Finding 2025-006 Lack of Internal Control over Activities Allowed or Unallowed and Allowable Costs/Activities Federal Agency: U.S. Department of Education, passed through the State of Alaska, Department of Education and Early Development (DEED) Federal Program(s): Title I-A Basis/School Improvement 1003(a) Assistance Listing Number(s):84.010A Award Number(s): Federal Award Numbers: S010A230002 and S010A24000, Pass through entity award numbers: IP 25.IASD.01 and SI 25.IASD.01 Award Year(s): 2025 Type of Finding: Significant deficiency in internal control over compliance. Criteria: Management is responsible for designing, implementing and maintaining internal controls relevant to ensuring that transactions charged to programs follow proper internal control processes (2 CFR Part 200 Subpart E § 200.400 (d)). Condition and Context: We tested seventeen (17) payroll transactions charged to the program and noted three (3) instances where the transaction lacked supporting documentation for approved employee pay rate. The transactions were not considered unallowable under the program. Cause: Lack of internal controls over maintaining adequate supporting documentation for transactions charged to the program. Effect: Lack of adequate supporting documentation for transactions allows for an environment where unallowable costs could be charged to the program. Repeat Finding: No. Questioned Costs: None reported. Recommendation: We recommend that management strengthen internal controls over payroll transactions and improve the maintenance of supporting documentation processes to ensure compliance and accuracy of payroll transactions. Management Response: Management concurs with this finding. See Corrective Action Plan
Finding 2025-002 Lack of Internal Controls over Activities Allowed and or Unallowed and Allowable Costs/Activities – Cash Disbursements Federal Agency: U.S. Department of Education passed through the State of Alaska, Department of Education and Early Development (DEED) Federal Program(s): ARP Act: ESSER III Assistance Listing Number(s):84.425U Award Number(s): Federal award number(s): S425U210020, Pass through entity award number(s): ER 25.YFSD.01, AR.25.YFSD.01 Award Years: 2025 Type of Finding: Significant deficiency in internal control over compliance. Criteria: 2 CFR Part 200 Subpart E §200.400(d) dictate that the accounting practices of a recipient (or subrecipient) must be consistent with these cost principles and support the accumulation of costs as required by these cost principles, including maintaining adequate documentation to support costs charged to the Federal award. This includes ensuring there is proper supporting documentation for transactions as well as methods to document approval of the cost/activity to determine whether it is allowable under the funding requirements. Condition and Context: We tested a sample of twenty-five (25) cash disbursements for the program. We noted seven (7) credit card transactions that lacked adequate supporting documentation. We did not identify any transactions in the program that appeared to be unallowed based on the context of the transaction. Cause: Lack of internal controls related to supporting documentation for transactions charged to the programs. Effect: Lack of internal controls allows for the potential for unallowable costs to be charged to the programs. Repeat Finding: This is a repeat of Finding of 2024-005, and since it is a repeat finding, we believe this to be a systemic issue. Questioned Costs: None reported. Recommendation: We recommend that management implement stronger internal controls over cash disbursements, specifically to retaining supporting documentation. Management Response: Management concurs with this finding. See Corrective Action Plan.
2024-002 Allowable Costs Assistance Listing Number: 81.042 Name of Program and Cluster: Weatherization Assistance Program Agency: U.S. Department of Energy Compliance Supplement Requirement: Allowable Cost Principles Condition: The Organization did not allocate shared costs between program and non-program related costs. Criteria: In accordance with Regulation 2 CFR 200.400, only costs related to the Weatherization Assistance Program should be allocated to the contract and submitted for reimbursement. Perspective: The Organization did not allocate costs between program and non-program related costs. RBT estimated approximately $15,078.56 in costs that should have been allocated to non- program related costs. Cause: The Organization believed all costs should be allocated to the program. Effect: The Organization may overstate expenditures of Federal Awards. Recommendation: RBT recommends that the Organization uses a percentage allocation based on the amount of time spent on other programs to allocate shared costs to non-program accounts. Management's Response: See corrective action plan
Criteria: According to §200.303 Internal controls of 2 CFR Part 200, 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. According to the Uniform Guidance (2 CFR Part 200), specifically §200.400 - 200.475, costs charged to federal awards must be reasonable, allocable, and allowable under the terms of the award. Condition and Context: Management was unable to provide sufficient documentation for specific COVID-19 expenditures that were initially reported on the Schedule of Expenditures of Federal Awards. As a result, audit adjustments were necessary to revise the total COVID-19 expenditures to include only those amounts that could be adequately substantiated. Cause: The lack of sufficient documentation was primarily due to a lack of adequate internal controls and oversight regarding the classification and allocation of COVID-19 expenditures charged to federal awards. Effect: Management did not have sufficient documentation to support activities met the terms and conditions related to the COVID-19 Indian Self-Determination federal awards. Audit adjustments were necessary to revise the total COVID-19 expenditures to include only those amounts that could be adequately substantiated. Questioned Cost: None. Repeat Finding: No Recommendation: We recommend the Hospital establish and document clear policies and procedures for identifying, classifying, and allocating costs charged to federal awards, ensuring compliance with the Uniform Guidance. Additionally, we recommend the Hospital conduct regular reviews of expenditures charged to federal awards to ensure compliance with federal regulations and the terms of the awards. Views of Responsible Officials: The Finance team of Financial Controller and Senior Accountant are responsible for gathering sufficient documentation specific to COVID-19 expenditures. Proper and accurate classification and allocation of COVID-19 related activities and expenditures will be tracked and monitored before charging to funds. This will be completed by September 30, 2025.
Criteria: According to §200.303 Internal controls of 2 CFR Part 200, 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. According to the Uniform Guidance (2 CFR Part 200), specifically §200.400 - 200.475, costs charged to federal awards must be reasonable, allocable, and allowable under the terms of the award. Condition and Context: Management was unable to provide sufficient documentation for specific COVID-19 expenditures that were initially reported on the Schedule of Expenditures of Federal Awards. As a result, audit adjustments were necessary to revise the total COVID-19 expenditures to include only those amounts that could be adequately substantiated. Cause: The lack of sufficient documentation was primarily due to a lack of adequate internal controls and oversight regarding the classification and allocation of COVID-19 expenditures charged to federal awards. Effect: Management did not have sufficient documentation to support activities met the terms and conditions related to the COVID-19 Indian Self-Determination federal awards. Audit adjustments were necessary to revise the total COVID-19 expenditures to include only those amounts that could be adequately substantiated. Questioned Cost: None. Repeat Finding: No Recommendation: We recommend the Hospital establish and document clear policies and procedures for identifying, classifying, and allocating costs charged to federal awards, ensuring compliance with the Uniform Guidance. Additionally, we recommend the Hospital conduct regular reviews of expenditures charged to federal awards to ensure compliance with federal regulations and the terms of the awards. Views of Responsible Officials: The Finance team of Financial Controller and Senior Accountant are responsible for gathering sufficient documentation specific to COVID-19 expenditures. Proper and accurate classification and allocation of COVID-19 related activities and expenditures will be tracked and monitored before charging to funds. This will be completed by September 30, 2025.
Finding 2024-001 (A/B – Activities Allowed or Unallowed and Allowable Costs / Cost Principles) Identification of the federal program: Federal Grantor: US Department of Homeland Security Federal Emergency Management Agency (FEMA) Assistance Listing No.: 97.036 - COVID-19 - Disaster Grants – Public Assistance (Presidentially Declared Disasters) Criteria or specific requirement (including statutory, regulatory or other citation): The Uniform Guidance 2 CFR section 200.303 states, “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).” The Uniform Guidance 2 CFR sections 200.400 through 200.405 set forth the guidance for allowable costs for projects funded with Federal funds. Condition: Baptist Health Care, Inc. (the Company) received funding under program 97.036 – COVID-19 - Disaster Grants – Public Assistance (Presidentially Declared Disasters) (Program) during the fiscal year ended September 30, 2024. The Company submitted duplicate invoices for different projects that resulted in expenditures being reimbursed for costs incurred multiple times. The Company also submitted for reimbursement an amount greater than what was supported by the underlying invoice due to incorrect data submission. Based on discussions with management, we understand that the Company utilized a contracted third party to assist with collecting the information to be submitted to FEMA. However, the internal controls over compliance did not detect or prevent these situations from occurring at the required level of precision. As such, we consider the lack of effectiveness of controls to validate completeness and accuracy of the amounts submitted for reimbursement for this program to represent a material weakness in internal control over compliance. Cause: The Company’s internal controls in place over the review of the completeness and accuracy of amounts submitted for reimbursement under the Program were not sufficient to detect or prevent errors in the underlying files submitted for reimbursement. Effect or potential effect: The lack of management review at a sufficient level of precision regarding expenditures submitted for reimbursement under this Program resulted in the reimbursement of duplicate invoices and reimbursement of an amount greater than the amount supported by the underlying supporting documentation from the granting agency. As a result, the Company will be required to reimburse the Federal Agency. Questioned costs: $79,118.82 Context: There were 8 individual projects for the COVID-19 disaster that the Company received funding for in fiscal year 2024. These projects were submitted to FEMA during the fiscal years 2020 through 2022. We selected 40 expenditures totaling $161,579 from the total population of expenditures totaling $1,843,741. We identified a duplicate invoice in our testing sample. We then reviewed the total population of invoices subject to testing and identified 24 invoices totaling $77,521.50 that were submitted for reimbursement more than once and therefore reimbursed by the Program more than once. We also identified one invoice totaling $177.48 for which reimbursement was requested for an amount $1,597.32 greater than the invoice amount. We extrapolated this error to estimate the likely questioned costs of $16,629.33. We reviewed the entire population of expenditures for which reimbursement was requested and received to determine the total amount of duplicate reimbursements and reimbursements in excess of supporting documentation to quantify the total known questioned costs of $79,118.82. Identification as a repeat finding, if applicable: Not applicable. Recommendation: The Company should ensure that a diligent review of amounts submitted for reimbursement is conducted at a sufficient level of precision by an appropriate individual with knowledge of the Program to ensure expenditures are only submitted once for reimbursement and to ensure that amounts submitted for reimbursement are not in excess of the amounts supported by appropriate documentation. We also recommend that management reimburse the Agency for the amounts reimbursed more than once and reimbursed at amounts in excess of the appropriate supporting documentation. Views of responsible officials: The Company agrees with the above recommendation. See separate Corrective Action Plan.
Federal Agency: U.S. Department of Education passed through the State of Alaska, Department of Education and Early Development (DEED) Federal Program(s): COVID-19 CRRSA Act: ESSER II / ARP Act: ESSER III (ESSER) and Title I-A Assistance Listing Number(s):84.425 U and D and 84.010A Award Number(s): Federal award number(s): S425U210020 and S425D210020 (ESSER), S010A230002, and S010A220002 (Title I-A), Pass through entity award number(s): ER 24.YFSD.01 (ESSER), IP 24.YFSD.01, and SI 24.YFSD.01 (Title I-A) Award Years: 2024 Type of Finding: Significant deficiency in internal control over compliance. Criteria: 2 CFR Part 200 Subpart E §200.400(d) dictate that the accounting practices of a recipient (or subrecipient) must be consistent with these cost principles and support the accumulation of costs as required by these cost principles, including maintaining adequate documentation to support costs charged to the Federal award. This includes ensuring there is proper supporting documentation for transactions as well as methods to document approval of the cost/activity to determine whether it is allowable under the funding requirements. Condition and Context: We tested a sample of seventeen (17) cash disbursements for ESSER and fourteen (14) cash disbursements for Title I-A. We noted seven (7) transactions from each program that lacked either adequate supporting documentation or documentation of proper review and approval. We did not identify any transactions in either program that appeared to be unallowable based on the context of the transaction. Cause: Lack of internal controls related to approval and supporting documentation for transactions charged to the programs. Effect: Lack of internal controls allows for the potential for unallowable costs to be charged to the programs. Repeat Finding: This is a repeat of Finding of 2023-006, and since it is a repeat finding, we believe this to be a systemic issue. Questioned Costs: None reported. Recommendation: We recommend that management implement stronger internal controls over cash disbursements, specifically to retaining supporting documentation and ensuring proper approval. Management Response: Management agrees with this finding, see Corrective Action Plan.
