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.
Finding 2024-001 - Use of federal program grant reimbursements to pay unallowed expenses. Federal Program Title: Highway Safety Cluster. Assistance Listing Numbers: 20.600; 20.616. Federal Agencies: National Highway Traffic Safety Administration Federal Highway Administration. Federal Award Numbers: As listed on Schedule of Expenditures of Federal Awards (SEFA). Grant Award Periods: Various. Compliance Requirement: Activities Allowed or Unallowed. Criteria: 2 CFR Part 200.400 is based on the recipient, in recognition of their unique combination of staff, facilities, and experience, are responsible for employing organization and management techniques necessary to ensure the proper and efficient administration of the Federal award that includes identifying the types of activities which are either specifically allowed or prohibited by federal statutes, regulations, and the terms and conditions of the federal award pertaining to the program. Oregon Department of Transportation grant funds shall be used solely for the Project activities describedin accord with the ODOT Grant Budget and Cost Sharing set forth in the Budget. Grantee agrees to use its best efforts to fully expend the Grant Funds for their stated purposes within the Grant Period, after which time all unspent award funds are no longer available for the project beyond the end of the Grant Period. Condition: At 6/30/24, the Organization's current assets are less than its current liabilities, resulting in a deficit in net assets. Analysis focused on the difference in Accounts Receivable (grant reimbursement requests to ODOT) and Accounts Payable (primarily payables to police agencies for ODOT program costs). These two account balances should closely correlate as the Organization bills ODOT for grant reimbursements based on program expense reimbursements submitted by the police agencies. Analysis found that the Organization has used grant reimbursements to pay unallowed (non-program) related expenses instead of satisfying the accounts payable obligations to the police agencies. Questioned Cost: Questioned costs totaled $101,958 which was calculated as the difference between Grants Receivable and Accounts Payable (police agency payables), less application of current cash balances that can be utilized to reduce payable obligations. Cause: The Organization experienced staff turnover and was unable to fill the vacant position, remaining staff absorbed the additional responsibilities which competed for their time performing program functions and administrative tasks. Insufficient time management for program and administrative functions resulted in staff incorrectly assessing vendor bills as unallowable program costs and/or omitting allowable program expenses from inclusion in program grant expense reimbursement requests. Correlated to time management, the Organization's Executive Director had to perform staff level program functions that were billed at their higher wage rate resulting in payroll costs in excess of budget costs that were disallowed for reimbursement. Effect: The Organization's failure to properly capture, classify, and request reimbursement for allowed program and incurring payroll costs more than budget strained operating cash flows used to satisfy its current liabilities. To maintain current operations, the Organization improperly used ODOT program grant cash reimbursements earmarked for police agency payables, and instead expended the funds on unallowed activities. This is in violation of the grant agreement which states, Grant Funds shall be used solely for the Project activities described in accord with the ODOT Grant Budget and Cost Sharing set forth in the Budget. Repeat Finding: Not applicable. Statistical Sampling: The Organization is in noncompliance with the Activities Allowed or Unallowed requirements which has been identified as a systemic matter affecting all programs administered under the Organization's Highway Safety Cluster program for the fiscal year under audit. Recommendation: The Organization should ensure that there is adequate staffing to conduct program and administrative activities without undue time constraints. Additionally, the Organization should increase management oversight of program expenses and reimbursement requests to ensure that activities allowed and unallowed are properly recorded and captured in its reporting. These changes will afford staff sufficient time to perform accounting functions with increased management oversight to help ensure that allowable activities are captured and charged cost to federal programs and unallowed activities will not be incurred.
