in accordance with the federal regulations, primarily in times of turnover in staff in the office of sponsored research. Effect Unsupported costs could be charged to a grant after the close out period. Questioned Costs ALN Amount 10.310 $ 1,092 47.041 3 47.070 628 66.469 543 97.077 25,000 Total $ 27,266 Statistical Sampling Our sample was not and was not intended to be statistically valid. Identification of Whether the Audit Finding was a Repeat Finding This was not a repeat finding Recommendation We recommend that the University implement a more thorough and detailed process and related internal controls to ensure that grants are closed out timely.
Finding Number: 2023-005 Program: Research and Development Cluster Federal Agency Name: Department of Agriculture, National Science Foundation, Environmental Protection Agency, Department of Homeland Security, Department of Commerce,Department of Defense and Department of Health and Human Services. Federal Award Year: July 1, 2022 – June 30, 2023 Federal Assistance Listing Numbers: 10.310, 47.041, 47.070, 66.469, 97.077, 11.609, 12.901, 93.913 Finding Type: Significant deficiency and non-compliance Compliance Requirement: Period of Performance Criteria Unless the federal awarding agency or pass-through entity authorizes an extension, a non-federal entity must liquidate all financial obligations incurred under the federal award not later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the federal award (2 CFR section 200.344(b)) In accordance with 2 CFR 200.303(a), non-federal entities 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. Condition During our testing of period of performance, we noted that 8 out of 20 transactions tested for grants closed out in FY23 had transactions posted to the grant more than 120 days after the close out of the award or the end of the period of performance. After reviewing the full population of grants that ended during FY23 we noted a total of 8 grants and 47 transactions that were posted to the grant more than 120 days after the close out of the award or the end of the period of performance. Specifically, we noted for 38 of the 47 transactions posted late were to move costs off the grants for a total of ($39,006) and 9 transactions were to add expenses to the grants for a total of $27,266. Cause In discussing this with the University, there was not adequately designed internal controls to ensure grants are closed out timely in accordance with the federal regulations, primarily in times of turnover in staff in the office of sponsored research. Effect Unsupported costs could be charged to a grant after the close out period. Questioned Costs ALN Amount 10.310 $ 1,092 47.041 3 47.070 628 66.469 543 97.077 25,000 Total $ 27,266 Statistical Sampling Our sample was not and was not intended to be statistically valid. Identification of Whether the Audit Finding was a Repeat Finding This was not a repeat finding Recommendation We recommend that the University implement a more thorough and detailed process and related internal controls to ensure that grants are closed out timely.
Finding Number: 2023-005 Program: Research and Development Cluster Federal Agency Name: Department of Agriculture, National Science Foundation, Environmental Protection Agency, Department of Homeland Security, Department of Commerce,Department of Defense and Department of Health and Human Services. Federal Award Year: July 1, 2022 – June 30, 2023 Federal Assistance Listing Numbers: 10.310, 47.041, 47.070, 66.469, 97.077, 11.609, 12.901, 93.913 Finding Type: Significant deficiency and non-compliance Compliance Requirement: Period of Performance Criteria Unless the federal awarding agency or pass-through entity authorizes an extension, a non-federal entity must liquidate all financial obligations incurred under the federal award not later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the federal award (2 CFR section 200.344(b)) In accordance with 2 CFR 200.303(a), non-federal entities 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. Condition During our testing of period of performance, we noted that 8 out of 20 transactions tested for grants closed out in FY23 had transactions posted to the grant more than 120 days after the close out of the award or the end of the period of performance. After reviewing the full population of grants that ended during FY23 we noted a total of 8 grants and 47 transactions that were posted to the grant more than 120 days after the close out of the award or the end of the period of performance. Specifically, we noted for 38 of the 47 transactions posted late were to move costs off the grants for a total of ($39,006) and 9 transactions were to add expenses to the grants for a total of $27,266. Cause In discussing this with the University, there was not adequately designed internal controls to ensure grants are closed out timely in accordance with the federal regulations, primarily in times of turnover in staff in the office of sponsored research. Effect Unsupported costs could be charged to a grant after the close out period. Questioned Costs ALN Amount 10.310 $ 1,092 47.041 3 47.070 628 66.469 543 97.077 25,000 Total $ 27,266 Statistical Sampling Our sample was not and was not intended to be statistically valid. Identification of Whether the Audit Finding was a Repeat Finding This was not a repeat finding Recommendation We recommend that the University implement a more thorough and detailed process and related internal controls to ensure that grants are closed out timely.
Finding Number: 2023-005 Program: Research and Development Cluster Federal Agency Name: Department of Agriculture, National Science Foundation, Environmental Protection Agency, Department of Homeland Security, Department of Commerce,Department of Defense and Department of Health and Human Services. Federal Award Year: July 1, 2022 – June 30, 2023 Federal Assistance Listing Numbers: 10.310, 47.041, 47.070, 66.469, 97.077, 11.609, 12.901, 93.913 Finding Type: Significant deficiency and non-compliance Compliance Requirement: Period of Performance Criteria Unless the federal awarding agency or pass-through entity authorizes an extension, a non-federal entity must liquidate all financial obligations incurred under the federal award not later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the federal award (2 CFR section 200.344(b)) In accordance with 2 CFR 200.303(a), non-federal entities 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. Condition During our testing of period of performance, we noted that 8 out of 20 transactions tested for grants closed out in FY23 had transactions posted to the grant more than 120 days after the close out of the award or the end of the period of performance. After reviewing the full population of grants that ended during FY23 we noted a total of 8 grants and 47 transactions that were posted to the grant more than 120 days after the close out of the award or the end of the period of performance. Specifically, we noted for 38 of the 47 transactions posted late were to move costs off the grants for a total of ($39,006) and 9 transactions were to add expenses to the grants for a total of $27,266. Cause In discussing this with the University, there was not adequately designed internal controls to ensure grants are closed out timely in accordance with the federal regulations, primarily in times of turnover in staff in the office of sponsored research. Effect Unsupported costs could be charged to a grant after the close out period. Questioned Costs ALN Amount 10.310 $ 1,092 47.041 3 47.070 628 66.469 543 97.077 25,000 Total $ 27,266 Statistical Sampling Our sample was not and was not intended to be statistically valid. Identification of Whether the Audit Finding was a Repeat Finding This was not a repeat finding Recommendation We recommend that the University implement a more thorough and detailed process and related internal controls to ensure that grants are closed out timely.
Finding Number: 2023-005 Program: Research and Development Cluster Federal Agency Name: Department of Agriculture, National Science Foundation, Environmental Protection Agency, Department of Homeland Security, Department of Commerce,Department of Defense and Department of Health and Human Services. Federal Award Year: July 1, 2022 – June 30, 2023 Federal Assistance Listing Numbers: 10.310, 47.041, 47.070, 66.469, 97.077, 11.609, 12.901, 93.913 Finding Type: Significant deficiency and non-compliance Compliance Requirement: Period of Performance Criteria Unless the federal awarding agency or pass-through entity authorizes an extension, a non-federal entity must liquidate all financial obligations incurred under the federal award not later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the federal award (2 CFR section 200.344(b)) In accordance with 2 CFR 200.303(a), non-federal entities 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. Condition During our testing of period of performance, we noted that 8 out of 20 transactions tested for grants closed out in FY23 had transactions posted to the grant more than 120 days after the close out of the award or the end of the period of performance. After reviewing the full population of grants that ended during FY23 we noted a total of 8 grants and 47 transactions that were posted to the grant more than 120 days after the close out of the award or the end of the period of performance. Specifically, we noted for 38 of the 47 transactions posted late were to move costs off the grants for a total of ($39,006) and 9 transactions were to add expenses to the grants for a total of $27,266. Cause In discussing this with the University, there was not adequately designed internal controls to ensure grants are closed out timely in accordance with the federal regulations, primarily in times of turnover in staff in the office of sponsored research. Effect Unsupported costs could be charged to a grant after the close out period. Questioned Costs ALN Amount 10.310 $ 1,092 47.041 3 47.070 628 66.469 543 97.077 25,000 Total $ 27,266 Statistical Sampling Our sample was not and was not intended to be statistically valid. Identification of Whether the Audit Finding was a Repeat Finding This was not a repeat finding Recommendation We recommend that the University implement a more thorough and detailed process and related internal controls to ensure that grants are closed out timely.
Finding Number: 2023-005 Program: Research and Development Cluster Federal Agency Name: Department of Agriculture, National Science Foundation, Environmental Protection Agency, Department of Homeland Security, Department of Commerce,Department of Defense and Department of Health and Human Services. Federal Award Year: July 1, 2022 – June 30, 2023 Federal Assistance Listing Numbers: 10.310, 47.041, 47.070, 66.469, 97.077, 11.609, 12.901, 93.913 Finding Type: Significant deficiency and non-compliance Compliance Requirement: Period of Performance Criteria Unless the federal awarding agency or pass-through entity authorizes an extension, a non-federal entity must liquidate all financial obligations incurred under the federal award not later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the federal award (2 CFR section 200.344(b)) In accordance with 2 CFR 200.303(a), non-federal entities 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. Condition During our testing of period of performance, we noted that 8 out of 20 transactions tested for grants closed out in FY23 had transactions posted to the grant more than 120 days after the close out of the award or the end of the period of performance. After reviewing the full population of grants that ended during FY23 we noted a total of 8 grants and 47 transactions that were posted to the grant more than 120 days after the close out of the award or the end of the period of performance. Specifically, we noted for 38 of the 47 transactions posted late were to move costs off the grants for a total of ($39,006) and 9 transactions were to add expenses to the grants for a total of $27,266. Cause In discussing this with the University, there was not adequately designed internal controls to ensure grants are closed out timely in accordance with the federal regulations, primarily in times of turnover in staff in the office of sponsored research. Effect Unsupported costs could be charged to a grant after the close out period. Questioned Costs ALN Amount 10.310 $ 1,092 47.041 3 47.070 628 66.469 543 97.077 25,000 Total $ 27,266 Statistical Sampling Our sample was not and was not intended to be statistically valid. Identification of Whether the Audit Finding was a Repeat Finding This was not a repeat finding Recommendation We recommend that the University implement a more thorough and detailed process and related internal controls to ensure that grants are closed out timely.