Federal Agency: U.S. Department of Education passed through the State of Alaska, Department of Education and Early Development (DEED) Federal Program(s): COVID-19 CRRSA Act: ESSER II / ARP Act: ESSER III (ESSER) and Title I-A Assistance Listing Number(s):84.425 U and D and 84.010A Award Number(s): Federal award number(s): S425U210020 and S425D210020 (ESSER), S010A230002, and S010A220002 (Title I-A), Pass through entity award number(s): ER 24.YFSD.01 (ESSER), IP 24.YFSD.01, and SI 24.YFSD.01 (Title I-A) Award Years: 2024 Type of Finding: Significant deficiency in internal control over compliance. Criteria: 2 CFR Part 200 Subpart E §200.400(d) dictate that the accounting practices of a recipient (or subrecipient) must be consistent with these cost principles and support the accumulation of costs as required by these cost principles, including maintaining adequate documentation to support costs charged to the Federal award. This includes ensuring there is proper supporting documentation for transactions as well as methods to document approval of the cost/activity to determine whether it is allowable under the funding requirements. Condition and Context: We tested a sample of seventeen (17) cash disbursements for ESSER and fourteen (14) cash disbursements for Title I-A. We noted seven (7) transactions from each program that lacked either adequate supporting documentation or documentation of proper review and approval. We did not identify any transactions in either program that appeared to be unallowable based on the context of the transaction. Cause: Lack of internal controls related to approval and supporting documentation for transactions charged to the programs. Effect: Lack of internal controls allows for the potential for unallowable costs to be charged to the programs. Repeat Finding: This is a repeat of Finding of 2023-006, and since it is a repeat finding, we believe this to be a systemic issue. Questioned Costs: None reported. Recommendation: We recommend that management implement stronger internal controls over cash disbursements, specifically to retaining supporting documentation and ensuring proper approval. Management Response: Management agrees with this finding, see Corrective Action Plan.
Federal Agency: U.S. Department of Education passed through the State of Alaska, Department of Education and Early Development (DEED) Federal Program(s): COVID-19 CRRSA Act: ESSER II / ARP Act: ESSER III (ESSER) and Title I-A Assistance Listing Number(s):84.425 U and D and 84.010A Award Number(s): Federal award number(s): S425U210020 and S425D210020 (ESSER), S010A230002, and S010A220002 (Title I-A), Pass through entity award number(s): ER 24.YFSD.01 (ESSER), IP 24.YFSD.01, and SI 24.YFSD.01 (Title I-A) Award Years: 2024 Type of Finding: Significant deficiency in internal control over compliance. Criteria: 2 CFR Part 200 Subpart E §200.400(d) dictate that the accounting practices of a recipient (or subrecipient) must be consistent with these cost principles and support the accumulation of costs as required by these cost principles, including maintaining adequate documentation to support costs charged to the Federal award. This includes ensuring there is proper supporting documentation for transactions as well as methods to document approval of the cost/activity to determine whether it is allowable under the funding requirements. Condition and Context: We tested a sample of seventeen (17) cash disbursements for ESSER and fourteen (14) cash disbursements for Title I-A. We noted seven (7) transactions from each program that lacked either adequate supporting documentation or documentation of proper review and approval. We did not identify any transactions in either program that appeared to be unallowable based on the context of the transaction. Cause: Lack of internal controls related to approval and supporting documentation for transactions charged to the programs. Effect: Lack of internal controls allows for the potential for unallowable costs to be charged to the programs. Repeat Finding: This is a repeat of Finding of 2023-006, and since it is a repeat finding, we believe this to be a systemic issue. Questioned Costs: None reported. Recommendation: We recommend that management implement stronger internal controls over cash disbursements, specifically to retaining supporting documentation and ensuring proper approval. Management Response: Management agrees with this finding, see Corrective Action Plan.
Federal Agency: U.S. Department of Education passed through the State of Alaska, Department of Education and Early Development (DEED) Federal Program(s): COVID-19 CRRSA ACT: ESSER II / ARP ACT: ESSER III (ESSER) and Title I-A Assistance Listing Number(s):84.425 U and D and 84.010A Award Number(s): Federal award numbers: S425U210020, S425D210020 (ESSER), S010A230002, and S010A230002 (Title I-A), Pass through entity award numbers: ER 24.YFSD.01 (ESSER), IP 24.YFSD.01, and SI 24.YFSD.01 (Title I-A). Award Year(s): 2024 Type of Finding: Significant deficiency in internal control over compliance and noncompliance. Criteria: Management is responsible for designing, implementing and maintaining internal controls relevant to ensuring that transactions charged to programs follow proper internal control processes (2 CFR Part 200 Subpart E §200.400 (d). This includes ensuring there is proper supporting documentation for transactions as well as methods to document approval of the cost/activity to determine whether it is allowable under the funding requirements. Condition and Context: We tested a sample of fifteen (15) payroll transactions for ESSER and seven (7) payroll transactions for Title I-A. We noted four (4) instances where the transaction either lacked supporting documentation for payrate or hours worked for ESSER. We noted three (3) instances where the transaction lacked supporting documentation for payrate or hours worked for Title I-A. We also identified one (1) transaction charged to ESSER that appeared to be unallowable based on the context of the transaction. Cause: Lack of internal controls related to approval and supporting documentation for transactions charged to the programs. Effect: Lack of approval and adequate supporting documentation for transactions allows for an environment where unallowable costs could be charged to the programs. Federal Schedule of Findings and Questioned Costs, Continued Repeat Finding: This is not a repeat finding, however, due to the number of exceptions identified, we believe this to be a systemic issue. Questioned Costs: None over the reporting threshold of $25,000. Recommendation: We recommend that management implement stronger internal controls over payroll transactions and improve the review, approval and maintenance of supporting documentation processes. Management Response: Management agrees with this finding, see Corrective Action Plan.
Federal Agency: U.S. Department of Education passed through the State of Alaska, Department of Education and Early Development (DEED) Federal Program(s): COVID-19 CRRSA ACT: ESSER II / ARP ACT: ESSER III (ESSER) and Title I-A Assistance Listing Number(s):84.425 U and D and 84.010A Award Number(s): Federal award numbers: S425U210020, S425D210020 (ESSER), S010A230002, and S010A230002 (Title I-A), Pass through entity award numbers: ER 24.YFSD.01 (ESSER), IP 24.YFSD.01, and SI 24.YFSD.01 (Title I-A). Award Year(s): 2024 Type of Finding: Significant deficiency in internal control over compliance and noncompliance. Criteria: Management is responsible for designing, implementing and maintaining internal controls relevant to ensuring that transactions charged to programs follow proper internal control processes (2 CFR Part 200 Subpart E §200.400 (d). This includes ensuring there is proper supporting documentation for transactions as well as methods to document approval of the cost/activity to determine whether it is allowable under the funding requirements. Condition and Context: We tested a sample of fifteen (15) payroll transactions for ESSER and seven (7) payroll transactions for Title I-A. We noted four (4) instances where the transaction either lacked supporting documentation for payrate or hours worked for ESSER. We noted three (3) instances where the transaction lacked supporting documentation for payrate or hours worked for Title I-A. We also identified one (1) transaction charged to ESSER that appeared to be unallowable based on the context of the transaction. Cause: Lack of internal controls related to approval and supporting documentation for transactions charged to the programs. Effect: Lack of approval and adequate supporting documentation for transactions allows for an environment where unallowable costs could be charged to the programs. Federal Schedule of Findings and Questioned Costs, Continued Repeat Finding: This is not a repeat finding, however, due to the number of exceptions identified, we believe this to be a systemic issue. Questioned Costs: None over the reporting threshold of $25,000. Recommendation: We recommend that management implement stronger internal controls over payroll transactions and improve the review, approval and maintenance of supporting documentation processes. Management Response: Management agrees with this finding, see Corrective Action Plan.
Federal Agency: U.S. Department of Education passed through the State of Alaska, Department of Education and Early Development (DEED) Federal Program(s): COVID-19 CRRSA ACT: ESSER II / ARP ACT: ESSER III (ESSER) and Title I-A Assistance Listing Number(s):84.425 U and D and 84.010A Award Number(s): Federal award numbers: S425U210020, S425D210020 (ESSER), S010A230002, and S010A230002 (Title I-A), Pass through entity award numbers: ER 24.YFSD.01 (ESSER), IP 24.YFSD.01, and SI 24.YFSD.01 (Title I-A). Award Year(s): 2024 Type of Finding: Significant deficiency in internal control over compliance and noncompliance. Criteria: Management is responsible for designing, implementing and maintaining internal controls relevant to ensuring that transactions charged to programs follow proper internal control processes (2 CFR Part 200 Subpart E §200.400 (d). This includes ensuring there is proper supporting documentation for transactions as well as methods to document approval of the cost/activity to determine whether it is allowable under the funding requirements. Condition and Context: We tested a sample of fifteen (15) payroll transactions for ESSER and seven (7) payroll transactions for Title I-A. We noted four (4) instances where the transaction either lacked supporting documentation for payrate or hours worked for ESSER. We noted three (3) instances where the transaction lacked supporting documentation for payrate or hours worked for Title I-A. We also identified one (1) transaction charged to ESSER that appeared to be unallowable based on the context of the transaction. Cause: Lack of internal controls related to approval and supporting documentation for transactions charged to the programs. Effect: Lack of approval and adequate supporting documentation for transactions allows for an environment where unallowable costs could be charged to the programs. Federal Schedule of Findings and Questioned Costs, Continued Repeat Finding: This is not a repeat finding, however, due to the number of exceptions identified, we believe this to be a systemic issue. Questioned Costs: None over the reporting threshold of $25,000. Recommendation: We recommend that management implement stronger internal controls over payroll transactions and improve the review, approval and maintenance of supporting documentation processes. Management Response: Management agrees with this finding, see Corrective Action Plan.
Federal Agency: U.S. Department of Education passed through the State of Alaska, Department of Education and Early Development (DEED) Federal Program(s): COVID-19 CRRSA ACT: ESSER II / ARP ACT: ESSER III (ESSER) and Title I-A Assistance Listing Number(s):84.425 U and D and 84.010A Award Number(s): Federal award numbers: S425U210020, S425D210020 (ESSER), S010A230002, and S010A230002 (Title I-A), Pass through entity award numbers: ER 24.YFSD.01 (ESSER), IP 24.YFSD.01, and SI 24.YFSD.01 (Title I-A). Award Year(s): 2024 Type of Finding: Significant deficiency in internal control over compliance. Criteria: Management is responsible for designing, implementing and maintaining internal controls relevant to ensuring that transactions charged to programs follow proper internal control processes (2 CFR Part 200 Subpart E § 200.400 (d)). Further, Uniform Guidance Requirements, which also apply to expenditures of ESSER funds, dictate the funding recipient is required to follow document personnel costs in accordance with 2 CFR Section 200.430 (i). The District is required to maintain time distribution records for employees funded under Federal Programs. Condition and Context: We tested a sample of fifteen (15) payroll transactions for ESSER and seven (7) payroll transactions for Title I-A. We were unable to verify the funding allocation for eleven (11) transactions for the ESSER funding and four (4) transactions for the Title I-A funding. The payroll expenditures charged to these programs were recorded using journal entries and lacked documentation of time and effort. The employee positions were not considered unallowable under the programs. Cause: Lack of internal controls over payroll expenditure allocation. Effect: The lack of supporting documentation indicating the payroll expenditure allocation allows for the potential of payroll expenditures to be incorrectly charge to unallowable funding sources. Repeat Finding: This is not a repeat finding, however, due to the number of exceptions identified, we believe this to be a systemic issue. Questioned Costs: None reported. Recommendation: We recommend that management ensures employee personnel action forms are updated to reflect the correct fund allocations for payroll costs to ensure employees time is appropriately coded. Additionally, if charged to federal grant sources that time and effort be adequately tracked and documented. Management Response: Management agrees with this finding, see Corrective Action Plan.