FINDING 2024-201 Multiple errors were identified in the amounts reported on the Rehabilitation Services Administration (RSA) reports required for the Rehabilitation Services-Vocational Rehabilitation Grants to States. Type of Finding: Material Weakness, Material Noncompliance Assistance Listing Title: Rehabilitation Services - Vocational Rehabilitation Grants to States Assistance Listing Number: 84.126 Federal Award Number: H126A220017, H126A230017, H126A240017 Program Year: October 1, 2021 – September 30, 2023, October 1, 2022 – September 30, 2024, October 1, 2023 – September 30, 2024 Federal Agency: U.S. Department of Education, Rehabilitation Services Administration Compliance Requirement: Reporting Questioned Costs: None Criteria: The Code of Federal Regulations (CFR) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200.303) requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. Section 2 CFR 200.400 contains the policy guide for cost principles related to federal grant administration. Paragraph (a) states that the nonfederal entity is responsible for the efficient and effective administration of the federal award through the application of sound management practices. Paragraph (d) states that the accounting practices of the nonfederal entity must be consistent with these cost principles and support the accumulation of costs as required by the principles and must provide for adequate documentation to support costs charged to the federal award. Section CFR 200.302 – Financial Management states that federal award recipient’s financial management system must identify all federal awards received and expended and the federal programs under which they were received. Additionally, they must maintain records that sufficiently identify the amount, source, and expenditure of federal funds for federal awards. These records must contain information necessary to identify federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Condition: The RSA requires the Commission to submit financial reports quarterly. The reports are cumulative and cover the entire grant period through to the end of the reporting period. The RSA also requires a final report at the end of the grant period. The Vocational Rehabilitation Basic Services (BS) Grants are issued for an initial 12-month period. If State match requirements are met within the initial period, recipients qualify for an additional 12-month carryover period to spend any unobligated federal funds. Including the carryover period, the federal fiscal year 2024 grant period is October 1, 2023, through September 30, 2025. The Commission identifies the grant periods using the initials BS and the last two digits of the grant year. During State fiscal year 2024, there were three grants open: BS22, BS23, and BS24. We tested four quarterly reports that reported on the periods within State fiscal year 2024. We identified errors in 3 of the 4 quarterly reports. We also identified errors in the final report for the federal fiscal year 2022 grant which ended on September 30, 2023. The following errors were identified: BS23 – Report Period July 1, 2023, to September 30, 2023 • Line 21 Total Federal Program Income Received: The reported amount was $47,300, and the supporting documentation showed $43,700, resulting in a $3,600 overstatement. This error carried forward to all subsequent quarterly reports because the amounts reported were cumulative. • Line 38A Required Pre-ETS Services Provided: The amount reported was $47,755. The Commission could not provide any documentation to support that amount or provide an explanation for how the amount was calculated. This error carried forward to all subsequent quarterly reports because the amounts reported were cumulative. • Line 38B Authorized Pre-ETS Services Provided: The amount reported was $73,708. The Commission could not provide any documentation to support that amount or provide an explanation for how the amount was calculated. This error carried forward to all subsequent quarterly reports because the amounts reported were cumulative. • Line 39G Transition Services to Youth and Students: The amount reported was $211,595; however, the supporting schedule showed $199,194 resulting in a $12,401 overstatement. The Commission included expenditures outside of the reporting period. • Line 41 Total Innovation and Expansion Expenditures: The amount reported was $20,943. The Commission could not provide any documentation to support that amount or provide an explanation for how the amount was calculated. BS23 – Report Period October 1, 2023, to December 31, 2023 • Line 39G Transition Services to Youth and Students: The amount reported was $211,594; however, the supporting schedule showed $227,249 resulting in a $15,655 understatement. The Commission included expenditures outside of the reporting period. • Line 41 Total Innovation and Expansion Expenditures: The amount reported was $20,943; however, the supporting schedule showed $10,472 resulting in a $10,471 overstatement. BS23 – Report Period January 1, 2024, to March 31, 2024 • Line 39E Business Enterprise Program (Randolph-Sheppard Program): The reported amount was $383,399; however, the supporting schedule showed $383,399 resulting in a $46,380 overstatement. • Line 39G Transition Services to Youth and Students: The amount reported was $254,977, however, the supporting schedule showed $249,977 resulting in a $4,303 overstatement. The Commission included expenditures outside of the reporting period. BS22 – Report Period October 1, 2021, to September 30, 2023 (Final report for federal fiscal year 2022 grant) • Line 21 Total Federal Program Income Received: The reported amount was $0; however, the supporting schedules showed $43,700 