Finding Number: 2023-005 Program: Research and Development Cluster Federal Agency Name: Department of Agriculture, National Science Foundation, Environmental Protection Agency, Department of Homeland Security, Department of Commerce,Department of Defense and Department of Health and Human Services. Federal Award Year: July 1, 2022 – June 30, 2023 Federal Assistance Listing Numbers: 10.310, 47.041, 47.070, 66.469, 97.077, 11.609, 12.901, 93.913 Finding Type: Significant deficiency and non-compliance Compliance Requirement: Period of Performance Criteria Unless the federal awarding agency or pass-through entity authorizes an extension, a non-federal entity must liquidate all financial obligations incurred under the federal award not later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the federal award (2 CFR section 200.344(b)) In accordance with 2 CFR 200.303(a), non-federal entities 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. Condition During our testing of period of performance, we noted that 8 out of 20 transactions tested for grants closed out in FY23 had transactions posted to the grant more than 120 days after the close out of the award or the end of the period of performance. After reviewing the full population of grants that ended during FY23 we noted a total of 8 grants and 47 transactions that were posted to the grant more than 120 days after the close out of the award or the end of the period of performance. Specifically, we noted for 38 of the 47 transactions posted late were to move costs off the grants for a total of ($39,006) and 9 transactions were to add expenses to the grants for a total of $27,266. Cause In discussing this with the University, there was not adequately designed internal controls to ensure grants are closed out timely in accordance with the federal regulations, primarily in times of turnover in staff in the office of sponsored research. Effect Unsupported costs could be charged to a grant after the close out period. Questioned Costs ALN Amount 10.310 $ 1,092 47.041 3 47.070 628 66.469 543 97.077 25,000 Total $ 27,266 Statistical Sampling Our sample was not and was not intended to be statistically valid. Identification of Whether the Audit Finding was a Repeat Finding This was not a repeat finding Recommendation We recommend that the University implement a more thorough and detailed process and related internal controls to ensure that grants are closed out timely.
Finding Number: 2023-005 Program: Research and Development Cluster Federal Agency Name: Department of Agriculture, National Science Foundation, Environmental Protection Agency, Department of Homeland Security, Department of Commerce,Department of Defense and Department of Health and Human Services. Federal Award Year: July 1, 2022 – June 30, 2023 Federal Assistance Listing Numbers: 10.310, 47.041, 47.070, 66.469, 97.077, 11.609, 12.901, 93.913 Finding Type: Significant deficiency and non-compliance Compliance Requirement: Period of Performance Criteria Unless the federal awarding agency or pass-through entity authorizes an extension, a non-federal entity must liquidate all financial obligations incurred under the federal award not later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the federal award (2 CFR section 200.344(b)) In accordance with 2 CFR 200.303(a), non-federal entities 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. Condition During our testing of period of performance, we noted that 8 out of 20 transactions tested for grants closed out in FY23 had transactions posted to the grant more than 120 days after the close out of the award or the end of the period of performance. After reviewing the full population of grants that ended during FY23 we noted a total of 8 grants and 47 transactions that were posted to the grant more than 120 days after the close out of the award or the end of the period of performance. Specifically, we noted for 38 of the 47 transactions posted late were to move costs off the grants for a total of ($39,006) and 9 transactions were to add expenses to the grants for a total of $27,266. Cause In discussing this with the University, there was not adequately designed internal controls to ensure grants are closed out timely in accordance with the federal regulations, primarily in times of turnover in staff in the office of sponsored research. Effect Unsupported costs could be charged to a grant after the close out period. Questioned Costs ALN Amount 10.310 $ 1,092 47.041 3 47.070 628 66.469 543 97.077 25,000 Total $ 27,266 Statistical Sampling Our sample was not and was not intended to be statistically valid. Identification of Whether the Audit Finding was a Repeat Finding This was not a repeat finding Recommendation We recommend that the University implement a more thorough and detailed process and related internal controls to ensure that grants are closed out timely.
Finding Number: 2023-005 Program: Research and Development Cluster Federal Agency Name: Department of Agriculture, National Science Foundation, Environmental Protection Agency, Department of Homeland Security, Department of Commerce,Department of Defense and Department of Health and Human Services. Federal Award Year: July 1, 2022 – June 30, 2023 Federal Assistance Listing Numbers: 10.310, 47.041, 47.070, 66.469, 97.077, 11.609, 12.901, 93.913 Finding Type: Significant deficiency and non-compliance Compliance Requirement: Period of Performance Criteria Unless the federal awarding agency or pass-through entity authorizes an extension, a non-federal entity must liquidate all financial obligations incurred under the federal award not later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the federal award (2 CFR section 200.344(b)) In accordance with 2 CFR 200.303(a), non-federal entities 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. Condition During our testing of period of performance, we noted that 8 out of 20 transactions tested for grants closed out in FY23 had transactions posted to the grant more than 120 days after the close out of the award or the end of the period of performance. After reviewing the full population of grants that ended during FY23 we noted a total of 8 grants and 47 transactions that were posted to the grant more than 120 days after the close out of the award or the end of the period of performance. Specifically, we noted for 38 of the 47 transactions posted late were to move costs off the grants for a total of ($39,006) and 9 transactions were to add expenses to the grants for a total of $27,266. Cause In discussing this with the University, there was not adequately designed internal controls to ensure grants are closed out timely in accordance with the federal regulations, primarily in times of turnover in staff in the office of sponsored research. Effect Unsupported costs could be charged to a grant after the close out period. Questioned Costs ALN Amount 10.310 $ 1,092 47.041 3 47.070 628 66.469 543 97.077 25,000 Total $ 27,266 Statistical Sampling Our sample was not and was not intended to be statistically valid. Identification of Whether the Audit Finding was a Repeat Finding This was not a repeat finding Recommendation We recommend that the University implement a more thorough and detailed process and related internal controls to ensure that grants are closed out timely.
Finding Number: 2023-005 Program: Research and Development Cluster Federal Agency Name: Department of Agriculture, National Science Foundation, Environmental Protection Agency, Department of Homeland Security, Department of Commerce,Department of Defense and Department of Health and Human Services. Federal Award Year: July 1, 2022 – June 30, 2023 Federal Assistance Listing Numbers: 10.310, 47.041, 47.070, 66.469, 97.077, 11.609, 12.901, 93.913 Finding Type: Significant deficiency and non-compliance Compliance Requirement: Period of Performance Criteria Unless the federal awarding agency or pass-through entity authorizes an extension, a non-federal entity must liquidate all financial obligations incurred under the federal award not later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the federal award (2 CFR section 200.344(b)) In accordance with 2 CFR 200.303(a), non-federal entities 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. Condition During our testing of period of performance, we noted that 8 out of 20 transactions tested for grants closed out in FY23 had transactions posted to the grant more than 120 days after the close out of the award or the end of the period of performance. After reviewing the full population of grants that ended during FY23 we noted a total of 8 grants and 47 transactions that were posted to the grant more than 120 days after the close out of the award or the end of the period of performance. Specifically, we noted for 38 of the 47 transactions posted late were to move costs off the grants for a total of ($39,006) and 9 transactions were to add expenses to the grants for a total of $27,266. Cause In discussing this with the University, there was not adequately designed internal controls to ensure grants are closed out timely in accordance with the federal regulations, primarily in times of turnover in staff in the office of sponsored research. Effect Unsupported costs could be charged to a grant after the close out period. Questioned Costs ALN Amount 10.310 $ 1,092 47.041 3 47.070 628 66.469 543 97.077 25,000 Total $ 27,266 Statistical Sampling Our sample was not and was not intended to be statistically valid. Identification of Whether the Audit Finding was a Repeat Finding This was not a repeat finding Recommendation We recommend that the University implement a more thorough and detailed process and related internal controls to ensure that grants are closed out timely.
Finding Number: 2023-005 Program: Research and Development Cluster Federal Agency Name: Department of Agriculture, National Science Foundation, Environmental Protection Agency, Department of Homeland Security, Department of Commerce,Department of Defense and Department of Health and Human Services. Federal Award Year: July 1, 2022 – June 30, 2023 Federal Assistance Listing Numbers: 10.310, 47.041, 47.070, 66.469, 97.077, 11.609, 12.901, 93.913 Finding Type: Significant deficiency and non-compliance Compliance Requirement: Period of Performance Criteria Unless the federal awarding agency or pass-through entity authorizes an extension, a non-federal entity must liquidate all financial obligations incurred under the federal award not later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the federal award (2 CFR section 200.344(b)) In accordance with 2 CFR 200.303(a), non-federal entities 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. Condition During our testing of period of performance, we noted that 8 out of 20 transactions tested for grants closed out in FY23 had transactions posted to the grant more than 120 days after the close out of the award or the end of the period of performance. After reviewing the full population of grants that ended during FY23 we noted a total of 8 grants and 47 transactions that were posted to the grant more than 120 days after the close out of the award or the end of the period of performance. Specifically, we noted for 38 of the 47 transactions posted late were to move costs off the grants for a total of ($39,006) and 9 transactions were to add expenses to the grants for a total of $27,266. Cause In discussing this with the University, there was not adequately designed internal controls to ensure grants are closed out timely in accordance with the federal regulations, primarily in times of turnover in staff in the office of sponsored research. Effect Unsupported costs could be charged to a grant after the close out period. Questioned Costs ALN Amount 10.310 $ 1,092 47.041 3 47.070 628 66.469 543 97.077 25,000 Total $ 27,266 Statistical Sampling Our sample was not and was not intended to be statistically valid. Identification of Whether the Audit Finding was a Repeat Finding This was not a repeat finding Recommendation We recommend that the University implement a more thorough and detailed process and related internal controls to ensure that grants are closed out timely.