Federal Agency: U.S. Department of Education passed through the State of Alaska, Department of Education and Early Development (DEED) Federal Program(s): COVID-19 CRRSA ACT: ESSER II / ARP ACT: ESSER III (ESSER) and Title I-A Assistance Listing Number(s):84.425 U and D and 84.010A Award Number(s): Federal award numbers: S425U210020, S425D210020 (ESSER), S010A230002, and S010A230002 (Title I-A), Pass through entity award numbers: ER 24.YFSD.01 (ESSER), IP 24.YFSD.01, and SI 24.YFSD.01 (Title I-A). Award Year(s): 2024 Type of Finding: Significant deficiency in internal control over compliance. Criteria: Management is responsible for designing, implementing and maintaining internal controls relevant to ensuring that transactions charged to programs follow proper internal control processes (2 CFR Part 200 Subpart E § 200.400 (d)). Further, Uniform Guidance Requirements, which also apply to expenditures of ESSER funds, dictate the funding recipient is required to follow document personnel costs in accordance with 2 CFR Section 200.430 (i). The District is required to maintain time distribution records for employees funded under Federal Programs. Condition and Context: We tested a sample of fifteen (15) payroll transactions for ESSER and seven (7) payroll transactions for Title I-A. We were unable to verify the funding allocation for eleven (11) transactions for the ESSER funding and four (4) transactions for the Title I-A funding. The payroll expenditures charged to these programs were recorded using journal entries and lacked documentation of time and effort. The employee positions were not considered unallowable under the programs. Cause: Lack of internal controls over payroll expenditure allocation. Effect: The lack of supporting documentation indicating the payroll expenditure allocation allows for the potential of payroll expenditures to be incorrectly charge to unallowable funding sources. Repeat Finding: This is not a repeat finding, however, due to the number of exceptions identified, we believe this to be a systemic issue. Questioned Costs: None reported. Recommendation: We recommend that management ensures employee personnel action forms are updated to reflect the correct fund allocations for payroll costs to ensure employees time is appropriately coded. Additionally, if charged to federal grant sources that time and effort be adequately tracked and documented. Management Response: Management agrees with this finding, see Corrective Action Plan.
Federal Agency: U.S. Department of Education passed through the State of Alaska, Department of Education and Early Development (DEED) Federal Program(s): COVID-19 CRRSA ACT: ESSER II / ARP ACT: ESSER III (ESSER) and Title I-A Assistance Listing Number(s):84.425 U and D and 84.010A Award Number(s): Federal award numbers: S425U210020, S425D210020 (ESSER), S010A230002, and S010A230002 (Title I-A), Pass through entity award numbers: ER 24.YFSD.01 (ESSER), IP 24.YFSD.01, and SI 24.YFSD.01 (Title I-A). Award Year(s): 2024 Type of Finding: Significant deficiency in internal control over compliance. Criteria: Management is responsible for designing, implementing and maintaining internal controls relevant to ensuring that transactions charged to programs follow proper internal control processes (2 CFR Part 200 Subpart E § 200.400 (d)). Further, Uniform Guidance Requirements, which also apply to expenditures of ESSER funds, dictate the funding recipient is required to follow document personnel costs in accordance with 2 CFR Section 200.430 (i). The District is required to maintain time distribution records for employees funded under Federal Programs. Condition and Context: We tested a sample of fifteen (15) payroll transactions for ESSER and seven (7) payroll transactions for Title I-A. We were unable to verify the funding allocation for eleven (11) transactions for the ESSER funding and four (4) transactions for the Title I-A funding. The payroll expenditures charged to these programs were recorded using journal entries and lacked documentation of time and effort. The employee positions were not considered unallowable under the programs. Cause: Lack of internal controls over payroll expenditure allocation. Effect: The lack of supporting documentation indicating the payroll expenditure allocation allows for the potential of payroll expenditures to be incorrectly charge to unallowable funding sources. Repeat Finding: This is not a repeat finding, however, due to the number of exceptions identified, we believe this to be a systemic issue. Questioned Costs: None reported. Recommendation: We recommend that management ensures employee personnel action forms are updated to reflect the correct fund allocations for payroll costs to ensure employees time is appropriately coded. Additionally, if charged to federal grant sources that time and effort be adequately tracked and documented. Management Response: Management agrees with this finding, see Corrective Action Plan.
Federal Agency: U.S. Department of Education passed through the State of Alaska, Department of Education and Early Development (DEED) Federal Program(s): COVID-19 CRRSA Act: ESSER II / ARP Act: ESSER III (ESSER) and Title I-A Assistance Listing Number(s):84.425 U and D and 84.010A Award Number(s): Federal award number(s): S425U210020 and S425D210020 (ESSER), S010A230002, and S010A220002 (Title I-A), Pass through entity award number(s): ER 24.YFSD.01 (ESSER), IP 24.YFSD.01, and SI 24.YFSD.01 (Title I-A) Award Years: 2024 Type of Finding: Significant deficiency in internal control over compliance. Criteria: 2 CFR Part 200 Subpart E §200.400(d) dictate that the accounting practices of a recipient (or subrecipient) must be consistent with these cost principles and support the accumulation of costs as required by these cost principles, including maintaining adequate documentation to support costs charged to the Federal award. This includes ensuring there is proper supporting documentation for transactions as well as methods to document approval of the cost/activity to determine whether it is allowable under the funding requirements. Condition and Context: We tested a sample of seventeen (17) cash disbursements for ESSER and fourteen (14) cash disbursements for Title I-A. We noted seven (7) transactions from each program that lacked either adequate supporting documentation or documentation of proper review and approval. We did not identify any transactions in either program that appeared to be unallowable based on the context of the transaction. Cause: Lack of internal controls related to approval and supporting documentation for transactions charged to the programs. Effect: Lack of internal controls allows for the potential for unallowable costs to be charged to the programs. Repeat Finding: This is a repeat of Finding of 2023-006, and since it is a repeat finding, we believe this to be a systemic issue. Questioned Costs: None reported. Recommendation: We recommend that management implement stronger internal controls over cash disbursements, specifically to retaining supporting documentation and ensuring proper approval. Management Response: Management agrees with this finding, see Corrective Action Plan.
Federal Agency: U.S. Department of Education passed through the State of Alaska, Department of Education and Early Development (DEED) Federal Program(s): COVID-19 CRRSA ACT: ESSER II / ARP ACT: ESSER III (ESSER) and Title I-A Assistance Listing Number(s):84.425 U and D and 84.010A Award Number(s): Federal award numbers: S425U210020, S425D210020 (ESSER), S010A230002, and S010A230002 (Title I-A), Pass through entity award numbers: ER 24.YFSD.01 (ESSER), IP 24.YFSD.01, and SI 24.YFSD.01 (Title I-A). Award Year(s): 2024 Type of Finding: Significant deficiency in internal control over compliance and noncompliance. Criteria: Management is responsible for designing, implementing and maintaining internal controls relevant to ensuring that transactions charged to programs follow proper internal control processes (2 CFR Part 200 Subpart E §200.400 (d). This includes ensuring there is proper supporting documentation for transactions as well as methods to document approval of the cost/activity to determine whether it is allowable under the funding requirements. Condition and Context: We tested a sample of fifteen (15) payroll transactions for ESSER and seven (7) payroll transactions for Title I-A. We noted four (4) instances where the transaction either lacked supporting documentation for payrate or hours worked for ESSER. We noted three (3) instances where the transaction lacked supporting documentation for payrate or hours worked for Title I-A. We also identified one (1) transaction charged to ESSER that appeared to be unallowable based on the context of the transaction. Cause: Lack of internal controls related to approval and supporting documentation for transactions charged to the programs. Effect: Lack of approval and adequate supporting documentation for transactions allows for an environment where unallowable costs could be charged to the programs. Federal Schedule of Findings and Questioned Costs, Continued Repeat Finding: This is not a repeat finding, however, due to the number of exceptions identified, we believe this to be a systemic issue. Questioned Costs: None over the reporting threshold of $25,000. Recommendation: We recommend that management implement stronger internal controls over payroll transactions and improve the review, approval and maintenance of supporting documentation processes. Management Response: Management agrees with this finding, see Corrective Action Plan.
Federal Agency: U.S. Department of Education passed through the State of Alaska, Department of Education and Early Development (DEED) Federal Program(s): COVID-19 CRRSA ACT: ESSER II / ARP ACT: ESSER III (ESSER) and Title I-A Assistance Listing Number(s):84.425 U and D and 84.010A Award Number(s): Federal award numbers: S425U210020, S425D210020 (ESSER), S010A230002, and S010A230002 (Title I-A), Pass through entity award numbers: ER 24.YFSD.01 (ESSER), IP 24.YFSD.01, and SI 24.YFSD.01 (Title I-A). Award Year(s): 2024 Type of Finding: Significant deficiency in internal control over compliance. Criteria: Management is responsible for designing, implementing and maintaining internal controls relevant to ensuring that transactions charged to programs follow proper internal control processes (2 CFR Part 200 Subpart E § 200.400 (d)). Further, Uniform Guidance Requirements, which also apply to expenditures of ESSER funds, dictate the funding recipient is required to follow document personnel costs in accordance with 2 CFR Section 200.430 (i). The District is required to maintain time distribution records for employees funded under Federal Programs. Condition and Context: We tested a sample of fifteen (15) payroll transactions for ESSER and seven (7) payroll transactions for Title I-A. We were unable to verify the funding allocation for eleven (11) transactions for the ESSER funding and four (4) transactions for the Title I-A funding. The payroll expenditures charged to these programs were recorded using journal entries and lacked documentation of time and effort. The employee positions were not considered unallowable under the programs. Cause: Lack of internal controls over payroll expenditure allocation. Effect: The lack of supporting documentation indicating the payroll expenditure allocation allows for the potential of payroll expenditures to be incorrectly charge to unallowable funding sources. Repeat Finding: This is not a repeat finding, however, due to the number of exceptions identified, we believe this to be a systemic issue. Questioned Costs: None reported. Recommendation: We recommend that management ensures employee personnel action forms are updated to reflect the correct fund allocations for payroll costs to ensure employees time is appropriately coded. Additionally, if charged to federal grant sources that time and effort be adequately tracked and documented. Management Response: Management agrees with this finding, see Corrective Action Plan.