resulting in a $43,700 understatement. • Line 37 Administrative Expenditures: The reported amount was $853,677; however, the supporting schedules showed $1,399,438 resulting in a $545,761 understatement. • Line 38A Required Pre-ETS Services Provided: The reported amount was $302,972; however, the supporting schedules showed $287,258 resulting in a $15,714 overstatement. • Line 38B Authorized Pre-ETS Services Provided: The reported amount was $44,151; however, the supporting schedules showed $75,110 resulting in a $30,959 understatement. • Line 39E Business Enterprise Program (Randolph-Sheppard Program): The reported amount was $372,887; however, the supporting schedule showed $438,558 resulting in a $65,671 understatement. • Line 39G Transition Services to Youth and Students: The amount reported was $91,966; however, the supporting schedule showed $76,407 resulting in a $15,559 overstatement. • Line 41 Total Innovation and Expansion Expenditures: The amount reported was $104,647; however, the supporting schedule showed $83,903 resulting in a $20,744 overstatement. We also noted an error while testing compliance with the Matching and Level of Effort requirements using amounts reported on the final RSA-17 report for the federal fiscal year 2022 grant. The Commission reported $835,255 as total State expenditures; however, the amount recorded in STARS was $566,698, resulting in a $268,557 overstatement. Cause: The Commission has designed a procedure to detect errors in reporting prior to issuance. The reports are compiled by one individual and reviewed by a second individual prior to issuing them to the federal agency. However, the review did not detect the errors indicating that the staff completing these reviews did not have adequate knowledge to ensure this internal control was effective. Our testing found that two of the three quarterly reports with errors were not reviewed prior to submission. The Commission could not provide an explanation for the errors. Effect: The RSA uses the RSA-17 reports to determine compliance with federal statutes, regulations, and the terms and conditions of the federal award. Incorrect reporting can affect both the ability to cover current obligations and the amount of future federal grant awards received by the State of Idaho. The total errors in the quarterly reports were overstatements of $219,561 and understatements of $15,655. The total errors in the final report for the federal fiscal year 2022 grant were overstatements of $271,578 and understatements of $701,746. The aggregated errors are a $229,262 understatement of costs. Recommendation: We recommend that the Commission design and implement procedures to ensure accurate federal grant reporting and retain appropriate documentation to support the amounts reported. We also recommend that the Commission review prior submissions, identify correct reporting, and communicate with the federal grantor about resubmitting corrected reports. Providing appropriate training and staff recruitment is critical to ensuring the internal controls are effective in preventing or detecting errors. Management’s View: Agree - These errors in quarterly and final RSA-17 reports are acknowledged, and immediate measures are being taken to address root causes Corrective Action • Accurate Financial Reporting: ICBVI will develop detailed procedures to ensure all amounts reported on federal forms are reconciled to supporting documentation in the accounting system (Luma) prior to submission. • Review and Oversight: A two-person review process will be formalized, ensuring every report is checked for accuracy by a knowledgeable reviewer before submission. • Documentation and Training: Supporting documentation for all line items will be archived securely. Staff will receive training in federal grant reporting standards. Auditor’s Concluding Remarks: We thank the Commission for its cooperation and assistance throughout the audit.
FINDING 2024-202 The Cost Allocation Plan (CAP) used in fiscal year 2024 was not approved by the RSA as required and contained multiple errors. Type of Finding: Material Weakness, Material Noncompliance Assistance Listing Title: Rehabilitation Services - Vocational Rehabilitation Grants to States Assistance Listing Number: 84.126 Federal Award Number: H126A220017, H126A230017, H126A240017 Program Year: October 1, 2021 – September 30, 2023, October 1, 2022 – September 30, 2024, October 1, 2023 – September 30, 2024 Federal Agency: U.S. Department of Education, Rehabilitation Services Administration Compliance Requirement: Allowable Costs/Cost Principles Questioned Costs: $210,203 Known Criteria: The U.S. Code of Federal Regulations (CFR) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200.303) requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. Section 2 CFR 200.400 contains the policy guide for cost principles related to federal grant administration. Paragraph (a) states that the nonfederal entity is responsible for the efficient and effective administration of the federal award through the application of sound management practices. Paragraph (d) states that the accounting practices of the nonfederal entity must be consistent with these cost principles and support the accumulation of costs as required by the principles and must provide for adequate documentation to support costs charged to the federal award. The U.S. Code of Federal Regulations (CFR) Title 34 contains the regulations of the offices of the U.S. Department of Education, including the Rehabilitation Services Administration (RSA). Title 34 CFR § 76.560 (b) states: A grantee must have a current indirect cost rate agreement to charge indirect costs to a grant. Title 2, Subtitle A contains the Office