Finding Number: 2023-005 Program: Research and Development Cluster Federal Agency Name: Department of Agriculture, National Science Foundation, Environmental Protection Agency, Department of Homeland Security, Department of Commerce,Department of Defense and Department of Health and Human Services. Federal Award Year: July 1, 2022 – June 30, 2023 Federal Assistance Listing Numbers: 10.310, 47.041, 47.070, 66.469, 97.077, 11.609, 12.901, 93.913 Finding Type: Significant deficiency and non-compliance Compliance Requirement: Period of Performance Criteria Unless the federal awarding agency or pass-through entity authorizes an extension, a non-federal entity must liquidate all financial obligations incurred under the federal award not later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the federal award (2 CFR section 200.344(b)) In accordance with 2 CFR 200.303(a), non-federal entities 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. Condition During our testing of period of performance, we noted that 8 out of 20 transactions tested for grants closed out in FY23 had transactions posted to the grant more than 120 days after the close out of the award or the end of the period of performance. After reviewing the full population of grants that ended during FY23 we noted a total of 8 grants and 47 transactions that were posted to the grant more than 120 days after the close out of the award or the end of the period of performance. Specifically, we noted for 38 of the 47 transactions posted late were to move costs off the grants for a total of ($39,006) and 9 transactions were to add expenses to the grants for a total of $27,266. Cause In discussing this with the University, there was not adequately designed internal controls to ensure grants are closed out timely in accordance with the federal regulations, primarily in times of turnover in staff in the office of sponsored research. Effect Unsupported costs could be charged to a grant after the close out period. Questioned Costs ALN Amount 10.310 $ 1,092 47.041 3 47.070 628 66.469 543 97.077 25,000 Total $ 27,266 Statistical Sampling Our sample was not and was not intended to be statistically valid. Identification of Whether the Audit Finding was a Repeat Finding This was not a repeat finding Recommendation We recommend that the University implement a more thorough and detailed process and related internal controls to ensure that grants are closed out timely.
Finding Number: 2023-005 Program: Research and Development Cluster Federal Agency Name: Department of Agriculture, National Science Foundation, Environmental Protection Agency, Department of Homeland Security, Department of Commerce,Department of Defense and Department of Health and Human Services. Federal Award Year: July 1, 2022 – June 30, 2023 Federal Assistance Listing Numbers: 10.310, 47.041, 47.070, 66.469, 97.077, 11.609, 12.901, 93.913 Finding Type: Significant deficiency and non-compliance Compliance Requirement: Period of Performance Criteria Unless the federal awarding agency or pass-through entity authorizes an extension, a non-federal entity must liquidate all financial obligations incurred under the federal award not later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the federal award (2 CFR section 200.344(b)) In accordance with 2 CFR 200.303(a), non-federal entities 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. Condition During our testing of period of performance, we noted that 8 out of 20 transactions tested for grants closed out in FY23 had transactions posted to the grant more than 120 days after the close out of the award or the end of the period of performance. After reviewing the full population of grants that ended during FY23 we noted a total of 8 grants and 47 transactions that were posted to the grant more than 120 days after the close out of the award or the end of the period of performance. Specifically, we noted for 38 of the 47 transactions posted late were to move costs off the grants for a total of ($39,006) and 9 transactions were to add expenses to the grants for a total of $27,266. Cause In discussing this with the University, there was not adequately designed internal controls to ensure grants are closed out timely in accordance with the federal regulations, primarily in times of turnover in staff in the office of sponsored research. Effect Unsupported costs could be charged to a grant after the close out period. Questioned Costs ALN Amount 10.310 $ 1,092 47.041 3 47.070 628 66.469 543 97.077 25,000 Total $ 27,266 Statistical Sampling Our sample was not and was not intended to be statistically valid. Identification of Whether the Audit Finding was a Repeat Finding This was not a repeat finding Recommendation We recommend that the University implement a more thorough and detailed process and related internal controls to ensure that grants are closed out timely.
Finding Number: 2023-005 Program: Research and Development Cluster Federal Agency Name: Department of Agriculture, National Science Foundation, Environmental Protection Agency, Department of Homeland Security, Department of Commerce,Department of Defense and Department of Health and Human Services. Federal Award Year: July 1, 2022 – June 30, 2023 Federal Assistance Listing Numbers: 10.310, 47.041, 47.070, 66.469, 97.077, 11.609, 12.901, 93.913 Finding Type: Significant deficiency and non-compliance Compliance Requirement: Period of Performance Criteria Unless the federal awarding agency or pass-through entity authorizes an extension, a non-federal entity must liquidate all financial obligations incurred under the federal award not later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the federal award (2 CFR section 200.344(b)) In accordance with 2 CFR 200.303(a), non-federal entities 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. Condition During our testing of period of performance, we noted that 8 out of 20 transactions tested for grants closed out in FY23 had transactions posted to the grant more than 120 days after the close out of the award or the end of the period of performance. After reviewing the full population of grants that ended during FY23 we noted a total of 8 grants and 47 transactions that were posted to the grant more than 120 days after the close out of the award or the end of the period of performance. Specifically, we noted for 38 of the 47 transactions posted late were to move costs off the grants for a total of ($39,006) and 9 transactions were to add expenses to the grants for a total of $27,266. Cause In discussing this with the University, there was not adequately designed internal controls to ensure grants are closed out timely in accordance with the federal regulations, primarily in times of turnover in staff in the office of sponsored research. Effect Unsupported costs could be charged to a grant after the close out period. Questioned Costs ALN Amount 10.310 $ 1,092 47.041 3 47.070 628 66.469 543 97.077 25,000 Total $ 27,266 Statistical Sampling Our sample was not and was not intended to be statistically valid. Identification of Whether the Audit Finding was a Repeat Finding This was not a repeat finding Recommendation We recommend that the University implement a more thorough and detailed process and related internal controls to ensure that grants are closed out timely.
Lack of Internal Controls and Noncompliance with Reporting Requirements Over Federal Grant Coronavirus State and Local Fiscal Recovery Funds PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $-0- Condition: The County has not established internal controls to ensure the correct expenditure category is used for reporting payments to subrecipients. The quarterly reports improperly classified payments totaling $1,600,000 to subrecipients as a ‘Revenue Replacement’ expense instead of using the ‘Infrastructure’ expense category. In addition, it was noted the 2nd Quarter Report was not timely submitted. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: This condition resulted in noncompliance with grant requirements. Recommendation: OSAI recommends the County gain an understanding of the requirements for this program and implement internal controls to ensure compliance with these requirements. Management Response: Chairman of the Board of County Commissioners: The Board of County Commissioners will take measures to ensure future compliance with all requirements of federal grants. Criteria: Title 2 CFR § 200.303(a) Internal Controls reads (a) reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Controls Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds (10. Reporting.) reads as follows: All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropriate, you organization needs to establish controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. Further, 2 CFR § 200.329 Monitoring and Reporting Program Performance (c)(1) reads as follows: The non-Federal entity must submit performance reports at the interval required by the Federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes. Reports submitted annually by the non-Federal entity and/or pass-through entity must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. Alternatively, the Federal awarding agency or pass-through entity may require annual reports before the anniversary dates of multiple year Federal awards. The final performance report submitted by the non-Federal entity and/or pass-through entity must be due no later than 120 calendar days after the period of performance end date. A subrecipient must submit to the pass-through entity, no later than 90 calendar days after the period of performance end date, all final performance reports as required by the terms and conditions of the Federal award. See also § 200.344. If a justified request is submitted by a non-Federal entity, the Federal agency may extend the due date for any performance report.
Condition: During the test of 100% of projects, thirty-five (35) projects, for the Coronavirus and Local Fiscal Recovery Funds, the following noncompliance with the Reporting compliance requirement was noted: • Eighteen (18) projects were coded as revenue loss and were a subrecipient relationship. • Seventeen (17) projects were coded as revenue loss and should have been coded to an Administrative code. • Four (4) projects were coded as a subrecipient and should not have been. After the review of the quarterly reports, the following exceptions were noted: • The second quarter report was over reported by $643,303, • 911 Trust Authority reported $195,398 in cumulative expenditures on the report; however, no disbursements were made in fiscal year 2022 or fiscal year 2023. • North West Rogers County Fire Protection District reported $171,219 in cumulative expenditures; however, no disbursements were made in fiscal year 2022 and fiscal year 2023. • Emergency Management reported $333,169 in cumulative expenditures; however, there were only expenditures totaling $18,313. • School Resource Officers reported $135,778 in cumulative expenditures; however, there were only expenditures totaled $41,447. • Expenditures for the jail security electronics upgrade was not reported; however, there were expenditures totaling $132,501. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are properly reported in accordance with federal compliance requirements. Effect of Condition: This condition resulted in noncompliance with federal grant guidelines. Recommendation: OSAI recommends the County gain an understanding of the requirements for this program and implement internal controls to ensure compliance with these requirements. Management Response: Board of County Commissioners: The Board of County Commissioners is responsible for the overall fiscal concerns of the county. See OKLA. STAT. Title 19, § 345. The Board of County Commissioners, with the cooperation and participation of all elected officials, reviews, develops and implements policies and procedures to create a strong internal control environment. The Board of County Commissioners will work with all elected officials, the third-party administrator, and federal, state and local partners to develop policies, procedures, and internal controls designed to accurately track grants, including the application process, verification, oversight, and reporting of grant requirements. These policies and procedures will be designed to identify requirements for recipients and sub-recipients of grants, ensure accurate equipment and real property management, procurement, recipient and subrecipient monitoring and reporting. Further, policies will ensure a proper understanding of all grant requirements and compliance of the same. To assist in this process, the Board of County Commissioners engaged a third-party administrator to oversee the grant process, including application, eligibility, review, requirements, contracting, recipient tracking and oversight, and documentation and reporting. The Board of County Commissioners will work with the third-party administrator to ensure proper grant administration. Criteria: Accountability and stewardship should be overall goals in management’s accounting of federal funds. Internal controls should be designed to monitor compliance with laws and regulations pertaining to grant contracts. Title 2 CFR § 200.303(a) Internal Controls, reads as follows: The non-federal entity must: Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework, “issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds (10. Reporting) reads as follows: All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlines in Part 2 of this guidance. Expenditures may be reported on a cash of accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropriate, your organization needs to establish internal controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. Further, 2 CFR 200.329-Monitoring and reporting Program Performance (c)(1) reads as follows: (c)(1) The non-Federal entity must submit performance reports at the interval required by the Federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes. Reports submitted annually by the non-Federal entity and/or pass-through entity must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. Alternatively, the Federal awarding agency or pass-through entity may require annual reports before the anniversary dates of multiple year Federal awards. The final performance report submitted by the non-Federal entity and/or pass-through entity must be due no later than 120 calendar gays after the period of performance end date. A subrecipient must submit to the pass-through entity, no later than 90 calendar days after the period of performance end date, all final performance reports as required by the terms and conditions of the Federal award. See also §200.344. If a justified request is submitted by a non-Federal entity, the Federal agency may extend the due date for any performance report.