2024-001 EXCESS DRAWDOWN OF FEDERAL FUNDS Federal agency: U.S. Department of Education Federal Program Title & Assistance Listing Number: Extending Equity into the Digital Workforce Projects of Regional and National Significance -84.411B Award Period: 12/15/2021 - 12/15/2025 Type of Finding: Significant Deficiency, Other Non-compliance Compliance Areas: Cash Management, Allowable Costs, and Cost Principles and Reporting Questioned Costs: None Condition During testing of expenditures and manual journal entries for the Extending Equity into the Digital Workforce (EEDW) grant, we identified a duplicate manual journal entry of $129,781. This entry reclassified August and September 2023 General Fund (Fund 27101) expenditures to the EEDW Fund (Fund 25271). While the costs themselves are necessary and reasonable under the grant's objectives, the duplicate entry resulted in the federal fund expenditures being overstated and reimbursed twice, leading to an overdraw of federal funds. The duplicate entry was reversed by the client upon discovery by the auditors. An audit adjustment was made to record the excess cash balance as unearned grant revenue. Additionally, the annual Federal Financial Report for the period ending December 31, 2023, included these expenditures, causing the reported federal disbursements to be overstated by $129,781. Criteria Cash Management: Although 2 CFR 200.305(b)(1) permits the Cooperative to draw funds in advance, the entity utilizes a cost reimbursement approach for Federal funding. This practice ensures that funds are drawn only for immediate cash needs. 2 CFR 200.305(b)(1) Federal payment. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. Cost Principles and Reporting: The application of cost principles is governed by 2 CFR 200.400; specifically (b) the non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. Effect The error resulted in an overstatement of federal revenues and expenditures, leading to excess unearned cash in the fund at year-end and inaccuracies in the financial reports (SF-425) submitted to the federal funding agency. The Cooperative is not in compliance with federal regulations for Cash Management and Cost Principles and Reporting. Cause The allowable expenditures intended to be reclassified from the general fund to the federal fund were processed twice, resulting in a duplicate recording. This error was not detected during regular reconciliations or the financial close and reporting process.
Finding 2024-002 Lack of Internal Control / Noncompliance over Activities Allowed or Material Weakness Unallowed and Allowable Costs/Cost Principles Material Noncompliance Federal Agency: U.S. Department of Education Federal Program: School Safety National Activities and Elementary-Secondary School Emergency Relief Programs ALN: 84.425 Pass-through Award Number: ER 24.HGSD.01 Award Years: 2024 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Allowable cost principles are defined in 2 CFR 200.400. Condition and Context: The District was unable to provide supporting documentation for all credit card transactions charged to the grant. Cause: Lack of internal control over transactions charged to the major programs. Effect: The lack of supporting documentation allows for the potential for misstatement of expenditures being charged to the major program for which the cost is unallowable. Questioned Costs: Known questioned costs are $10,611. This is the total balance of purchases made on the district’s credit card charged to the grant. Repeat Finding: Yes, this is a repeat of Finding 2023-004. Since this is a repeat finding, we believe this to be a systemic issue. Recommendation: We recommend the District adhere to their internal control policies to ensure that the regulations contained in 2 CFR 200 are followed and adequate support for transaction is maintained. Management’s Response: Management agrees with this finding. See Corrective Action Plan.
Finding 2024-002 Lack of Internal Control / Noncompliance over Activities Allowed or Material Weakness Unallowed and Allowable Costs/Cost Principles Material Noncompliance Federal Agency: U.S. Department of Education Federal Program: School Safety National Activities and Elementary-Secondary School Emergency Relief Programs ALN: 84.425 Pass-through Award Number: ER 24.HGSD.01 Award Years: 2024 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Allowable cost principles are defined in 2 CFR 200.400. Condition and Context: The District was unable to provide supporting documentation for all credit card transactions charged to the grant. Cause: Lack of internal control over transactions charged to the major programs. Effect: The lack of supporting documentation allows for the potential for misstatement of expenditures being charged to the major program for which the cost is unallowable. Questioned Costs: Known questioned costs are $10,611. This is the total balance of purchases made on the district’s credit card charged to the grant. Repeat Finding: Yes, this is a repeat of Finding 2023-004. Since this is a repeat finding, we believe this to be a systemic issue. Recommendation: We recommend the District adhere to their internal control policies to ensure that the regulations contained in 2 CFR 200 are followed and adequate support for transaction is maintained. Management’s Response: Management agrees with this finding. See Corrective Action Plan.
Finding: Allowable Activities and Allowable Costs Federal Assistance Listing No. 93.527 Affordable Care Act (ACA) Grants for New and Expanded Services Under the Health Center Program Cluster Award #: 1 Q8VCS45450-01-00, Award year: March 1, 2022 – February 29, 2024 U.S. Department of Health and Human Services, Health Resources and Services Administration Criteria: Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards; Subpart E – Cost Principles; General Provision – Policy Guide (2 CFR 200.400): The application of cost principles is based on the fundamental premises that: The accounting practices of the recipient and subrecipient must be consistent with these cost principles and support the accumulation of costs as required by these cost principles, including maintaining adequate documentation to support costs charged to the federal award. Condition: During our review of expenditures of federal funds under the Health Center Program Cluster, certain cost principles were not consistently applied to all expenses. The Organization received a grant for the purpose of expanding electronic health record systems, which ended in February of 2024; however the contracted vendor had not completed work for which the grant funds had been appropriated within the 120 day grant close out period. Questioned Costs: $880,535. Questioned costs were related to a single grant within the Health Center Program cluster. The value was determined based on the two vendor invoices paid to the vendor at the end of the grant period but prior to work performed. Context: We tested a sample of 24 expenditures out of a population of 230 expenditures recorded to the grant for $1,906,159 of the total expenditures $5,711,364 and noted the above issue. A non-statistical sampling methodology was used to select the sample. Effect: The Organization did not consistently cost principles under Uniform Guidance. Costs were incurred using federal funds prior to services rendered. Cause: The Organization did not have adequate internal controls in place to ensure cost principles under Uniform Guidance were consistently applied. Identification as a repeat finding: Not applicable. Recommendation: The Organization should coordinate with HRSA to determine allowability of expenditures incurred. The Organization should add internal controls to monitor that cost principles under Uniform Guidance are consistently applied. Views of responsible officials: The Organization agrees with the finding. See separate report for planned corrective actions.
FINDING 2024-003 Subject: Title I Grants to Local Educational Agencies - Earmarking Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Number and Year (or Other Identifying Number): S010A210014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters Condition and Context Homeless children and youth are automatically eligible for services under Title I, Part A, whether or not they live in a Title I school attendance area or meet the academic standards required of other children for eligibility. The School Corporation is required to reserve (set-aside) the funds necessary to provide homeless children services comparable to services provided in Title I, Part A schools. The set-aside is to be a reasonable amount of funds to meet the needs of the homeless population in the school community. At the end of each grant period, if the School Corporation's obligation to provide services to students experiencing homelessness has been met, but the amount needed to meet that obligation was less than the amount the school had reserved, the school may carry over those unused funds to support any allowable Title I, Part A activities in the next school year. However, if at the end of each grant period the School Corporation's obligation to provide services has not been met, the funds must be carried over to the next school year to provide services to those students experiencing homelessness, in addition to reserving funds from that next school year's grant award for that purpose. The 2021-2022 grant award homeless reservation was $8,600. The School Corporation did not spend any of the funds, but was determined to have met its obligation based on documentation provided. However, through inspection of the final grant report, it was determined that $276 of the $8,600 was used inappropriately in the current school year for other Title I, Part A activities and not for the needs of the homeless student population. The lack of internal controls and noncompliance were isolated to the 2022-2023 school year. 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 200.400 states in part: "The application of these cost principles is based on the fundamental premises that: (a) The recipient and subrecipient are responsible for the efficient and effective administration of the Federal award through sound management practices. (b) The recipient and subrecipient are responsible for administering Federal funds in a manner consistent with Federal statutes, regulations, and the terms and conditions of the Federal award. . . ." 20 USC 6313(c)(3)(A) states: "A local educational agency shall reserve such funds as are necessary under this part, determined in accordance with subparagraphs (B) and (C), to provide services comparable to those provided to children in schools funded under this part to serve - (i) homeless children and youths, including providing educationally related support services to children in shelters and other locations where children may live; (ii) children in local institutions for neglected children; and (iii) if appropriate, children in local institutions for delinquent children, and neglected or delinquent children in community day programs." Cause Total expenditures for the grant were not adequately monitored to ensure funds from the homeless reservation were not spent on other activities. Effect A portion of the homeless reservation was spent on activities not related to the homeless population. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls, including segregation of duties, related to the grant agreement and the earmarking compliance requirements. An internal control system, including segregation of duties, should be designed and operate effectively to provide reasonable assurance that material noncompliance with the grant agreement or a compliance requirement of a federal program will be prevented, or detected and corrected, on a timely basis. In order to have an effective internal control system, it is important to have proper segregation of duties. This is accomplished by making sure proper oversight, reviews, and approvals take place and to have a separation of functions over certain activities related to the program. The fundamental premise of segregation of duties is that an individual or small group of individuals should not be in a position to initiate, approve, undertake, and review the same activity. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Material Weakness in Internal Control over Compliance 2024-004 Activities Allowed or Unallowed and Allowable Costs/Costs Principles Program: Community Services Block Grant (CSBG) & Health Center Program Cluster Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)(HCH). Federal Assistance Listing No: 93.569 and 93.224 County Recipient: Community Action Partnership of Natrona County Federal Agency: Department of Health and Human Services Grant year: 2023 and 2024 Federal Award Identification: Unknown Applicable Pass-through Entity: Wyoming Department of Health (CSBG), Direct (HCH) Criteria Accounting practices of the non-Federal entity must provide for adequate documentation to support costs charged to the Federal award. Standards for accounting practices in Uniform Guidance 2 CFR part 200.400 state that the accounting practices of the recipient and subrecipient must be consistent with these cost principles and support the accumulation of costs as required by these cost principles, including maintaining adequate documentation to support costs charged to the Federal award. Condition CAP was missing a consistent system of internal control for accumulation of costs charged to the federal program. The detail of costs maintained in the accounting system charged to the grants differed from the amounts included in the reimbursement requests. Cause Due to an accounting system conversion, adjustments were made in the general ledger to the beginning account balances. This resulted in unreconcilable differences from the detail in the accounting system after adjustment to what was originally submitted for reimbursement. Additionally, CAP began utilizing a separate payroll provider that required an integration of the payroll register monthly to the general ledger. Mapping and coding errors existed during the initial integrations of the payroll register to the general ledger resulting in additional differences from the general ledger to the amounts submitted for reimbursement for wage and benefit expense allocated to the grants. Effect or Potential Effect CAP was unable to provide an accurate accumulation of costs for amounts charged to the grant. Questioned Cost 93.224 - $9,274 93.569 - $28,355 Context The comparison of the general ledger for grant costs to the total of the amounts submitted for reimbursement resulted in differences of $9,274 for the Health Center Program Cluster Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) grant, and $28,355 Community Services Block Grant. Identification as a repeat finding This is not a repeat finding Recommendation We recommend CAP review its policies and procedures related to the internal controls over accumulation of expenditures related to grants to ensure the detail agrees to amounts submitted for reimbursement. Views of Responsible Officials Over the past year, CAPNC has continued to make significant improvements to its fiscal practices, particularly in navigating the software conversion from an archaic, unsupported system to Sage Intacct. This new software has modernized and deployed the levels of internal controls that were previously missing due to inadequate fiscal personnel oversight and technical capability. Current staff have been trained under Sage Intacct and Wipfli consultants to properly track accounts payable (A/P), accounts receivable (A/R), payroll, and grant management, ensuring data integrity and compliance. Resulting journal entries are in place to bring system in alignment and current as of July 2024, alleviating any further discrepancies related to past staff and old software. The old system will be archived as required under retention. See Corrective Action Plan
Material Weakness in Internal Control over Compliance 2024-004 Activities Allowed or Unallowed and Allowable Costs/Costs Principles Program: Community Services Block Grant (CSBG) & Health Center Program Cluster Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)(HCH). Federal Assistance Listing No: 93.569 and 93.224 County Recipient: Community Action Partnership of Natrona County Federal Agency: Department of Health and Human Services Grant year: 2023 and 2024 Federal Award Identification: Unknown Applicable Pass-through Entity: Wyoming Department of Health (CSBG), Direct (HCH) Criteria Accounting practices of the non-Federal entity must provide for adequate documentation to support costs charged to the Federal award. Standards for accounting practices in Uniform Guidance 2 CFR part 200.400 state that the accounting practices of the recipient and subrecipient must be consistent with these cost principles and support the accumulation of costs as required by these cost principles, including maintaining adequate documentation to support costs charged to the Federal award. Condition CAP was missing a consistent system of internal control for accumulation of costs charged to the federal program. The detail of costs maintained in the accounting system charged to the grants differed from the amounts included in the reimbursement requests. Cause Due to an accounting system conversion, adjustments were made in the general ledger to the beginning account balances. This resulted in unreconcilable differences from the detail in the accounting system after adjustment to what was originally submitted for reimbursement. Additionally, CAP began utilizing a separate payroll provider that required an integration of the payroll register monthly to the general ledger. Mapping and coding errors existed during the initial integrations of the payroll register to the general ledger resulting in additional differences from the general ledger to the amounts submitted for reimbursement for wage and benefit expense allocated to the grants. Effect or Potential Effect CAP was unable to provide an accurate accumulation of costs for amounts charged to the grant. Questioned Cost 93.224 - $9,274 93.569 - $28,355 Context The comparison of the general ledger for grant costs to the total of the amounts submitted for reimbursement resulted in differences of $9,274 for the Health Center Program Cluster Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) grant, and $28,355 Community Services Block Grant. Identification as a repeat finding This is not a repeat finding Recommendation We recommend CAP review its policies and procedures related to the internal controls over accumulation of expenditures related to grants to ensure the detail agrees to amounts submitted for reimbursement. Views of Responsible Officials Over the past year, CAPNC has continued to make significant improvements to its fiscal practices, particularly in navigating the software conversion from an archaic, unsupported system to Sage Intacct. This new software has modernized and deployed the levels of internal controls that were previously missing due to inadequate fiscal personnel oversight and technical capability. Current staff have been trained under Sage Intacct and Wipfli consultants to properly track accounts payable (A/P), accounts receivable (A/R), payroll, and grant management, ensuring data integrity and compliance. Resulting journal entries are in place to bring system in alignment and current as of July 2024, alleviating any further discrepancies related to past staff and old software. The old system will be archived as required under retention. See Corrective Action Plan