of Management and Budget Guidance for Grants and Agreements. Title 2 CFR § 200 Appendix VII part 3 states: Indirect Cost Allocations Not Using Rates: In certain situations, governmental departments or agencies (components of the governmental unit), because of the nature of their Federal awards, may be required to develop a cost allocation plan that distributes indirect (and, in some cases, direct) costs to the specific funding sources. In these cases, a narrative cost allocation methodology should be developed, documented, maintained for audit, or submitted, as appropriate, to the cognizant agency for indirect costs for review, negotiation, and approval. Condition: The Commission uses a CAP to allocate indirect costs among its various programs that should be certified annually by the RSA. The CAP used by the Commission in fiscal year 2024 was not submitted to the RSA for recertification until April 2025 after we inquired about the certification process and documentation for the CAP. Additionally, this CAP was created to be used with data from STARS and no changes were made to coincide with changes in the chart of accounts and reporting available in Luma. The Commission uses a spreadsheet to calculate the indirect costs in accordance with its CAP. This spreadsheet is prepared each month and also keeps track of total spending for federal grants and calculates the amount of federal draws. We tested 4 of the 12 (33 percent) CAP spreadsheets from State fiscal year 2024 to verify that the expenditure amounts used in the calculations tied to support in Luma. One of the CAP spreadsheets reported monthly expenditures of $703,475; however, reports from Luma showed expenditures of $454,004, which is a difference of $249,471. The Commission could not provide documentation or an explanation to support the difference. Cause: The Commission did not have a procedure in place to review the CAP and submit it for recertification annually as required. The Commission has used the CAP spreadsheet for many years, and it has been changed and prepared by multiple personnel, many of whom no longer work for the Commission. The spreadsheet includes multiple tabs, many formulas, cells with hard coded amounts, and no restrictions or controls on data entry. This creates an environment where data entry errors could be made, or a formula could be overridden, and the errors would be difficult to detect. The primary internal control that the Commission relies upon is that the CAP spreadsheet is prepared by one person and reviewed by a second person. However, this control has been ineffective in preventing errors from occurring. Effect: The CAP used by the Commission was not properly submitted for recertification, was not properly modified for Luma, and was not reviewed for accuracy resulting in multiple errors. The Commission has drawn excess federal funds due to the reliance on inaccurate spreadsheets that are not supported by Luma. The reported expenditures of $703,474 were adjusted down by $95,065 for a new total of $608,409, which was also not supported by the accounting records. This amount, run through the CAP resulted in a draw calculation of $512,644, which is 84 percent of $608,409. To calculate the possible overdraw, we started the allowable calculation with the expenditures identified in Luma of $454,004, less the $95,065 adjustment equaling $358,839 of allowable costs, multiplied by the 84 percent CAP estimation is $302,441 for a possible overdraw of $210,203 ($512,644 - $302,441). Our estimation of the error is based on total program expenditures in Luma for November 2023. The Commission could not provide documentation to support various amounts included in the November CAP calculation and could not explain the reason for the differences. If support for adjustments made was available, the amount of the error may have been reduced. Recommendation: We recommend that the Commission work with the federal grantor, the Rehabilitation Services Administration (RSA), to establish an indirect cost rate plan based on Luma reporting. We further recommend that the Commission design and implement procedures to ensure the indirect cost rate plan is implemented as designed and to ensure that future plans are submitted and approved timely and appropriate supporting documentation is retained. We also recommend that the Commission work with the federal grantor to resolve the questioned costs due to unsupported expenditures. Management’s View: Agree - ICBVI recognizes it did not submit its Cost Allocation Plan for annual recertification as required and that the CAP contained errors due to transition challenges with the new accounting software (Luma). Corrective Action: • CAP Update and Approval: The CAP will be revised to reflect the current chart of accounts and reporting parameters of the Luma system. We have a meeting scheduled with the Director of the Indirect Cost Division at the US Dept of Education on 12/10/25. We will be submitting an updated CAP for review and approval. Annual submission for federal recertification will be scheduled and tracked. • Documentation: All expenditure data and supporting documentation will be sourced directly from Luma and retained for verification. Auditor’s Concluding Remarks: We thank the Commission for its cooperation and assistance throughout the audit. We would like to clarify that some of the errors in the CAP were related to the transition to Luma, however many errors occurred because of a lack of internal controls such as reviews for accuracy, protected cells, and detailed procedures. It is important that the Commission address all of the reasons the CAP was unreliable to ensure only appropriate supported costs are charged to federal grants.