FINDING NO: 2023-091 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; Allowable Costs/Cost Principles; and Period of Performance QUESTIONED COSTS: $10,985,211 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.” 2 CFR § 200.403(f) – 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: … (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period.” The US Department of Treasury Emergency Rental Assistance (ERA) FAQ #42 states in part “The nonprofit organization deposits and maintains the ERA funds in a separate account that is not commingled with other funds.” The US Department of Treasury Emergency Rental Assistance (ERA) FAQ #42 states in part “There are several options for a grantee to resolve its responsibility for improper payments, including the following: 1. ERA grantees may recharacterize expenditures initially reported under their ERA1 award as ultimately being funded by their ERA2 award, provided the expenditures are made during the ERA2 award period of performance and meet the ERA2 award requirements. For example, a grantee could consider the following option to achieve this: (1) recharacterize an improper payment made with ERA1 award funds as being made with ERA2 award funds provided the ERA1 improper payment was made during the ERA2 award period of performance; or (2) recharacterize an equivalent amount of ERA2 payments made during the ERA1 award period of performance that are in compliance with ERA1 award requirements at the time they were made as ERA1 payments.” The US Department of Treasury Emergency Rental Assistance ERA 1 Reporting Guidance states in part, “ERA Recipients are required to certify and submit reports on each ERA award separately… Recipients with multiple ERA awards must take care to ensure that they do not commingle, funds, data, or records across two awards and to submit separate reports for each award.” The US Department of Treasury Emergency Rental Assistance Closeout Resource states in part, “Treasury does not prohibit ERA grantees from recharacterizing expenditures initially reported under one award as ultimately being funded by the other (between ERA1 and ERA2 awards), provided the grantee updates all relevant program reports to reflect the recharacterization … program financial reporting must be updated should a grantee choose to recharacterize the allocation of expenditures between its ERA 1 and ERA 2 awards.” The US Department of Treasury Emergency Rental Assistance Closeout Resource states in part, “ A. Basic Closeout Requirements • Closeout must occur after the end of the award period of performance (also called the end of the award term) to ensure collection of robust, and complete reporting data from all grantees. Grantees may not close out their ERA1 awards before the end of the award period of performance on September 30, 2022. • ERA1 funds received through reallocation are subject to a 90-day extension of the availability of such funds. Grantees that received reallocated funds may elect to begin closeout after September 30, 2022 or to defer closeout until after December 29, 2022. C. Closeout Activities 1. Allowable Operations The end date of the award period of performance is the last day for a grantee to obligate funds for ERA1 activities (September 30, 2022 for award funds received pursuant to the grantee’s initial allocation and December 29, 2022 for reallocated funds). Funds statutorily available for administrative costs are not considered to be “automatically” obligated; therefore, grantees must obligate award funds by the end of the award period of performance to cover their administrative costs for closeout activities. Obligated funds may be expended by grantees for up to 120 calendar days after the end of the award period of performance for allowable administrative activities. Obligated funds may be expended by subrecipients for up to 90 calendar days after the end of the award period of performance for allowable administrative activities or an earlier date as agreed upon by subrecipient and grantee per 2 CFR 200.344(a).” Condition and Context: While documenting controls over Period of Performance for the ERA 1 grant, we noted payments made to subrecipients in the Statewide Accounting System were all put under one fund and were not distinguishable between ERA 1 and ERA 2. Therefore, OMES was unable to determine at a glance whether the funds distributed to subrecipients were attributable to ERA 1 or ERA 2. Further, we determined one of the subrecipients, Communities Foundation of Oklahoma (CFO), did not have sufficient internal controls over ERA 1 program spending to ensure all funds were expended by the end of the period of performance. During our testwork of 30 of 116 adjusting journal entries totaling $35,811,879.92 for CFO, we noted the following: • For eight of 30, or 26.67% of adjustments tested, the adjustment was to move expenses from ERA 2 to ERA 1 to meet ERA 1 spending requirements prior to closeout of the program. CFO comingled ERA 1 and ERA 2 funds and could not directly support each recharacterization with documentation for the specific transactions involved, but stated it was recharacterized to meet ERA 1 spending limits prior to the end of the period. • For 11 of 30, or 36.67%, the adjustment was to move expenses between jurisdictions (City, State, County), which is unallowable per FAQ #42 and ERA reporting guidance. This resulted in $2,586,978 in questioned costs. (incurred on or before September 30, 2022), we noted 207 transactions occurred after September 30, 2022. Of the 207 transactions, we noted 40 that resulted in $10,711,668 (of this amount $2,313,435 is already questioned above) in questioned costs. We noted the following: • For 13 of 207, or 6.28% of transactions tested, the adjustment was to move funds between funding jurisdictions (City, State, County), which is unallowable per FAQ #42 and ERA reporting guidance. (This resulted in $1,594,881 in questioned costs, of which $24,450 is questioned above) • For 11 of 207, or 5.31%, the adjustment was to move funds between ERA 2 and ERA 1 and the adjustment was not directly supported with documentation for the specific transactions involved. It was noted as recharacterized to meet ERA 1 spending limits prior to the end of the period, and CFO did not go back to revise any prior monthly or quarterly reports as required by Treasury. (This resulted in $7,003,715 in questioned costs, of which $2,200,000 is questioned above) • For 7 of 207, or 3.38% of transactions tested, the adjustment was to ‘correct accounts’ or ‘tie out accounts’; we determined these were not attributable to specific transactions but were ‘plug’ numbers to zero out the ERA 1 balance prior to the end of the period of performance to meet spend down requirements and were not supported by actual expenditures that can be determined to have been incurred on or before September 30, 2022. (This resulted in $1,837,072 in questioned costs, of which $88,985 is questioned above) • For 7 of 207, or 3.38% of transactions tested, the adjustment was to CFO management fees. Management fees were retained on a percentage basis; therefore, the fee is not supported by actual expenditures that can be determined to have been incurred on or before September 30, 2022. (This resulted in $1,430,228 in questioned costs which were all questioned on finding 2023-028). • We noted a total of $8,271,796 in management fees that were not expended for ERA 1 and therefore were not spent within the period of performance. Of this amount, $6,841,568 were management fees questioned in the SFY2021 and SFY2022 State of Oklahoma Single Audit reports and the remaining $1,430,228 is questioned on finding 2023-028. • For 2 of 207, or 0.97% of transactions tested, the payment was not supported by an itemized invoice to enable a determination that all the costs were incurred prior to September 30, 2022. (This resulted in $276,000 in questioned costs) 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. Effect: Unallowable costs or adjustments, totaling $10,985,211, were charged to the ERA program by one subrecipient for SFY 2023 as administrative expenditures. Administrative expenditures for other jurisdictions were reimbursed 100% by the State. OMES did not accurately and correctly report ERA program expenditures on federal reports. Lastly, not all ERA 1 funds were spent within the program’s period of performance. Recommendation: We recommend that the OMES develop and implement internal controls to ensure that program obligations and expenditures are accurately reported by the subrecipient. In addition. we also recommend OMES obtain and review federal reports and supporting documentation before submitting the information to the Federal agency. Lastly, we recommend that 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: Ongoing throughout the life of the grant 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 Response 1bullet 1 - SAI acknowledges that funds 49400 and 49200 were created for ERA 1 and ERA 2; however, our finding is addressing the fact that all ERA 1 and 2 payments were classified as fund 49000. CFO Response 1 bullet 2 - SAI acknowledges that the date shows December 29, 2022; however, CFO used plug numbers in their tracking spreadsheet which is not a true tracking of expenditures, and funds were recharacterized to meet spend down requirements; however, reports were not revised to reflect the changes. CFO Response 2 bullet 1 - CFO partially agrees. CFO Response 2 bullet 2 - CFO agrees that funds cannot be moved from ERA 2 to ERA 1. CFO Response 2 bullet 3 - SAI acknowledges that CFO has 31 separate accounts for ERA funds; however, in the transaction data SAI was provided, these eight adjustments are transfers of funds between ERA 1 and ERA 2. CFO Response 2 bullet 4 -We have removed the portion stating reports should have been revised. While this was present in the reporting instructions, we also acknowledge the guidance referred to by CFO. CFO Response 3 bullet 1 - The expenditure description clearly states CFO/CCP moved funds from the State to ‘xyz’ or visa versa. Further, it does not appear that the tracking of spending limits for either ERA grant was kept. CFO Response 3 bullet 2 - SAI notes that FAQ #42 does not directly address ‘jurisdictions’; however, it does explain that ‘The nonprofit organization deposits and maintains the ERA funds in a separate account that is not commingled with other funds.’ Because there are adjustments to move expenses between jurisdictions, this conflicts with guidance. CFO Response 4 bullet 1 - SAI acknowledges that the date shows December 29, 2022; however, CFO used plug numbers in their tracking spreadsheet which is not a true tracking of expenditures, and funds were recharacterized to meet spend down requirements; however, reports were not revised to reflect the changes. CFO Response 5 bullet 1 - The expenditure description clearly states CFO/CCP moved funds from the State to ‘xyz’ or visa versa. Further, it does not appear that the tracking of spending limits for either ERA grant was kept. CFO Response 5 bullet 2 - SAI notes that FAQ #42 does not directly address ‘jurisdictions’; however, it does explain that ‘The nonprofit organization deposits and maintains the ERA funds in a separate account that is not commingled with other funds.’ Because there are adjustments to move expenses between jurisdictions, this conflicts with guidance. CFO Response 6 bullet 1 - CFO partially agrees. CFO Response 6 bullet 2 - CFO agrees that funds cannot be moved from ERA 2 to ERA 1. CFO Response 6 bullet 3 -We have removed the portion stating reports should have been revised. While this was present in the reporting instructions, we also acknowledge the guidance referred to by CFO. CFO Response 6 bullet 3 - SAI acknowledges that the date shows December 29, 2022; however, CFO used plug numbers in their tracking spreadsheet which is not a true tracking of expenditures, and funds were recharacterized to meet spend down requirements; however, reports were not revised to reflect the changes. CFO Response 7 bullet 1 - CFO partially agrees. CFO Response 7 bullet 2 - CFO agrees that funds cannot be moved from ERA 2 to ERA 1. CFO Response 7 bullet 3 - SAI acknowledges that the date shows December 29, 2022; however, CFO used plug numbers in their tracking spreadsheet which is not a true tracking of expenditures, and funds were recharacterized to meet spend down requirements; however, reports were not revised to reflect the changes. CFO Response 8 - SAI reiterates that management fees did not represent actual expenditures; therefore, the transactions are questioned. CFO Response 9 - SAI reiterates that management fees did not represent actual expenditures; therefore, the transactions are questioned. In addition, see previous response above. CFO Response 10 bullets 1 and 2 - Support was only provided for one of the two questioned itemized invoices; however, an itemized invoice was not provided but rather an excel spreadsheet that does not provide the dates for the costs incurred for the applicants. Therefore, we are unable to determine whether costs were incurred prior to September 30, 2022, and the costs will remain questioned.