Material Weakness in Internal Control over Compliance 2024-004 Activities Allowed or Unallowed and Allowable Costs/Costs Principles Program: Community Services Block Grant (CSBG) & Health Center Program Cluster Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)(HCH). Federal Assistance Listing No: 93.569 and 93.224 County Recipient: Community Action Partnership of Natrona County Federal Agency: Department of Health and Human Services Grant year: 2023 and 2024 Federal Award Identification: Unknown Applicable Pass-through Entity: Wyoming Department of Health (CSBG), Direct (HCH) Criteria Accounting practices of the non-Federal entity must provide for adequate documentation to support costs charged to the Federal award. Standards for accounting practices in Uniform Guidance 2 CFR part 200.400 state that the accounting practices of the recipient and subrecipient must be consistent with these cost principles and support the accumulation of costs as required by these cost principles, including maintaining adequate documentation to support costs charged to the Federal award. Condition CAP was missing a consistent system of internal control for accumulation of costs charged to the federal program. The detail of costs maintained in the accounting system charged to the grants differed from the amounts included in the reimbursement requests. Cause Due to an accounting system conversion, adjustments were made in the general ledger to the beginning account balances. This resulted in unreconcilable differences from the detail in the accounting system after adjustment to what was originally submitted for reimbursement. Additionally, CAP began utilizing a separate payroll provider that required an integration of the payroll register monthly to the general ledger. Mapping and coding errors existed during the initial integrations of the payroll register to the general ledger resulting in additional differences from the general ledger to the amounts submitted for reimbursement for wage and benefit expense allocated to the grants. Effect or Potential Effect CAP was unable to provide an accurate accumulation of costs for amounts charged to the grant. Questioned Cost 93.224 - $9,274 93.569 - $28,355 Context The comparison of the general ledger for grant costs to the total of the amounts submitted for reimbursement resulted in differences of $9,274 for the Health Center Program Cluster Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) grant, and $28,355 Community Services Block Grant. Identification as a repeat finding This is not a repeat finding Recommendation We recommend CAP review its policies and procedures related to the internal controls over accumulation of expenditures related to grants to ensure the detail agrees to amounts submitted for reimbursement. Views of Responsible Officials Over the past year, CAPNC has continued to make significant improvements to its fiscal practices, particularly in navigating the software conversion from an archaic, unsupported system to Sage Intacct. This new software has modernized and deployed the levels of internal controls that were previously missing due to inadequate fiscal personnel oversight and technical capability. Current staff have been trained under Sage Intacct and Wipfli consultants to properly track accounts payable (A/P), accounts receivable (A/R), payroll, and grant management, ensuring data integrity and compliance. Resulting journal entries are in place to bring system in alignment and current as of July 2024, alleviating any further discrepancies related to past staff and old software. The old system will be archived as required under retention. See Corrective Action Plan
Material Weakness in Internal Control over Compliance 2024-004 Activities Allowed or Unallowed and Allowable Costs/Costs Principles Program: Community Services Block Grant (CSBG) & Health Center Program Cluster Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)(HCH). Federal Assistance Listing No: 93.569 and 93.224 County Recipient: Community Action Partnership of Natrona County Federal Agency: Department of Health and Human Services Grant year: 2023 and 2024 Federal Award Identification: Unknown Applicable Pass-through Entity: Wyoming Department of Health (CSBG), Direct (HCH) Criteria Accounting practices of the non-Federal entity must provide for adequate documentation to support costs charged to the Federal award. Standards for accounting practices in Uniform Guidance 2 CFR part 200.400 state that the accounting practices of the recipient and subrecipient must be consistent with these cost principles and support the accumulation of costs as required by these cost principles, including maintaining adequate documentation to support costs charged to the Federal award. Condition CAP was missing a consistent system of internal control for accumulation of costs charged to the federal program. The detail of costs maintained in the accounting system charged to the grants differed from the amounts included in the reimbursement requests. Cause Due to an accounting system conversion, adjustments were made in the general ledger to the beginning account balances. This resulted in unreconcilable differences from the detail in the accounting system after adjustment to what was originally submitted for reimbursement. Additionally, CAP began utilizing a separate payroll provider that required an integration of the payroll register monthly to the general ledger. Mapping and coding errors existed during the initial integrations of the payroll register to the general ledger resulting in additional differences from the general ledger to the amounts submitted for reimbursement for wage and benefit expense allocated to the grants. Effect or Potential Effect CAP was unable to provide an accurate accumulation of costs for amounts charged to the grant. Questioned Cost 93.224 - $9,274 93.569 - $28,355 Context The comparison of the general ledger for grant costs to the total of the amounts submitted for reimbursement resulted in differences of $9,274 for the Health Center Program Cluster Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) grant, and $28,355 Community Services Block Grant. Identification as a repeat finding This is not a repeat finding Recommendation We recommend CAP review its policies and procedures related to the internal controls over accumulation of expenditures related to grants to ensure the detail agrees to amounts submitted for reimbursement. Views of Responsible Officials Over the past year, CAPNC has continued to make significant improvements to its fiscal practices, particularly in navigating the software conversion from an archaic, unsupported system to Sage Intacct. This new software has modernized and deployed the levels of internal controls that were previously missing due to inadequate fiscal personnel oversight and technical capability. Current staff have been trained under Sage Intacct and Wipfli consultants to properly track accounts payable (A/P), accounts receivable (A/R), payroll, and grant management, ensuring data integrity and compliance. Resulting journal entries are in place to bring system in alignment and current as of July 2024, alleviating any further discrepancies related to past staff and old software. The old system will be archived as required under retention. See Corrective Action Plan
Finding Number: 2024-005 State/Educational Agency(s): Arkansas Department of Education Pass-Through Entity: Not Applicable AL Number(s) and Program Title(s): 10.558 – Child and Adult Care Food Program Federal Awarding Agency: U.S. Department of Agriculture Federal Award Number(s): 6AR300321 Federal Award Year(s): 2023 and 2024 Compliance Requirement(s) Affected: Cash Management Type of Finding: Noncompliance and Significant Deficiency Repeat Finding: A similar issue was report in prior year finding 2023-002. Criteria: In accordance with 2 CFR § 200.303(c), a non-federal entity must evaluate and monitor its compliance with statutes, regulations, and the terms and conditions of federal awards. In addition, 2 CFR § 200.400(a) and (b) state that the non-federal entity is responsible for efficient and effective administration of the federal award through the application of sound management practices and assumes responsibility for administering federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the federal award. Condition and Context: The Agency receives the following separate grant awards for reimbursement payments to meal providers and sponsoring organizations: 1) Child Nutrition Program (CNP) Block Consolidated (ALN 10.555). 2) CNP Child and Adult Care Food Program (CACFP) Cash in Lieu (ALN 10.558). 3) CNP CACFP Sponsor Administrative (ALN 10.558). Previous correspondence between ALA and the federal awarding agency indicated that each grant award has a designated purpose, and funds are not to be used interchangeably among the grant awards. All expenditures are assigned a cost center and WBS element to identify the applicable federal program and cost category within AASIS, the State’s accounting system. The Agency’s Health and Nutrition Unit (HNU) staff are responsible for ensuring expenditures are properly coded in AASIS, and the federal finance staff utilize expenditure transactions in AASIS to complete cash draws for direct costs to the program. Expense corrections are completed and processed in AASIS by federal finance staff as needed. According to the Agency, corrective action was taken to ensure the accuracy of data from August 1, 2023 through January 31, 2024. ALA review of 10 cash draws to determine if funds were drawn from the appropriate grant revealed the following: • Sponsor Administrative expenditures (ALN 10.558) totaling $65,173 were inappropriately drawn from the CNP Block Consolidated grant (ALN 10.555). • As a result of expense corrections, Child Care and Development Block grant (ALN 93.575) expenditures were erroneously coded as CACFP expenditures and inappropriately drawn from the CNP Block Consolidated grant (ALN 10.555) and CNP CACFP Cash in Lieu (ALN 10.558), totaling $53,095 and $1,940, respectively. Note: Sponsor Administrative expenditures were appropriately drawn from the CNP CACFP Sponsor Administrative grant (ALN 10.558) beginning March 12, 2024. Additionally, on October 14, 2024, after auditor inquiry, federal finance staff completed fund transfers in AASIS to correct the coding of Child Care and Development Block grant expenditures. Statistically Valid Sample: Not a statistically valid sample Questioned Costs: $120,208 Cause: CACFP sponsor administrative and child care expenditures were not properly coded in AASIS, causing funds to be drawn from the incorrect grant award. Effect: Funds were drawn for unallowable expenditures (based on the purpose of each grant). Recommendation: ALA staff recommend the Agency establish and document procedures that specifically address the proper coding of expenditures in AASIS. Views of Responsible Officials and Planned Corrective Action: The Arkansas Department of Education (ADE), Division of Elementary and Secondary Education (DESE), Health and Nutrition Unit (HNU), concur with the finding. The HNU Finance staff implemented procedures for meal claim payment requests which include an initial and final review of all requests to be conducted by two (2) staff. The review process includes, but is not limited to, ensuring expenditures are assigned correct codes related to the appropriate funding source within the appropriate grant year, mitigating the Child Nutrition Program (CNP), Child and Adult Care Food Program (CACFP) Sponsor Administrative expenditure errors going forward. When the request is determined to be compliant, the Associate Director of Finance and Training approves payments before being forwarded to the ADE Finance team for payment. Anticipated Completion Date: March 15, 2025 Contact Person: Sheila Chastain Associate Director Arkansas Department of Education, DESE, Nutrition Services #4 Capitol Mall, Box #12 Little Rock, AR 72201 (501) 324-9502 Sheila.Chastain@ade.arkansas.gov Pamela Burton Director Arkansas Department of Education, DESE, Nutrition Services #4 Capitol Mall, Box #19 Little Rock, AR 72201 (501) 320-8978 Pamela.Burton@ade.arkansas.gov
Finding Number: 2024-007 State/Educational Agency(s): Arkansas Department of Agriculture – Natural Resources Division Pass-Through Entity: Not Applicable ALN Number(s) and Program Title(s): 21.027 – COVID 19: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Federal Awarding Agency: U.S. Department of the Treasury Federal Award Number(s): SLFRP3627 Federal Award Year(s): 2021 Compliance Requirement(s) Affected: Allowable Costs/Cost Principles Type of Finding: Noncompliance and Material Weakness Repeat Finding: Not applicable Criteria: In accordance with 2 CFR § 200.403(g), costs must be adequately documented to be allowable under federal awards. In addition, 2 CFR § 200.400(d) states that the accounting practices of the recipient and subrecipient must be consistent with these cost principles and support the accumulation of costs as required by these cost principles, including maintaining adequate documentation to support costs charged to the federal award. Condition and Context: ALA staff reviewed 14 payments to water departments to determine if sufficient, appropriate documentation was maintained to support allowability of infrastructure improvement expenses. ALA review of one of those payments included costs of $26,979 that were not adequately documented. In addition, supporting documentation did not include a complete accumulation of costs that identified amounts charged to the federal award. Statistically Valid Sample: Not a statistically valid sample Questioned Costs: $26,979 Cause: The Agency did not have controls in place to ensure a review of documentation supporting reimbursement requests was properly performed prior to issuing payments. In addition, the Agency did not provide training on Uniform Guidance documentation requirements to staff responsible for reviewing and loading documents into its project management application. Effect: Reimbursements were approved for expenditures that may not have been allowable. The federal awarding agency may require recoupment. Recommendation: ALA staff recommend the Agency strengthen controls to ensure costs are adequately documented. Supporting documentation containing sufficient detail to determine the allowability and nature of the costs incurred by the subrecipient should be reviewed by the Agency prior to reimbursement to ensure compliance with federal regulations. Views of Responsible Officials and Planned Corrective Action: Moving forward the Department will require recipients to provide a list of invoices with the invoice date, period of performance, invoice amount and amount requested/disbursed from ARPA and/or other funding sources to be included with each disbursement request. Staff training will be modified to ensure staff understand allowable expenditures and period of performance restrictions. Anticipated Completion Date: June 30, 2025 Contact Person: Debby Dickson Water Development Division Manager Arkansas Department of Agriculture-Natural Resources Division 1 Natural Resources Drive Little Rock, AR 72205 (501) 225-1598 Debra.Dickson@agriculture.arkansas.gov
Finding: 2024-01: Written Policies and Procedures Criteria: The Organization is required to have written policies, procedures and standards of conduct in accordance with 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400, respectively). Condition: The Organization did not have written policies, procedures and standards of conduct in accordance with 2 CFR 200, Subparts D and E for the year ended June 30, 2024. Effect: While the Organization did not have written policies, procedures, or standards of conduct in accordance with 2 CFR 200, Subparts D and E during the year ended June 30, 2024, we are not aware of any instances of noncompliance with respect to activities allowed or unallowed, allowable costs/cost principles, cash management, period of performance procurement, suspension and debarment or reporting. Cause: Management was not aware of the requirement under 2 CFR 200, Subparts D and E requiring the Organization to have written policies, procedures and standards of conduct. Recommendation: We recommend that management of the Organization adopt written policies, procedures and standards of conduct as required by 2 CFR 200, Subparts D and E. Response: Management accepts the recommendation and is working to develop an updated financial policies and procedures manual to meet Federal compliance requirements.