FINDING 2024-212 The Department’s Indirect Cost Rate Proposal (ICRP) contained multiple errors. Type of Finding: Material Weakness, Material Noncompliance Assistance Listing Title: Drinking Water State Revolving Fund; Clean Water State Revolving Fund Assistance Listing Number: 66.468; 66.458 Federal Award Number: Various Program Year: Various Federal Agency: Environmental Protection Agency Compliance Requirement: Activities and Costs Allowed Questioned Costs: Undetermined Criteria: The U.S. Code of Federal Regulations (CFR) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200.303) requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. Section 2 CFR 200.400 contains the policy guide for cost principles related to federal grant administration. Paragraph (a) states that the nonfederal entity is responsible for the efficient and effective administration of the federal award through the application of sound management practices. Paragraph (d) states that the accounting practices of the nonfederal entity must be consistent with these cost principles and support the accumulation of costs as required by the principles and must provide for adequate documentation to support costs charged to the federal award. Condition: The Department uses an Indirect Cost Rate Agreement to charge indirect costs to its programs. We reviewed the ICRP used to calculate the indirect cost rate in place in fiscal year 2024 and found multiple errors: • The direct cost base was reported as $27,355,390; however, the ICRP did not define the methodology used to calculate that amount, the amount reported was also not defined in a detailed schedule in the ICRP, and the Department could not provide documentation to support that it was correct. • The indirect departmental cost was reported as $9,685,891 however, the ICRP did not define the methodology used to calculate that amount nor was the amount reported or supported by a detailed schedule in the ICRP, and the Department could not provide documentation to support that it was correct. • The rate calculation did not include a carryforward amount from the prior year, as required. • The schedules in the proposal contained multiple mathematical errors, including the total sum of the fiscal year 2024 indirect cost pool. The sum was reported as $9,543,761; however, the amounts in the schedule sum to $9,696,805. The difference, $153,044, was the carryover amount from the fiscal year 2022 ICRP, which was incorrect. Cause: The Department’s procedures require the ICRP to be compiled by the fiscal staff and reviewed by separate staff to identify errors. The Department provided documentation to verify that the review occurred; however, it was not performed at a level of detail necessary to identify the errors. The Department also did not include a procedure to retain documentation to support the amounts reported in the ICRP. Effect: We were unable to determine if the indirect cost rate used in fiscal year 2024 was correctly calculated because the methodology and documentation to support the amounts used in the calculation were unavailable. Further, Department staff could not explain or recreate what had been calculated. Even if we make assumptions about what the direct cost base was intended to include, typically direct salary, wages, and fringe benefits, there is no support available to identify which salaries were included or how fringe benefits were calculated. Additionally, formula errors within the schedule used to calculate the rate increase the risk of an incorrect calculation. Recommendation: We recommend that the Department provide training for the staff preparing and reviewing the ICRP to ensure compliance with applicable regulations. We further recommend that the Department design and implement procedures to retain documentation of the methods used to compile the ICRP and the basis for the amounts reported in the ICRP. Management’s View: We agree with and acknowledge the finding presented and are committed to addressing it with the following corrective action plan. Corrective Action: The agency has new staff that will be preparing and submitting the indirect cost rate proposal this year and will take the auditor’s recommendations very seriously in our development and preparation. We have reached out to our federal oversight agency for assistance and direction and are committed to maintaining a file with all supporting documentation used to compile and prepare the proposal, as required by 2 CFR 200. DEQ has had significant turnover in the fiscal office, which has resulted in gaps of knowledge of policies and practices. In summer 2025, DEQ leadership reorganized the fiscal department to improve efficiency, enhance oversight of grants and contracts, and strengthen financial controls. The fiscal office is currently in a rebuilding phase and is dedicated to training and developing staff, implementing best practices, and documenting processes and procedures, including those for federal grant compliance. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2024-214 The Department does not have documented internal controls for cash draws and requested reimbursement for the same $175,500 grant expenditure twice. Type of Finding: Material Weakness, Noncompliance Assistance Listing Title: Clean Water State Revolving Fund Assistance Listing Number: 66.458 Federal Award Number: EB25020-22 Program Year: November 1, 2022 – October 31, 2027 Federal Agency: Environmental Protection Agency Compliance Requirement: Cash Management Questioned Costs: $175,500 Known Criteria: The U.S. Code of Federal Regulations (CFR) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200.303) requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. Section 2 CFR 200.400 contains the policy guide for cost principles related to federal grant administration. Paragraph (a) states that the nonfederal entity is responsible for the efficient and effective administration of the federal award through the application of sound management practices. Paragraph (d) states that the accounting practices of the nonfederal entity must be consistent with these cost principles and support the accumulation of costs as required by the principles and must provide for adequate documentation to support costs charged to the federal award. Condition: The Department draws grant funds for reimbursement of allowed costs such as loan disbursements and set-aside funds which may be used for administrative expenses, technical assistance to small water systems, and State program management. One employee uses reports from the statewide accounting system, Luma, to prepare the draw request, accesses the Environmental Protection Agency’s (EPA) Automated Standard Application for Payments (ASAP) system to request the draw, and enters the receivable amount into Luma. The Department does not have a procedure in place for a second person to verify the amounts requested in the grant draws are correct. We tested the following cash draws for the Drinking Water State Revolving Fund (DWSRF) and the Clean Water State Revolving Fund (CWSRF) to verify they were made in compliance with applicable requirements and were recorded in the correct amount: • The Department made five cash draws for reimbursement of loan disbursements for the DWSRF. We tested all five and found no errors. • The Department made four cash draws for reimbursement of loan disbursements for the CWSRF. We tested all four and found one $175,500 draw that was a duplicate of a previously drawn amount. • The Department made six draws for set-aside amounts. These draws were made for multiple EPA programs including the CWSRF and DWSRF. We tested all six and found no errors. Cause: The Department relied on the expenditure controls in Luma to identify the grant expenditures used to determine the amount of the cash draws and did not believe additional controls were necessary. However, these controls would not be effective for ensuring that errors in the draw process would be detected or prevented. Effect: The Department did not have controls in place to identify a duplicate cash draw request for $175,500, resulting in questioned costs. Without control procedures in place to ensure the correct grant expenditures are identified for cash draw requests, additional errors could be made and remain undetected. Recommendation: We recommend that the Department design and implement control procedures to ensure cash draw requests are correct and supported. Management’s View: We agree with and acknowledge the three findings presented and are committed to addressing them with the following corrective actions being taken by DEQ. Corrective Action: The duplicate payment in question was issued but not redeemed. The issuance was to a similar, but incorrect, vendor name and was caught by staff before it was sent to the vendor. The transaction was cancelled in Luma but was not properly recorded in the following draw request. Fiscal staff now perform a thorough review of transactions before a loan draw is finalized in Luma, reconciling the transactions from the Loans and Grants Tracking System (LGTS) to the information generated in the Luma draw invoice. The reconciling and supporting documentation from LGTS is attached to the Luma draw invoice. DEQ has had significant turnover in the fiscal office, which has resulted in gaps of knowledge of policies and practices. In summer 2025, DEQ leadership reorganized the fiscal department to improve efficiency, enhance oversight of grants and contracts, and strengthen financial controls. The fiscal office is currently in a rebuilding phase and is dedicated to training and developing staff, implementing best practices, and documenting processes and procedures, including those for federal grant compliance. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit. We agree that a more stringent review process and reconciliation control in place would likely prevent or detect an error of this nature in the future, however we would also like to emphasize that the Department should contact the federal grantor to resolve the overdraw of $175,500.