FINDING NO: 2023-091 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; Allowable Costs/Cost Principles; and Period of Performance QUESTIONED COSTS: $10,985,211 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.” 2 CFR § 200.403(f) – 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: … (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period.” The US Department of Treasury Emergency Rental Assistance (ERA) FAQ #42 states in part “The nonprofit organization deposits and maintains the ERA funds in a separate account that is not commingled with other funds.” The US Department of Treasury Emergency Rental Assistance (ERA) FAQ #42 states in part “There are several options for a grantee to resolve its responsibility for improper payments, including the following: 1. ERA grantees may recharacterize expenditures initially reported under their ERA1 award as ultimately being funded by their ERA2 award, provided the expenditures are made during the ERA2 award period of performance and meet the ERA2 award requirements. For example, a grantee could consider the following option to achieve this: (1) recharacterize an improper payment made with ERA1 award funds as being made with ERA2 award funds provided the ERA1 improper payment was made during the ERA2 award period of performance; or (2) recharacterize an equivalent amount of ERA2 payments made during the ERA1 award period of performance that are in compliance with ERA1 award requirements at the time they were made as ERA1 payments.” The US Department of Treasury Emergency Rental Assistance ERA 1 Reporting Guidance states in part, “ERA Recipients are required to certify and submit reports on each ERA award separately… Recipients with multiple ERA awards must take care to ensure that they do not commingle, funds, data, or records across two awards and to submit separate reports for each award.” The US Department of Treasury Emergency Rental Assistance Closeout Resource states in part, “Treasury does not prohibit ERA grantees from recharacterizing expenditures initially reported under one award as ultimately being funded by the other (between ERA1 and ERA2 awards), provided the grantee updates all relevant program reports to reflect the recharacterization … program financial reporting must be updated should a grantee choose to recharacterize the allocation of expenditures between its ERA 1 and ERA 2 awards.” The US Department of Treasury Emergency Rental Assistance Closeout Resource states in part, “ A. Basic Closeout Requirements • Closeout must occur after the end of the award period of performance (also called the end of the award term) to ensure collection of robust, and complete reporting data from all grantees. Grantees may not close out their ERA1 awards before the end of the award period of performance on September 30, 2022. • ERA1 funds received through reallocation are subject to a 90-day extension of the availability of such funds. Grantees that received reallocated funds may elect to begin closeout after September 30, 2022 or to defer closeout until after December 29, 2022. C. Closeout Activities 1. Allowable Operations The end date of the award period of performance is the last day for a grantee to obligate funds for ERA1 activities (September 30, 2022 for award funds received pursuant to the grantee’s initial allocation and December 29, 2022 for reallocated funds). Funds statutorily available for administrative costs are not considered to be “automatically” obligated; therefore, grantees must obligate award funds by the end of the award period of performance to cover their administrative costs for closeout activities. Obligated funds may be expended by grantees for up to 120 calendar days after the end of the award period of performance for allowable administrative activities. Obligated funds may be expended by subrecipients for up to 90 calendar days after the end of the award period of performance for allowable administrative activities or an earlier date as agreed upon by subrecipient and grantee per 2 CFR 200.344(a).” Condition and Context: While documenting controls over Period of Performance for the ERA 1 grant, we noted payments made to subrecipients in the Statewide Accounting System were all put under one fund and were not distinguishable between ERA 1 and ERA 2. Therefore, OMES was unable to determine at a glance whether the funds distributed to subrecipients were attributable to ERA 1 or ERA 2. Further, we determined one of the subrecipients, Communities Foundation of Oklahoma (CFO), did not have sufficient internal controls over ERA 1 program spending to ensure all funds were expended by the end of the period of performance. During our testwork of 30 of 116 adjusting journal entries totaling $35,811,879.92 for CFO, we noted the following: • For eight of 30, or 26.67% of adjustments tested, the adjustment was to move expenses from ERA 2 to ERA 1 to meet ERA 1 spending requirements prior to closeout of the program. CFO comingled ERA 1 and ERA 2 funds and could not directly support each recharacterization with documentation for the specific transactions involved, but stated it was recharacterized to meet ERA 1 spending limits prior to the end of the period. • For 11 of 30, or 36.67%, the adjustment was to move expenses between jurisdictions (City, State, County), which is unallowable per FAQ #42 and ERA reporting guidance. This resulted in $2,586,978 in questioned costs. (incurred on or before September 30, 2022), we noted 207 transactions occurred after September 30, 2022. Of the 207 transactions, we noted 40 that resulted in $10,711,668 (of this amount $2,313,435 is already questioned above) in questioned costs. We noted the following: • For 13 of 207, or 6.28% of transactions tested, the adjustment was to move funds between funding jurisdictions (City, State, County), which is unallowable per FAQ #42 and ERA reporting guidance. (This resulted in $1,594,881 in questioned costs, of which $24,450 is questioned above) • For 11 of 207, or 5.31%, the adjustment was to move funds between ERA 2 and ERA 1 and the adjustment was not directly supported with documentation for the specific transactions involved. It was noted as recharacterized to meet ERA 1 spending limits prior to the end of the period, and CFO did not go back to revise any prior monthly or quarterly reports as required by Treasury. (This resulted in $7,003,715 in questioned costs, of which $2,200,000 is questioned above) • For 7 of 207, or 3.38% of transactions tested, the adjustment was to ‘correct accounts’ or ‘tie out accounts’; we determined these were not attributable to specific transactions but were ‘plug’ numbers to zero out the ERA 1 balance prior to the end of the period of performance to meet spend down requirements and were not supported by actual expenditures that can be determined to have been incurred on or before September 30, 2022. (This resulted in $1,837,072 in questioned costs, of which $88,985 is questioned above) • For 7 of 207, or 3.38% of transactions tested, the adjustment was to CFO management fees. Management fees were retained on a percentage basis; therefore, the fee is not supported by actual expenditures that can be determined to have been incurred on or before September 30, 2022. (This resulted in $1,430,228 in questioned costs which were all questioned on finding 2023-028). • We noted a total of $8,271,796 in management fees that were not expended for ERA 1 and therefore were not spent within the period of performance. Of this amount, $6,841,568 were management fees questioned in the SFY2021 and SFY2022 State of Oklahoma Single Audit reports and the remaining $1,430,228 is questioned on finding 2023-028. • For 2 of 207, or 0.97% of transactions tested, the payment was not supported by an itemized invoice to enable a determination that all the costs were incurred prior to September 30, 2022. (This resulted in $276,000 in questioned costs) 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. Effect: Unallowable costs or adjustments, totaling $10,985,211, were charged to the ERA program by one subrecipient for SFY 2023 as administrative expenditures. Administrative expenditures for other jurisdictions were reimbursed 100% by the State. OMES did not accurately and correctly report ERA program expenditures on federal reports. Lastly, not all ERA 1 funds were spent within the program’s period of performance. Recommendation: We recommend that the OMES develop and implement internal controls to ensure that program obligations and expenditures are accurately reported by the subrecipient. In addition. we also recommend OMES obtain and review federal reports and supporting documentation before submitting the information to the Federal agency. Lastly, we recommend that 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: Ongoing throughout the life of the grant 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 Response 1bullet 1 - SAI acknowledges that funds 49400 and 49200 were created for ERA 1 and ERA 2; however, our finding is addressing the fact that all ERA 1 and 2 payments were classified as fund 49000. CFO Response 1 bullet 2 - SAI acknowledges that the date shows December 29, 2022; however, CFO used plug numbers in their tracking spreadsheet which is not a true tracking of expenditures, and funds were recharacterized to meet spend down requirements; however, reports were not revised to reflect the changes. CFO Response 2 bullet 1 - CFO partially agrees. CFO Response 2 bullet 2 - CFO agrees that funds cannot be moved from ERA 2 to ERA 1. CFO Response 2 bullet 3 - SAI acknowledges that CFO has 31 separate accounts for ERA funds; however, in the transaction data SAI was provided, these eight adjustments are transfers of funds between ERA 1 and ERA 2. CFO Response 2 bullet 4 -We have removed the portion stating reports should have been revised. While this was present in the reporting instructions, we also acknowledge the guidance referred to by CFO. CFO Response 3 bullet 1 - The expenditure description clearly states CFO/CCP moved funds from the State to ‘xyz’ or visa versa. Further, it does not appear that the tracking of spending limits for either ERA grant was kept. CFO Response 3 bullet 2 - SAI notes that FAQ #42 does not directly address ‘jurisdictions’; however, it does explain that ‘The nonprofit organization deposits and maintains the ERA funds in a separate account that is not commingled with other funds.’ Because there are adjustments to move expenses between jurisdictions, this conflicts with guidance. CFO Response 4 bullet 1 - SAI acknowledges that the date shows December 29, 2022; however, CFO used plug numbers in their tracking spreadsheet which is not a true tracking of expenditures, and funds were recharacterized to meet spend down requirements; however, reports were not revised to reflect the changes. CFO Response 5 bullet 1 - The expenditure description clearly states CFO/CCP moved funds from the State to ‘xyz’ or visa versa. Further, it does not appear that the tracking of spending limits for either ERA grant was kept. CFO Response 5 bullet 2 - SAI notes that FAQ #42 does not directly address ‘jurisdictions’; however, it does explain that ‘The nonprofit organization deposits and maintains the ERA funds in a separate account that is not commingled with other funds.’ Because there are adjustments to move expenses between jurisdictions, this conflicts with guidance. CFO Response 6 bullet 1 - CFO partially agrees. CFO Response 6 bullet 2 - CFO agrees that funds cannot be moved from ERA 2 to ERA 1. CFO Response 6 bullet 3 -We have removed the portion stating reports should have been revised. While this was present in the reporting instructions, we also acknowledge the guidance referred to by CFO. CFO Response 6 bullet 3 - SAI acknowledges that the date shows December 29, 2022; however, CFO used plug numbers in their tracking spreadsheet which is not a true tracking of expenditures, and funds were recharacterized to meet spend down requirements; however, reports were not revised to reflect the changes. CFO Response 7 bullet 1 - CFO partially agrees. CFO Response 7 bullet 2 - CFO agrees that funds cannot be moved from ERA 2 to ERA 1. CFO Response 7 bullet 3 - SAI acknowledges that the date shows December 29, 2022; however, CFO used plug numbers in their tracking spreadsheet which is not a true tracking of expenditures, and funds were recharacterized to meet spend down requirements; however, reports were not revised to reflect the changes. CFO Response 8 - SAI reiterates that management fees did not represent actual expenditures; therefore, the transactions are questioned. CFO Response 9 - SAI reiterates that management fees did not represent actual expenditures; therefore, the transactions are questioned. In addition, see previous response above. CFO Response 10 bullets 1 and 2 - Support was only provided for one of the two questioned itemized invoices; however, an itemized invoice was not provided but rather an excel spreadsheet that does not provide the dates for the costs incurred for the applicants. Therefore, we are unable to determine whether costs were incurred prior to September 30, 2022, and the costs will remain questioned.
FINDING 2022-005 Subject: Staffing for Adequate Fire and Emergency Response (SAFER) - Reporting Federal Agency: Department of Homeland Security Federal Program: Staffing for Adequate Fire and Emergency Response (SAFER) Assistance Listings Number: 97.083 Federal Award Number and Year (or Other Identifying Number): EMW-2019-FF-00944 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context Recipients are required to submit Reimbursement Requests, Quarterly Performance Reports, and Semi-Annual SF-425 Federal Financial Reports to the Federal Emergency Management Agency (FEMA). The reporting periods, as well as the respective due dates are based on the calendar year, and recipients must begin to submit reports in the period following the beginning of their period of performance, and throughout the entire period of performance of the grant. Information to be reported includes expenditures for the appropriate reporting period. The Township submitted five reimbursement requests during the audit period. The Director of Finance prepared a sheet with the payroll and benefit amounts to be submitted for reimbursement and provided it to the Assistant Fire Chief. The reimbursement request was filed by the Assistant Fire Chief, without a review or oversight process in place to prevent, or detect and correct, errors and ensure compliance with the reporting compliance requirement. Additionally, the Township did not have a system of internal controls in place to ensure submission of required reports. The Township did not submit the Semi-Annual SF-425 Federal Financial Report that was due by July 30, 2022, or the four Quarterly Performance Reports that were due during the audit period. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.329 states in part: ". . . (b) Reporting program performance. The Federal awarding agency must use OMBapproved common information collections, as applicable, when providing financial and performance reporting information. As appropriate and in accordance with above mentioned information collections, the Federal awarding agency must require the recipient to relate financial data and accomplishments to performance goals and objectives of the Federal award. Also, in accordance with above mentioned common information collections, and when required by the terms and conditions of the Federal award, recipients must provide cost information to demonstrate cost effective practices (e.g., through unit cost data). In some instances (e.g., discretionary research awards), this will be limited to the requirement to submit technical performance reports (to be evaluated in accordance with Federal awarding agency policy). Reporting requirements must be clearly articulated such that, where appropriate, performance during the execution of the Federal award has a standard against which non-Federal entity performance can be measured. (c) Non-construction performance reports. The Federal awarding agency must use standard, governmentwide OMB-approved data elements for collection of performance information including performance progress reports, Research Performance Progress Reports. (1) The non-Federal entity must submit performance reports at the interval required by the Federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes. Reports submitted annually by the non- Federal entity and/or pass-through entity must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. Alternatively, the Federal awarding agency or pass-through entity may require annual reports before the anniversary dates of multiple year Federal awards. The final performance report submitted by the non-Federal entity and/or pass-through entity must be due no later than 120 calendar days after the period of performance end date. A subrecipient must submit to the pass-through entity, no later than 90 calendar days after the period of performance end date, all final performance reports as required by the terms and conditions of the Federal award. See also ? 200.344. If a justified request is submitted by a non-Federal entity, the Federal agency may extend the due date for any performance report. . . ." Cause A system of internal controls was not designed or implemented by management of the Township which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be controls consisting of policies and procedures. Policies reflect the management's expectation of what should be done to effect internal control, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, reimbursement requests were completed and filed by one individual and the Semi-Annual SF-425 Federal Financial Report and the four Quarterly Performance Reports due during the audit period were not submitted as required. Noncompliance with the grant agreement and the reporting compliance requirement could result in the loss of future federal funds to the Township. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Township design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place over reimbursement requestions. In addition, we recommended that management of the Township establish a proper system of internal controls and develop policies and procedures to ensure that all required reports are filed. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Formerly 2021-003: Period of Performance: Federal Program: Assistance Listing Nos.: 14.267 Continuum of Care Program Condition: The organization was unable to demonstrate controls over the period of performance for six items selected for testing. Criteria: The requirements for the period of performance are contained in 2 CFR section 200.1 Definitions for “budget period,” “financial obligations,” “period of performance,” 2 CFR section 200.308 (revision of budget and program plans), 2 CFR section 200.309 (modifications to period of performance), 2 CFR section 200.344 (closeout), program legislation, federal awarding agency regulations; and the terms and conditions of the award. Questioned Costs: There were six expenditures where no documentation could be provided to support that the expense was incurred during the grant period resulting in a questioned cost of $2,699 for 14.267. Cause: The Organization did not have good controls on ensuring the period of performance requirement was met due to staff turn over and being unable to locate documentation. Effect: The Organization could have grant expenditures outside the grant period. Recommendation: In order to prevent future occurrences of this deficiency, we recommend that management enhance a set of controls to ensure that they are able to demonstrate the period of performance. Perspective: This is a systemic issue in that controls over the requirement have not been developed to ensure the reported information is accurate. Repeat: This is a repeat finding. Responsible Official’s View: The Organization agrees with the finding. See attached corrective action plan.
Formerly 2021-003: Period of Performance: Federal Program: Assistance Listing Nos.: 14.267 Continuum of Care Program Condition: The organization was unable to demonstrate controls over the period of performance for six items selected for testing. Criteria: The requirements for the period of performance are contained in 2 CFR section 200.1 Definitions for “budget period,” “financial obligations,” “period of performance,” 2 CFR section 200.308 (revision of budget and program plans), 2 CFR section 200.309 (modifications to period of performance), 2 CFR section 200.344 (closeout), program legislation, federal awarding agency regulations; and the terms and conditions of the award. Questioned Costs: There were six expenditures where no documentation could be provided to support that the expense was incurred during the grant period resulting in a questioned cost of $2,699 for 14.267. Cause: The Organization did not have good controls on ensuring the period of performance requirement was met due to staff turn over and being unable to locate documentation. Effect: The Organization could have grant expenditures outside the grant period. Recommendation: In order to prevent future occurrences of this deficiency, we recommend that management enhance a set of controls to ensure that they are able to demonstrate the period of performance. Perspective: This is a systemic issue in that controls over the requirement have not been developed to ensure the reported information is accurate. Repeat: This is a repeat finding. Responsible Official’s View: The Organization agrees with the finding. See attached corrective action plan.