Finding: 2024-01: Written Policies and Procedures Criteria: The Organization is required to have written policies, procedures and standards of conduct in accordance with 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400, respectively). Condition: The Organization did not have written policies, procedures and standards of conduct in accordance with 2 CFR 200, Subparts D and E for the year ended June 30, 2024. Effect: While the Organization did not have written policies, procedures, or standards of conduct in accordance with 2 CFR 200, Subparts D and E during the year ended June 30, 2024, we are not aware of any instances of noncompliance with respect to activities allowed or unallowed, allowable costs/cost principles, cash management, period of performance procurement, suspension and debarment or reporting. Cause: Management was not aware of the requirement under 2 CFR 200, Subparts D and E requiring the Organization to have written policies, procedures and standards of conduct. Recommendation: We recommend that management of the Organization adopt written policies, procedures and standards of conduct as required by 2 CFR 200, Subparts D and E. Response: Management accepts the recommendation and is working to develop an updated financial policies and procedures manual to meet Federal compliance requirements.
2024-003 - Control Weakness and Noncompliance Related to Cost Allocation Process State Entity: Department of Children and Family Services (DCFS) Award Years: 2018, 2023, 2024 Award Numbers: 1804LACEST, 2301LASOSR, 2401LACSES, 2401LAFOST, 2401LASOSR, 2401LATANF, SNAP - Letter of Credit Compliance Requirement: Allowable Costs/Cost Principles Repeat Finding: Yes (Prior Year Finding No. 2023-003) See Schedule of Findings and Questioned Costs for chart/table. Condition: The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure the correct allocation of expenditures in accordance with the Cost Allocation Plan, which assigns costs to federal programs. In a non-statistical sample of 60 cost allocation forms out of a population of 921 forms, three (5%) forms used percentages from a prior month and amounts were applied to the incorrect cost allocation grant, which resulted in the incorrect allocation of costs to various cost pools affecting multiple federal programs. These errors resulted in overbilling Temporary Assistance for Needy Families program by $1,907, Child Support Services (CSS) program by $1,161, State Administrative Matching Grants for the Supplemental Nutrition Assistance Program (SNAP) by $389, Foster Care Title IV-E program by $1,216, and Social Services Block Grant program by $12. The amounts overbilled represent questioned costs. In addition, the CSS and SNAP programs were underbilled by $621 and $4,684, respectively. Criteria: 2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award. Cause: These errors occurred because there was not an effective review process in place to identify amounts being charged incorrectly through the cost allocation process. Effect: Failure to adequately review cost allocation supporting documentation increases the risk that unallowable costs could be charged to federal programs. This is the second consecutive year we have reported to DCFS management exceptions with internal controls related to the cost allocation process. Recommendation: Management should strengthen internal controls over the cost allocation review process. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-2).
2024-003 - Control Weakness and Noncompliance Related to Cost Allocation Process State Entity: Department of Children and Family Services (DCFS) Award Years: 2018, 2023, 2024 Award Numbers: 1804LACEST, 2301LASOSR, 2401LACSES, 2401LAFOST, 2401LASOSR, 2401LATANF, SNAP - Letter of Credit Compliance Requirement: Allowable Costs/Cost Principles Repeat Finding: Yes (Prior Year Finding No. 2023-003) See Schedule of Findings and Questioned Costs for chart/table. Condition: The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure the correct allocation of expenditures in accordance with the Cost Allocation Plan, which assigns costs to federal programs. In a non-statistical sample of 60 cost allocation forms out of a population of 921 forms, three (5%) forms used percentages from a prior month and amounts were applied to the incorrect cost allocation grant, which resulted in the incorrect allocation of costs to various cost pools affecting multiple federal programs. These errors resulted in overbilling Temporary Assistance for Needy Families program by $1,907, Child Support Services (CSS) program by $1,161, State Administrative Matching Grants for the Supplemental Nutrition Assistance Program (SNAP) by $389, Foster Care Title IV-E program by $1,216, and Social Services Block Grant program by $12. The amounts overbilled represent questioned costs. In addition, the CSS and SNAP programs were underbilled by $621 and $4,684, respectively. Criteria: 2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award. Cause: These errors occurred because there was not an effective review process in place to identify amounts being charged incorrectly through the cost allocation process. Effect: Failure to adequately review cost allocation supporting documentation increases the risk that unallowable costs could be charged to federal programs. This is the second consecutive year we have reported to DCFS management exceptions with internal controls related to the cost allocation process. Recommendation: Management should strengthen internal controls over the cost allocation review process. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-2).
2024-003 - Control Weakness and Noncompliance Related to Cost Allocation Process State Entity: Department of Children and Family Services (DCFS) Award Years: 2018, 2023, 2024 Award Numbers: 1804LACEST, 2301LASOSR, 2401LACSES, 2401LAFOST, 2401LASOSR, 2401LATANF, SNAP - Letter of Credit Compliance Requirement: Allowable Costs/Cost Principles Repeat Finding: Yes (Prior Year Finding No. 2023-003) See Schedule of Findings and Questioned Costs for chart/table. Condition: The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure the correct allocation of expenditures in accordance with the Cost Allocation Plan, which assigns costs to federal programs. In a non-statistical sample of 60 cost allocation forms out of a population of 921 forms, three (5%) forms used percentages from a prior month and amounts were applied to the incorrect cost allocation grant, which resulted in the incorrect allocation of costs to various cost pools affecting multiple federal programs. These errors resulted in overbilling Temporary Assistance for Needy Families program by $1,907, Child Support Services (CSS) program by $1,161, State Administrative Matching Grants for the Supplemental Nutrition Assistance Program (SNAP) by $389, Foster Care Title IV-E program by $1,216, and Social Services Block Grant program by $12. The amounts overbilled represent questioned costs. In addition, the CSS and SNAP programs were underbilled by $621 and $4,684, respectively. Criteria: 2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award. Cause: These errors occurred because there was not an effective review process in place to identify amounts being charged incorrectly through the cost allocation process. Effect: Failure to adequately review cost allocation supporting documentation increases the risk that unallowable costs could be charged to federal programs. This is the second consecutive year we have reported to DCFS management exceptions with internal controls related to the cost allocation process. Recommendation: Management should strengthen internal controls over the cost allocation review process. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-2).
2024-003 - Control Weakness and Noncompliance Related to Cost Allocation Process State Entity: Department of Children and Family Services (DCFS) Award Years: 2018, 2023, 2024 Award Numbers: 1804LACEST, 2301LASOSR, 2401LACSES, 2401LAFOST, 2401LASOSR, 2401LATANF, SNAP - Letter of Credit Compliance Requirement: Allowable Costs/Cost Principles Repeat Finding: Yes (Prior Year Finding No. 2023-003) See Schedule of Findings and Questioned Costs for chart/table. Condition: The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure the correct allocation of expenditures in accordance with the Cost Allocation Plan, which assigns costs to federal programs. In a non-statistical sample of 60 cost allocation forms out of a population of 921 forms, three (5%) forms used percentages from a prior month and amounts were applied to the incorrect cost allocation grant, which resulted in the incorrect allocation of costs to various cost pools affecting multiple federal programs. These errors resulted in overbilling Temporary Assistance for Needy Families program by $1,907, Child Support Services (CSS) program by $1,161, State Administrative Matching Grants for the Supplemental Nutrition Assistance Program (SNAP) by $389, Foster Care Title IV-E program by $1,216, and Social Services Block Grant program by $12. The amounts overbilled represent questioned costs. In addition, the CSS and SNAP programs were underbilled by $621 and $4,684, respectively. Criteria: 2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award. Cause: These errors occurred because there was not an effective review process in place to identify amounts being charged incorrectly through the cost allocation process. Effect: Failure to adequately review cost allocation supporting documentation increases the risk that unallowable costs could be charged to federal programs. This is the second consecutive year we have reported to DCFS management exceptions with internal controls related to the cost allocation process. Recommendation: Management should strengthen internal controls over the cost allocation review process. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-2).