Formerly 2021-003: Period of Performance: Federal Program: Assistance Listing Nos.: 14.267 Continuum of Care Program Condition: The organization was unable to demonstrate controls over the period of performance for six items selected for testing. Criteria: The requirements for the period of performance are contained in 2 CFR section 200.1 Definitions for “budget period,” “financial obligations,” “period of performance,” 2 CFR section 200.308 (revision of budget and program plans), 2 CFR section 200.309 (modifications to period of performance), 2 CFR section 200.344 (closeout), program legislation, federal awarding agency regulations; and the terms and conditions of the award. Questioned Costs: There were six expenditures where no documentation could be provided to support that the expense was incurred during the grant period resulting in a questioned cost of $2,699 for 14.267. Cause: The Organization did not have good controls on ensuring the period of performance requirement was met due to staff turn over and being unable to locate documentation. Effect: The Organization could have grant expenditures outside the grant period. Recommendation: In order to prevent future occurrences of this deficiency, we recommend that management enhance a set of controls to ensure that they are able to demonstrate the period of performance. Perspective: This is a systemic issue in that controls over the requirement have not been developed to ensure the reported information is accurate. Repeat: This is a repeat finding. Responsible Official’s View: The Organization agrees with the finding. See attached corrective action plan.
Formerly 2021-003: Period of Performance: Federal Program: Assistance Listing Nos.: 14.267 Continuum of Care Program Condition: The organization was unable to demonstrate controls over the period of performance for six items selected for testing. Criteria: The requirements for the period of performance are contained in 2 CFR section 200.1 Definitions for “budget period,” “financial obligations,” “period of performance,” 2 CFR section 200.308 (revision of budget and program plans), 2 CFR section 200.309 (modifications to period of performance), 2 CFR section 200.344 (closeout), program legislation, federal awarding agency regulations; and the terms and conditions of the award. Questioned Costs: There were six expenditures where no documentation could be provided to support that the expense was incurred during the grant period resulting in a questioned cost of $2,699 for 14.267. Cause: The Organization did not have good controls on ensuring the period of performance requirement was met due to staff turn over and being unable to locate documentation. Effect: The Organization could have grant expenditures outside the grant period. Recommendation: In order to prevent future occurrences of this deficiency, we recommend that management enhance a set of controls to ensure that they are able to demonstrate the period of performance. Perspective: This is a systemic issue in that controls over the requirement have not been developed to ensure the reported information is accurate. Repeat: This is a repeat finding. Responsible Official’s View: The Organization agrees with the finding. See attached corrective action plan.
Condition: For the year ended December 31, 2022, the auditee received $2,300,000 in ERA program funds but only spent $2,112,889, consisting of: $1,675,129 in direct expenses, $240,685 in furniture, fixtures, equipment, and leasehold improvements utilized for administering the program, and $197,075 in indirect cost allocations. This resulted in $187,111 unobligated funds for the ERA program that were not refunded to the grantor. Additionally, the organization spent $327,316 out of $337,290 in TANF grant funds received during the same year, which resulted in $9,974 in unobligated funds that were also not returned to the grantor. The failure to have a process to monitor and return unspent or unobligated funds highlights weaknesses in the organization’s cash and financial management processes and an apparent lack of awareness of the obligation to monitor and return unobligated funds to the grantor agency. Criteria: 2 CFR 200.308(e): Requires non‐federal entities to maintain a comparison of actual expenditures with the approved budget and explain any significant variances. 2 CFR 200.344(d): Requires unobligated balances of federal funds to be returned to the awarding agency unless specifically authorized to retain them. 2 CFR 200.303: Requires entities to establish internal controls over cash management to ensure proper use and reporting of federal funds. Cause: The organization’s failure to perform regular budget‐to‐actual comparisons and establish adequate cash management controls contributed to unspent funds remaining unreturned. Additionally, the Organization did not have an internal control process to monitor the performance period of grants which resulted in management being under the impression it could spend funds beyond the performance period in the grant contract. Effect: The lack of budget monitoring and cash management controls: 1. Increased the risk of noncompliance with federal requirements for unobligated funds. 2. Resulted in the failure to detect and return unobligated balances of $197,085 ($187,111 for the ERA program, $9,974 for the TANF program). 3. Raised concerns about the organization’s oversight and financial management capabilities. Recommendation: 1. Establish and implement procedures for preparing budget‐to‐actual comparisons for all grant programs to monitor variances regularly. 2. Develop cash management controls to ensure timely identification and return of unobligated funds, unless otherwise authorized by the grantor. 3. Strengthen financial oversight to avoid recurrence of these issues and ensure compliance with federal grant requirements. Questioned Costs: $187,111 (ERA Program). Management’s Response: Management agrees with the findings and has already initiated corrective actions. Moving forward, budget‐to‐actual comparisons will be prepared monthly, and any discrepancies will be addressed promptly. The organization will work closely with the cognizant agency to arrange for the return of any unobligated funds or, if applicable, seek authorization to retain the funds for use in other similar programs. This process will ensure proper financial management and compliance.
Finding 2022-003 Cash Management – Repeat Finding 2021-003 Federal Agency: U.S. Department of Commerce Program Name: MBDA Business Center Assistance Listing #: 11.805 Questioned Costs: None Condition/Context We tested a sample consisting of six cash drawdowns from a total of twenty-two amounting to $264,870. Our audit procedures indicated that $81,023 were not disbursed in a timely manner. In addition, our SEFA reconciliation procedures revealed that an additional $9,497 had not been disbursed timely by the end of the year. As of December 31, 2022, CMSDC had accumulated $206,746 in grant advances, of which $197,249 pertain to 2021. Criteria Uniform Guidance requires that non-federal entities minimize the time elapsing between the transfer of funds and disbursements by the non-federal entity. Per 2 CFR 200.344, unobligated funds must be promptly refunded to the Federal agency that paid those funds. Cause CMSDC did not reconcile expenditures to cash drawdowns. Effect CMSDC did not comply with Uniform Guidance and closed the year with a grant advance of $206,746. Recommendation We recommend that CMSDC updates it policies and procedures to include procedures for reconciling expenditures to cash drawdowns. In addition, we recommend that CMSDC reconciles expenditures and cash drawdowns on a monthly basis. Unobligated funds should also be refunded to the U.S. Department of Commerce. Organization’s Management Response See corrective action plan.
Finding 2022-003 Cash Management – Repeat Finding 2021-003 Federal Agency: U.S. Department of Commerce Program Name: MBDA Business Center Assistance Listing #: 11.805 Questioned Costs: None Condition/Context We tested a sample consisting of six cash drawdowns from a total of twenty-two amounting to $264,870. Our audit procedures indicated that $81,023 were not disbursed in a timely manner. In addition, our SEFA reconciliation procedures revealed that an additional $9,497 had not been disbursed timely by the end of the year. As of December 31, 2022, CMSDC had accumulated $206,746 in grant advances, of which $197,249 pertain to 2021. Criteria Uniform Guidance requires that non-federal entities minimize the time elapsing between the transfer of funds and disbursements by the non-federal entity. Per 2 CFR 200.344, unobligated funds must be promptly refunded to the Federal agency that paid those funds. Cause CMSDC did not reconcile expenditures to cash drawdowns. Effect CMSDC did not comply with Uniform Guidance and closed the year with a grant advance of $206,746. Recommendation We recommend that CMSDC updates it policies and procedures to include procedures for reconciling expenditures to cash drawdowns. In addition, we recommend that CMSDC reconciles expenditures and cash drawdowns on a monthly basis. Unobligated funds should also be refunded to the U.S. Department of Commerce. Organization’s Management Response See corrective action plan.
Finding 2022-003 Cash Management – Repeat Finding 2021-003 Federal Agency: U.S. Department of Commerce Program Name: MBDA Business Center Assistance Listing #: 11.805 Questioned Costs: None Condition/Context We tested a sample consisting of six cash drawdowns from a total of twenty-two amounting to $264,870. Our audit procedures indicated that $81,023 were not disbursed in a timely manner. In addition, our SEFA reconciliation procedures revealed that an additional $9,497 had not been disbursed timely by the end of the year. As of December 31, 2022, CMSDC had accumulated $206,746 in grant advances, of which $197,249 pertain to 2021. Criteria Uniform Guidance requires that non-federal entities minimize the time elapsing between the transfer of funds and disbursements by the non-federal entity. Per 2 CFR 200.344, unobligated funds must be promptly refunded to the Federal agency that paid those funds. Cause CMSDC did not reconcile expenditures to cash drawdowns. Effect CMSDC did not comply with Uniform Guidance and closed the year with a grant advance of $206,746. Recommendation We recommend that CMSDC updates it policies and procedures to include procedures for reconciling expenditures to cash drawdowns. In addition, we recommend that CMSDC reconciles expenditures and cash drawdowns on a monthly basis. Unobligated funds should also be refunded to the U.S. Department of Commerce. Organization’s Management Response See corrective action plan.
FINDING 2022-005 Subject: Staffing for Adequate Fire and Emergency Response (SAFER) - Reporting Federal Agency: Department of Homeland Security Federal Program: Staffing for Adequate Fire and Emergency Response (SAFER) Assistance Listings Number: 97.083 Federal Award Number and Year (or Other Identifying Number): EMW-2019-FF-00944 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context Recipients are required to submit Reimbursement Requests, Quarterly Performance Reports, and Semi-Annual SF-425 Federal Financial Reports to the Federal Emergency Management Agency (FEMA). The reporting periods, as well as the respective due dates are based on the calendar year, and recipients must begin to submit reports in the period following the beginning of their period of performance, and throughout the entire period of performance of the grant. Information to be reported includes expenditures for the appropriate reporting period. The Township submitted five reimbursement requests during the audit period. The Director of Finance prepared a sheet with the payroll and benefit amounts to be submitted for reimbursement and provided it to the Assistant Fire Chief. The reimbursement request was filed by the Assistant Fire Chief, without a review or oversight process in place to prevent, or detect and correct, errors and ensure compliance with the reporting compliance requirement. Additionally, the Township did not have a system of internal controls in place to ensure submission of required reports. The Township did not submit the Semi-Annual SF-425 Federal Financial Report that was due by July 30, 2022, or the four Quarterly Performance Reports that were due during the audit period. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.329 states in part: ". . . (b) Reporting program performance. The Federal awarding agency must use OMBapproved common information collections, as applicable, when providing financial and performance reporting information. As appropriate and in accordance with above mentioned information collections, the Federal awarding agency must require the recipient to relate financial data and accomplishments to performance goals and objectives of the Federal award. Also, in accordance with above mentioned common information collections, and when required by the terms and conditions of the Federal award, recipients must provide cost information to demonstrate cost effective practices (e.g., through unit cost data). In some instances (e.g., discretionary research awards), this will be limited to the requirement to submit technical performance reports (to be evaluated in accordance with Federal awarding agency policy). Reporting requirements must be clearly articulated such that, where appropriate, performance during the execution of the Federal award has a standard against which non-Federal entity performance can be measured. (c) Non-construction performance reports. The Federal awarding agency must use standard, governmentwide OMB-approved data elements for collection of performance information including performance progress reports, Research Performance Progress Reports. (1) The non-Federal entity must submit performance reports at the interval required by the Federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes. Reports submitted annually by the non- Federal entity and/or pass-through entity must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. Alternatively, the Federal awarding agency or pass-through entity may require annual reports before the anniversary dates of multiple year Federal awards. The final performance report submitted by the non-Federal entity and/or pass-through entity must be due no later than 120 calendar days after the period of performance end date. A subrecipient must submit to the pass-through entity, no later than 90 calendar days after the period of performance end date, all final performance reports as required by the terms and conditions of the Federal award. See also ? 200.344. If a justified request is submitted by a non-Federal entity, the Federal agency may extend the due date for any performance report. . . ." Cause A system of internal controls was not designed or implemented by management of the Township which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be controls consisting of policies and procedures. Policies reflect the management's expectation of what should be done to effect internal control, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, reimbursement requests were completed and filed by one individual and the Semi-Annual SF-425 Federal Financial Report and the four Quarterly Performance Reports due during the audit period were not submitted as required. Noncompliance with the grant agreement and the reporting compliance requirement could result in the loss of future federal funds to the Township. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Township design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place over reimbursement requestions. In addition, we recommended that management of the Township establish a proper system of internal controls and develop policies and procedures to ensure that all required reports are filed. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Formerly 2021-003: Period of Performance: Federal Program: Assistance Listing Nos.: 14.267 Continuum of Care Program Condition: The organization was unable to demonstrate controls over the period of performance for six items selected for testing. Criteria: The requirements for the period of performance are contained in 2 CFR section 200.1 Definitions for “budget period,” “financial obligations,” “period of performance,” 2 CFR section 200.308 (revision of budget and program plans), 2 CFR section 200.309 (modifications to period of performance), 2 CFR section 200.344 (closeout), program legislation, federal awarding agency regulations; and the terms and conditions of the award. Questioned Costs: There were six expenditures where no documentation could be provided to support that the expense was incurred during the grant period resulting in a questioned cost of $2,699 for 14.267. Cause: The Organization did not have good controls on ensuring the period of performance requirement was met due to staff turn over and being unable to locate documentation. Effect: The Organization could have grant expenditures outside the grant period. Recommendation: In order to prevent future occurrences of this deficiency, we recommend that management enhance a set of controls to ensure that they are able to demonstrate the period of performance. Perspective: This is a systemic issue in that controls over the requirement have not been developed to ensure the reported information is accurate. Repeat: This is a repeat finding. Responsible Official’s View: The Organization agrees with the finding. See attached corrective action plan.
Formerly 2021-003: Period of Performance: Federal Program: Assistance Listing Nos.: 14.267 Continuum of Care Program Condition: The organization was unable to demonstrate controls over the period of performance for six items selected for testing. Criteria: The requirements for the period of performance are contained in 2 CFR section 200.1 Definitions for “budget period,” “financial obligations,” “period of performance,” 2 CFR section 200.308 (revision of budget and program plans), 2 CFR section 200.309 (modifications to period of performance), 2 CFR section 200.344 (closeout), program legislation, federal awarding agency regulations; and the terms and conditions of the award. Questioned Costs: There were six expenditures where no documentation could be provided to support that the expense was incurred during the grant period resulting in a questioned cost of $2,699 for 14.267. Cause: The Organization did not have good controls on ensuring the period of performance requirement was met due to staff turn over and being unable to locate documentation. Effect: The Organization could have grant expenditures outside the grant period. Recommendation: In order to prevent future occurrences of this deficiency, we recommend that management enhance a set of controls to ensure that they are able to demonstrate the period of performance. Perspective: This is a systemic issue in that controls over the requirement have not been developed to ensure the reported information is accurate. Repeat: This is a repeat finding. Responsible Official’s View: The Organization agrees with the finding. See attached corrective action plan.
Formerly 2021-003: Period of Performance: Federal Program: Assistance Listing Nos.: 14.267 Continuum of Care Program Condition: The organization was unable to demonstrate controls over the period of performance for six items selected for testing. Criteria: The requirements for the period of performance are contained in 2 CFR section 200.1 Definitions for “budget period,” “financial obligations,” “period of performance,” 2 CFR section 200.308 (revision of budget and program plans), 2 CFR section 200.309 (modifications to period of performance), 2 CFR section 200.344 (closeout), program legislation, federal awarding agency regulations; and the terms and conditions of the award. Questioned Costs: There were six expenditures where no documentation could be provided to support that the expense was incurred during the grant period resulting in a questioned cost of $2,699 for 14.267. Cause: The Organization did not have good controls on ensuring the period of performance requirement was met due to staff turn over and being unable to locate documentation. Effect: The Organization could have grant expenditures outside the grant period. Recommendation: In order to prevent future occurrences of this deficiency, we recommend that management enhance a set of controls to ensure that they are able to demonstrate the period of performance. Perspective: This is a systemic issue in that controls over the requirement have not been developed to ensure the reported information is accurate. Repeat: This is a repeat finding. Responsible Official’s View: The Organization agrees with the finding. See attached corrective action plan.
Formerly 2021-003: Period of Performance: Federal Program: Assistance Listing Nos.: 14.267 Continuum of Care Program Condition: The organization was unable to demonstrate controls over the period of performance for six items selected for testing. Criteria: The requirements for the period of performance are contained in 2 CFR section 200.1 Definitions for “budget period,” “financial obligations,” “period of performance,” 2 CFR section 200.308 (revision of budget and program plans), 2 CFR section 200.309 (modifications to period of performance), 2 CFR section 200.344 (closeout), program legislation, federal awarding agency regulations; and the terms and conditions of the award. Questioned Costs: There were six expenditures where no documentation could be provided to support that the expense was incurred during the grant period resulting in a questioned cost of $2,699 for 14.267. Cause: The Organization did not have good controls on ensuring the period of performance requirement was met due to staff turn over and being unable to locate documentation. Effect: The Organization could have grant expenditures outside the grant period. Recommendation: In order to prevent future occurrences of this deficiency, we recommend that management enhance a set of controls to ensure that they are able to demonstrate the period of performance. Perspective: This is a systemic issue in that controls over the requirement have not been developed to ensure the reported information is accurate. Repeat: This is a repeat finding. Responsible Official’s View: The Organization agrees with the finding. See attached corrective action plan.
Condition: For the year ended December 31, 2022, the auditee received $2,300,000 in ERA program funds but only spent $2,112,889, consisting of: $1,675,129 in direct expenses, $240,685 in furniture, fixtures, equipment, and leasehold improvements utilized for administering the program, and $197,075 in indirect cost allocations. This resulted in $187,111 unobligated funds for the ERA program that were not refunded to the grantor. Additionally, the organization spent $327,316 out of $337,290 in TANF grant funds received during the same year, which resulted in $9,974 in unobligated funds that were also not returned to the grantor. The failure to have a process to monitor and return unspent or unobligated funds highlights weaknesses in the organization’s cash and financial management processes and an apparent lack of awareness of the obligation to monitor and return unobligated funds to the grantor agency. Criteria: 2 CFR 200.308(e): Requires non‐federal entities to maintain a comparison of actual expenditures with the approved budget and explain any significant variances. 2 CFR 200.344(d): Requires unobligated balances of federal funds to be returned to the awarding agency unless specifically authorized to retain them. 2 CFR 200.303: Requires entities to establish internal controls over cash management to ensure proper use and reporting of federal funds. Cause: The organization’s failure to perform regular budget‐to‐actual comparisons and establish adequate cash management controls contributed to unspent funds remaining unreturned. Additionally, the Organization did not have an internal control process to monitor the performance period of grants which resulted in management being under the impression it could spend funds beyond the performance period in the grant contract. Effect: The lack of budget monitoring and cash management controls: 1. Increased the risk of noncompliance with federal requirements for unobligated funds. 2. Resulted in the failure to detect and return unobligated balances of $197,085 ($187,111 for the ERA program, $9,974 for the TANF program). 3. Raised concerns about the organization’s oversight and financial management capabilities. Recommendation: 1. Establish and implement procedures for preparing budget‐to‐actual comparisons for all grant programs to monitor variances regularly. 2. Develop cash management controls to ensure timely identification and return of unobligated funds, unless otherwise authorized by the grantor. 3. Strengthen financial oversight to avoid recurrence of these issues and ensure compliance with federal grant requirements. Questioned Costs: $187,111 (ERA Program). Management’s Response: Management agrees with the findings and has already initiated corrective actions. Moving forward, budget‐to‐actual comparisons will be prepared monthly, and any discrepancies will be addressed promptly. The organization will work closely with the cognizant agency to arrange for the return of any unobligated funds or, if applicable, seek authorization to retain the funds for use in other similar programs. This process will ensure proper financial management and compliance.