2024-003 - Control Weakness and Noncompliance Related to Cost Allocation Process State Entity: Department of Children and Family Services (DCFS) Award Years: 2018, 2023, 2024 Award Numbers: 1804LACEST, 2301LASOSR, 2401LACSES, 2401LAFOST, 2401LASOSR, 2401LATANF, SNAP - Letter of Credit Compliance Requirement: Allowable Costs/Cost Principles Repeat Finding: Yes (Prior Year Finding No. 2023-003) See Schedule of Findings and Questioned Costs for chart/table. Condition: The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure the correct allocation of expenditures in accordance with the Cost Allocation Plan, which assigns costs to federal programs. In a non-statistical sample of 60 cost allocation forms out of a population of 921 forms, three (5%) forms used percentages from a prior month and amounts were applied to the incorrect cost allocation grant, which resulted in the incorrect allocation of costs to various cost pools affecting multiple federal programs. These errors resulted in overbilling Temporary Assistance for Needy Families program by $1,907, Child Support Services (CSS) program by $1,161, State Administrative Matching Grants for the Supplemental Nutrition Assistance Program (SNAP) by $389, Foster Care Title IV-E program by $1,216, and Social Services Block Grant program by $12. The amounts overbilled represent questioned costs. In addition, the CSS and SNAP programs were underbilled by $621 and $4,684, respectively. Criteria: 2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award. Cause: These errors occurred because there was not an effective review process in place to identify amounts being charged incorrectly through the cost allocation process. Effect: Failure to adequately review cost allocation supporting documentation increases the risk that unallowable costs could be charged to federal programs. This is the second consecutive year we have reported to DCFS management exceptions with internal controls related to the cost allocation process. Recommendation: Management should strengthen internal controls over the cost allocation review process. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-2).
2024-003 - Control Weakness and Noncompliance Related to Cost Allocation Process State Entity: Department of Children and Family Services (DCFS) Award Years: 2018, 2023, 2024 Award Numbers: 1804LACEST, 2301LASOSR, 2401LACSES, 2401LAFOST, 2401LASOSR, 2401LATANF, SNAP - Letter of Credit Compliance Requirement: Allowable Costs/Cost Principles Repeat Finding: Yes (Prior Year Finding No. 2023-003) See Schedule of Findings and Questioned Costs for chart/table. Condition: The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure the correct allocation of expenditures in accordance with the Cost Allocation Plan, which assigns costs to federal programs. In a non-statistical sample of 60 cost allocation forms out of a population of 921 forms, three (5%) forms used percentages from a prior month and amounts were applied to the incorrect cost allocation grant, which resulted in the incorrect allocation of costs to various cost pools affecting multiple federal programs. These errors resulted in overbilling Temporary Assistance for Needy Families program by $1,907, Child Support Services (CSS) program by $1,161, State Administrative Matching Grants for the Supplemental Nutrition Assistance Program (SNAP) by $389, Foster Care Title IV-E program by $1,216, and Social Services Block Grant program by $12. The amounts overbilled represent questioned costs. In addition, the CSS and SNAP programs were underbilled by $621 and $4,684, respectively. Criteria: 2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award. Cause: These errors occurred because there was not an effective review process in place to identify amounts being charged incorrectly through the cost allocation process. Effect: Failure to adequately review cost allocation supporting documentation increases the risk that unallowable costs could be charged to federal programs. This is the second consecutive year we have reported to DCFS management exceptions with internal controls related to the cost allocation process. Recommendation: Management should strengthen internal controls over the cost allocation review process. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-2).
2024-014 Oregon Department of Human Services/Oregon Health Authority Implement control procedures around cost allocation system inputs Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777, 93.778 Medicaid Cluster Federal Award Numbers and Years: 2305OR5MAP, 2023; 2305OR5ADM, 2023; 2405OR5MAP, 2024; 2405OR05ADM, 2024 Compliance Requirements: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: N/A Questioned Costs: $32,522 (known) Criteria: 2 CFR 200.400(e) The Department of Human Services (department) administers separate federally approved cost allocation plans for both the department and the Oregon Health Authority. The plans outline the methods used to allocate the various cost pools to federal programs. The department uses a series of processes for allocating shared services and pooled expenditures. We recalculated one month, January 2024, of shared services and pooled expenditures using tables from the cost allocation system, and identified differences between the recalculation and the amounts recorded in the state accounting system for various grants. After inquiry, the department identified an error related to coding of payroll costs starting in November 2023, which continued through January 2024. Payroll coding corrections were made in January 2024, but did not correct the cost allocation as those types of documents are excluded from the process. The errors identified in the testing month resulted in questioned costs of $32,522 for the Medicaid grant and immaterial allocations in approximately thirty other grants. We recommend department management implement control procedures to verify the cost allocation system inputs are appropriately identified and processed.
2024-015 Oregon Department of Human Services/Oregon Health Authority Strengthen review over direct costs charged to the program Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777, 93.778 Medicaid Cluster Federal Award Numbers and Years: 2305OR5MAP, 2023; 2305OR5ADM, 2023; 2405OR5MAP, 2024; 2405OR05ADM, 2024 Compliance Requirements: Activities Allowed or Unallowed Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: N/A Questioned Costs: $28,869 (known) Criteria: 2 CFR 200.1; 2 CFR 200.400(a); 42 CFR § 433.32(a) Federal regulations allow the Medicaid program to charge allowable and supported program expenditures for various program costs at the time of payment for services is provided. The Department of Human Services (department) and the Oregon Health Authority (authority) make payments to vendors other than providers through the state’s accounting system. We judgmentally selected payments to 28 vendors for our review. We identified the following errors that were not identified during the department’s and authority’s review process, which resulted in improper payments of Medicaid expenditures: • One department payment included interest related to past due amounts charged to the Medicaid program, resulting in known federally funded questioned costs of $3. The agency performed a review of all payments to the vendor and identified an additional $65 other known questioned costs. • One authority payment included cash incentives for surveys taken. Management was unable to provide allowability support, resulting in known federally funded questioned costs of $28,801. The above errors occurred due to human error and were not identified during review, leading to unallowed activities/costs being charged to the Medicaid program. We recommend department and authority management strengthen controls over review and ensure transactions are adequately supported. Additionally, we recommend the department reimburse the federal agency for unallowable costs.
2024-014 Oregon Department of Human Services/Oregon Health Authority Implement control procedures around cost allocation system inputs Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777, 93.778 Medicaid Cluster Federal Award Numbers and Years: 2305OR5MAP, 2023; 2305OR5ADM, 2023; 2405OR5MAP, 2024; 2405OR05ADM, 2024 Compliance Requirements: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: N/A Questioned Costs: $32,522 (known) Criteria: 2 CFR 200.400(e) The Department of Human Services (department) administers separate federally approved cost allocation plans for both the department and the Oregon Health Authority. The plans outline the methods used to allocate the various cost pools to federal programs. The department uses a series of processes for allocating shared services and pooled expenditures. We recalculated one month, January 2024, of shared services and pooled expenditures using tables from the cost allocation system, and identified differences between the recalculation and the amounts recorded in the state accounting system for various grants. After inquiry, the department identified an error related to coding of payroll costs starting in November 2023, which continued through January 2024. Payroll coding corrections were made in January 2024, but did not correct the cost allocation as those types of documents are excluded from the process. The errors identified in the testing month resulted in questioned costs of $32,522 for the Medicaid grant and immaterial allocations in approximately thirty other grants. We recommend department management implement control procedures to verify the cost allocation system inputs are appropriately identified and processed.
2024-015 Oregon Department of Human Services/Oregon Health Authority Strengthen review over direct costs charged to the program Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777, 93.778 Medicaid Cluster Federal Award Numbers and Years: 2305OR5MAP, 2023; 2305OR5ADM, 2023; 2405OR5MAP, 2024; 2405OR05ADM, 2024 Compliance Requirements: Activities Allowed or Unallowed Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: N/A Questioned Costs: $28,869 (known) Criteria: 2 CFR 200.1; 2 CFR 200.400(a); 42 CFR § 433.32(a) Federal regulations allow the Medicaid program to charge allowable and supported program expenditures for various program costs at the time of payment for services is provided. The Department of Human Services (department) and the Oregon Health Authority (authority) make payments to vendors other than providers through the state’s accounting system. We judgmentally selected payments to 28 vendors for our review. We identified the following errors that were not identified during the department’s and authority’s review process, which resulted in improper payments of Medicaid expenditures: • One department payment included interest related to past due amounts charged to the Medicaid program, resulting in known federally funded questioned costs of $3. The agency performed a review of all payments to the vendor and identified an additional $65 other known questioned costs. • One authority payment included cash incentives for surveys taken. Management was unable to provide allowability support, resulting in known federally funded questioned costs of $28,801. The above errors occurred due to human error and were not identified during review, leading to unallowed activities/costs being charged to the Medicaid program. We recommend department and authority management strengthen controls over review and ensure transactions are adequately supported. Additionally, we recommend the department reimburse the federal agency for unallowable costs.
2024-014 Oregon Department of Human Services/Oregon Health Authority Implement control procedures around cost allocation system inputs Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777, 93.778 Medicaid Cluster Federal Award Numbers and Years: 2305OR5MAP, 2023; 2305OR5ADM, 2023; 2405OR5MAP, 2024; 2405OR05ADM, 2024 Compliance Requirements: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: N/A Questioned Costs: $32,522 (known) Criteria: 2 CFR 200.400(e) The Department of Human Services (department) administers separate federally approved cost allocation plans for both the department and the Oregon Health Authority. The plans outline the methods used to allocate the various cost pools to federal programs. The department uses a series of processes for allocating shared services and pooled expenditures. We recalculated one month, January 2024, of shared services and pooled expenditures using tables from the cost allocation system, and identified differences between the recalculation and the amounts recorded in the state accounting system for various grants. After inquiry, the department identified an error related to coding of payroll costs starting in November 2023, which continued through January 2024. Payroll coding corrections were made in January 2024, but did not correct the cost allocation as those types of documents are excluded from the process. The errors identified in the testing month resulted in questioned costs of $32,522 for the Medicaid grant and immaterial allocations in approximately thirty other grants. We recommend department management implement control procedures to verify the cost allocation system inputs are appropriately identified and processed.
2024-015 Oregon Department of Human Services/Oregon Health Authority Strengthen review over direct costs charged to the program Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777, 93.778 Medicaid Cluster Federal Award Numbers and Years: 2305OR5MAP, 2023; 2305OR5ADM, 2023; 2405OR5MAP, 2024; 2405OR05ADM, 2024 Compliance Requirements: Activities Allowed or Unallowed Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: N/A Questioned Costs: $28,869 (known) Criteria: 2 CFR 200.1; 2 CFR 200.400(a); 42 CFR § 433.32(a) Federal regulations allow the Medicaid program to charge allowable and supported program expenditures for various program costs at the time of payment for services is provided. The Department of Human Services (department) and the Oregon Health Authority (authority) make payments to vendors other than providers through the state’s accounting system. We judgmentally selected payments to 28 vendors for our review. We identified the following errors that were not identified during the department’s and authority’s review process, which resulted in improper payments of Medicaid expenditures: • One department payment included interest related to past due amounts charged to the Medicaid program, resulting in known federally funded questioned costs of $3. The agency performed a review of all payments to the vendor and identified an additional $65 other known questioned costs. • One authority payment included cash incentives for surveys taken. Management was unable to provide allowability support, resulting in known federally funded questioned costs of $28,801. The above errors occurred due to human error and were not identified during review, leading to unallowed activities/costs being charged to the Medicaid program. We recommend department and authority management strengthen controls over review and ensure transactions are adequately supported. Additionally, we recommend the department reimburse the federal agency for unallowable costs.
2024-014 Oregon Department of Human Services/Oregon Health Authority Implement control procedures around cost allocation system inputs Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777, 93.778 Medicaid Cluster Federal Award Numbers and Years: 2305OR5MAP, 2023; 2305OR5ADM, 2023; 2405OR5MAP, 2024; 2405OR05ADM, 2024 Compliance Requirements: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: N/A Questioned Costs: $32,522 (known) Criteria: 2 CFR 200.400(e) The Department of Human Services (department) administers separate federally approved cost allocation plans for both the department and the Oregon Health Authority. The plans outline the methods used to allocate the various cost pools to federal programs. The department uses a series of processes for allocating shared services and pooled expenditures. We recalculated one month, January 2024, of shared services and pooled expenditures using tables from the cost allocation system, and identified differences between the recalculation and the amounts recorded in the state accounting system for various grants. After inquiry, the department identified an error related to coding of payroll costs starting in November 2023, which continued through January 2024. Payroll coding corrections were made in January 2024, but did not correct the cost allocation as those types of documents are excluded from the process. The errors identified in the testing month resulted in questioned costs of $32,522 for the Medicaid grant and immaterial allocations in approximately thirty other grants. We recommend department management implement control procedures to verify the cost allocation system inputs are appropriately identified and processed.
2024-015 Oregon Department of Human Services/Oregon Health Authority Strengthen review over direct costs charged to the program Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777, 93.778 Medicaid Cluster Federal Award Numbers and Years: 2305OR5MAP, 2023; 2305OR5ADM, 2023; 2405OR5MAP, 2024; 2405OR05ADM, 2024 Compliance Requirements: Activities Allowed or Unallowed Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: N/A Questioned Costs: $28,869 (known) Criteria: 2 CFR 200.1; 2 CFR 200.400(a); 42 CFR § 433.32(a) Federal regulations allow the Medicaid program to charge allowable and supported program expenditures for various program costs at the time of payment for services is provided. The Department of Human Services (department) and the Oregon Health Authority (authority) make payments to vendors other than providers through the state’s accounting system. We judgmentally selected payments to 28 vendors for our review. We identified the following errors that were not identified during the department’s and authority’s review process, which resulted in improper payments of Medicaid expenditures: • One department payment included interest related to past due amounts charged to the Medicaid program, resulting in known federally funded questioned costs of $3. The agency performed a review of all payments to the vendor and identified an additional $65 other known questioned costs. • One authority payment included cash incentives for surveys taken. Management was unable to provide allowability support, resulting in known federally funded questioned costs of $28,801. The above errors occurred due to human error and were not identified during review, leading to unallowed activities/costs being charged to the Medicaid program. We recommend department and authority management strengthen controls over review and ensure transactions are adequately supported. Additionally, we recommend the department reimburse the federal agency for unallowable costs.
Federal Agency: U.S. Department of Treasury Federal Program: COVID 19 Coronavirus State and Local Fiscal Relief Fund Assistance Listing: 21.027 Pass-Through Entity: Maryland Department of Housing and Community Development Pass-Through Award Number and Period: (7/1/2023 - 6/30/2024) Compliance Requirement: Allowable Activities/Costs Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance (Modified Opinion) Criteria or Specific Requirement: Control: Per 2 CFR section 200.303(a), a 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 comply 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: The 2 CFR Part 200, Subpart E is applicable to expenditures under SLFRF unless stated otherwise. Given the purpose and very broad scope of eligible uses of the revenue replacement funds, only a subset of the requirements in 2 CFR Part 200, Subpart E apply to recipients use of such funds, as follows: 2 CFR 200.400(a) - (c), and (e) Policy guide; 200.403(a), (c), (d), (g), and (h) Factors affecting allowability of costs; and 200.404(e) Reasonable costs. Condition: The Town didnt maintain adequate documentation (i.e. invoices) to support the existence, allowability and approval of CSLFRF funds used to support programmatic costs. Context: The Town failed to provide supporting documentation to auditors for 16 out of 60 expenditures tested. Therefore, we could not determine if costs were allowable under the program. In addition, the town failed to provide supporting documentation for the review and approval of 24 out of 60 expenditures tested. Questioned Costs: $102,612. Cause: The Town transferred the funds to the grant in the accounting system but failed to maintain an audit trail to document the allowability and approval for the use of federal funds. Effect: Auditors were unable to verify the Towns compliance with program requirements. Recommendation: The Town should evaluate its current policies, implement proper controls, and perform additional training to ensure that, prior to charging costs to the program adequate documentation exists and maintained to support those costs, they are reviewed by a supervisor who is knowledgeable of the regulations regarding allowable program costs and that documentation of review is maintained. Views of Responsible Officials: Management agrees with the finding.
Federal Agency: U.S. Department of Education passed through the State of Alaska, Department of Education and Early Development (DEED) Federal Program(s): COVID-19 CRRSA Act: ESSER II / ARP Act: ESSER III (ESSER) and Title I-A Assistance Listing Number(s):84.425 U and D and 84.010A Award Number(s): Federal award number(s): S425U210020 and S425D210020 (ESSER), S010A230002, and S010A220002 (Title I-A), Pass through entity award number(s): ER 24.YFSD.01 (ESSER), IP 24.YFSD.01, and SI 24.YFSD.01 (Title I-A) Award Years: 2024 Type of Finding: Significant deficiency in internal control over compliance. Criteria: 2 CFR Part 200 Subpart E §200.400(d) dictate that the accounting practices of a recipient (or subrecipient) must be consistent with these cost principles and support the accumulation of costs as required by these cost principles, including maintaining adequate documentation to support costs charged to the Federal award. This includes ensuring there is proper supporting documentation for transactions as well as methods to document approval of the cost/activity to determine whether it is allowable under the funding requirements. Condition and Context: We tested a sample of seventeen (17) cash disbursements for ESSER and fourteen (14) cash disbursements for Title I-A. We noted seven (7) transactions from each program that lacked either adequate supporting documentation or documentation of proper review and approval. We did not identify any transactions in either program that appeared to be unallowable based on the context of the transaction. Cause: Lack of internal controls related to approval and supporting documentation for transactions charged to the programs. Effect: Lack of internal controls allows for the potential for unallowable costs to be charged to the programs. Repeat Finding: This is a repeat of Finding of 2023-006, and since it is a repeat finding, we believe this to be a systemic issue. Questioned Costs: None reported. Recommendation: We recommend that management implement stronger internal controls over cash disbursements, specifically to retaining supporting documentation and ensuring proper approval. Management Response: Management agrees with this finding, see Corrective Action Plan.
Federal Agency: U.S. Department of Education passed through the State of Alaska, Department of Education and Early Development (DEED) Federal Program(s): COVID-19 CRRSA Act: ESSER II / ARP Act: ESSER III (ESSER) and Title I-A Assistance Listing Number(s):84.425 U and D and 84.010A Award Number(s): Federal award number(s): S425U210020 and S425D210020 (ESSER), S010A230002, and S010A220002 (Title I-A), Pass through entity award number(s): ER 24.YFSD.01 (ESSER), IP 24.YFSD.01, and SI 24.YFSD.01 (Title I-A) Award Years: 2024 Type of Finding: Significant deficiency in internal control over compliance. Criteria: 2 CFR Part 200 Subpart E §200.400(d) dictate that the accounting practices of a recipient (or subrecipient) must be consistent with these cost principles and support the accumulation of costs as required by these cost principles, including maintaining adequate documentation to support costs charged to the Federal award. This includes ensuring there is proper supporting documentation for transactions as well as methods to document approval of the cost/activity to determine whether it is allowable under the funding requirements. Condition and Context: We tested a sample of seventeen (17) cash disbursements for ESSER and fourteen (14) cash disbursements for Title I-A. We noted seven (7) transactions from each program that lacked either adequate supporting documentation or documentation of proper review and approval. We did not identify any transactions in either program that appeared to be unallowable based on the context of the transaction. Cause: Lack of internal controls related to approval and supporting documentation for transactions charged to the programs. Effect: Lack of internal controls allows for the potential for unallowable costs to be charged to the programs. Repeat Finding: This is a repeat of Finding of 2023-006, and since it is a repeat finding, we believe this to be a systemic issue. Questioned Costs: None reported. Recommendation: We recommend that management implement stronger internal controls over cash disbursements, specifically to retaining supporting documentation and ensuring proper approval. Management Response: Management agrees with this finding, see Corrective Action Plan.
Federal Agency: U.S. Department of Education passed through the State of Alaska, Department of Education and Early Development (DEED) Federal Program(s): COVID-19 CRRSA Act: ESSER II / ARP Act: ESSER III (ESSER) and Title I-A Assistance Listing Number(s):84.425 U and D and 84.010A Award Number(s): Federal award number(s): S425U210020 and S425D210020 (ESSER), S010A230002, and S010A220002 (Title I-A), Pass through entity award number(s): ER 24.YFSD.01 (ESSER), IP 24.YFSD.01, and SI 24.YFSD.01 (Title I-A) Award Years: 2024 Type of Finding: Significant deficiency in internal control over compliance. Criteria: 2 CFR Part 200 Subpart E §200.400(d) dictate that the accounting practices of a recipient (or subrecipient) must be consistent with these cost principles and support the accumulation of costs as required by these cost principles, including maintaining adequate documentation to support costs charged to the Federal award. This includes ensuring there is proper supporting documentation for transactions as well as methods to document approval of the cost/activity to determine whether it is allowable under the funding requirements. Condition and Context: We tested a sample of seventeen (17) cash disbursements for ESSER and fourteen (14) cash disbursements for Title I-A. We noted seven (7) transactions from each program that lacked either adequate supporting documentation or documentation of proper review and approval. We did not identify any transactions in either program that appeared to be unallowable based on the context of the transaction. Cause: Lack of internal controls related to approval and supporting documentation for transactions charged to the programs. Effect: Lack of internal controls allows for the potential for unallowable costs to be charged to the programs. Repeat Finding: This is a repeat of Finding of 2023-006, and since it is a repeat finding, we believe this to be a systemic issue. Questioned Costs: None reported. Recommendation: We recommend that management implement stronger internal controls over cash disbursements, specifically to retaining supporting documentation and ensuring proper approval. Management Response: Management agrees with this finding, see Corrective Action Plan.
Federal Agency: U.S. Department of Education passed through the State of Alaska, Department of Education and Early Development (DEED) Federal Program(s): COVID-19 CRRSA ACT: ESSER II / ARP ACT: ESSER III (ESSER) and Title I-A Assistance Listing Number(s):84.425 U and D and 84.010A Award Number(s): Federal award numbers: S425U210020, S425D210020 (ESSER), S010A230002, and S010A230002 (Title I-A), Pass through entity award numbers: ER 24.YFSD.01 (ESSER), IP 24.YFSD.01, and SI 24.YFSD.01 (Title I-A). Award Year(s): 2024 Type of Finding: Significant deficiency in internal control over compliance and noncompliance. Criteria: Management is responsible for designing, implementing and maintaining internal controls relevant to ensuring that transactions charged to programs follow proper internal control processes (2 CFR Part 200 Subpart E §200.400 (d). This includes ensuring there is proper supporting documentation for transactions as well as methods to document approval of the cost/activity to determine whether it is allowable under the funding requirements. Condition and Context: We tested a sample of fifteen (15) payroll transactions for ESSER and seven (7) payroll transactions for Title I-A. We noted four (4) instances where the transaction either lacked supporting documentation for payrate or hours worked for ESSER. We noted three (3) instances where the transaction lacked supporting documentation for payrate or hours worked for Title I-A. We also identified one (1) transaction charged to ESSER that appeared to be unallowable based on the context of the transaction. Cause: Lack of internal controls related to approval and supporting documentation for transactions charged to the programs. Effect: Lack of approval and adequate supporting documentation for transactions allows for an environment where unallowable costs could be charged to the programs. Federal Schedule of Findings and Questioned Costs, Continued Repeat Finding: This is not a repeat finding, however, due to the number of exceptions identified, we believe this to be a systemic issue. Questioned Costs: None over the reporting threshold of $25,000. Recommendation: We recommend that management implement stronger internal controls over payroll transactions and improve the review, approval and maintenance of supporting documentation processes. Management Response: Management agrees with this finding, see Corrective Action Plan.