Condition: During our audit procedures, we noted management did not implement internal controls over the authorization of expenditures charged to the federal major program under audit. Additionally, it was noted documentation was unavailable to support expenditures charged to the federal program being tested. Criteria: As defined in the Code of Federal Regulations the Organization must establish and maintain effective internal controls over the financial award that provides reasonable assurance that the non-Federal entity is managing the Federal Award in compliance with Federal statutes, regulation, and the terms and conditions of the Federal award per §200.303. These requirements detail all the information that must be included in the Organization’s internal controls. It is also defined in the Code of Federal Regulations the Organization must have adequate documentation to support cost charged to the Federal award per § 200.400. Cause: Controls to review cash disbursements incurred have not been developed and implemented on a consistent basis by the Organization’s management. Adequate documentation has not been stored to support expenditures charged to federal awards. Effect: The absence of controls over authorization and approval incurred leads to an increased risk of errors and noncompliance of the Organization’s financial statements and compliance with federal regulations. The absence of adequate documentation for expenditures charged to federal awards prevents the determination if the expenditures are allowable, necessary, and reasonable for the federal program. Recommendation: We recommend the Organization document the authorization of expenditures charged to federal awards and ensure documentation is available to support such expenditures. Views of Responsible Officials: Management agrees with the finding.
Condition: During our audit procedures, we noted management did not implement internal controls over the authorization of expenditures charged to the federal major program under audit. Additionally, it was noted documentation was unavailable to support expenditures charged to the federal program being tested. Criteria: As defined in the Code of Federal Regulations the Organization must establish and maintain effective internal controls over the financial award that provides reasonable assurance that the non-Federal entity is managing the Federal Award in compliance with Federal statutes, regulation, and the terms and conditions of the Federal award per §200.303. These requirements detail all the information that must be included in the Organization’s internal controls. It is also defined in the Code of Federal Regulations the Organization must have adequate documentation to support cost charged to the Federal award per § 200.400. Cause: Controls to review cash disbursements incurred have not been developed and implemented on a consistent basis by the Organization’s management. Adequate documentation has not been stored to support expenditures charged to federal awards. Effect: The absence of controls over authorization and approval incurred leads to an increased risk of errors and noncompliance of the Organization’s financial statements and compliance with federal regulations. The absence of adequate documentation for expenditures charged to federal awards prevents the determination if the expenditures are allowable, necessary, and reasonable for the federal program. Recommendation: We recommend the Organization document the authorization of expenditures charged to federal awards and ensure documentation is available to support such expenditures. Views of Responsible Officials: Management agrees with the finding.
Condition: During our audit procedures, we noted management did not implement internal controls over the authorization of expenditures charged to the federal major program under audit. Additionally, it was noted documentation was unavailable to support expenditures charged to the federal program being tested. Criteria: As defined in the Code of Federal Regulations the Organization must establish and maintain effective internal controls over the financial award that provides reasonable assurance that the non-Federal entity is managing the Federal Award in compliance with Federal statutes, regulation, and the terms and conditions of the Federal award per §200.303. These requirements detail all the information that must be included in the Organization’s internal controls. It is also defined in the Code of Federal Regulations the Organization must have adequate documentation to support cost charged to the Federal award per § 200.400. Cause: Controls to review cash disbursements incurred have not been developed and implemented on a consistent basis by the Organization’s management. Adequate documentation has not been stored to support expenditures charged to federal awards. Effect: The absence of controls over authorization and approval incurred leads to an increased risk of errors and noncompliance of the Organization’s financial statements and compliance with federal regulations. The absence of adequate documentation for expenditures charged to federal awards prevents the determination if the expenditures are allowable, necessary, and reasonable for the federal program. Recommendation: We recommend the Organization document the authorization of expenditures charged to federal awards and ensure documentation is available to support such expenditures. Views of Responsible Officials: Management agrees with the finding.
Finding: 2023-01: 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 December 31, 2023. 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 December 31, 2023, we are not aware of any instances of noncompliance with respect to activities allowed or unallowed or allowable costs/cost principles. 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: 2023-01: 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 December 31, 2023. 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 December 31, 2023, 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 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: 2023-01: 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 December 31, 2023. 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 December 31, 2023, 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 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 2023-003 U.S. Department of Health and Human Services ALN: 93.224/93.527 Health Centers Cluster A/B - Activities allowed/Allowable costs Condition: The Organization did not properly maintain documentation to support the pay rate authorization. Criteria: Per the Uniform Guidance general provisions at 2 CFR 200.400 (d), the accounting practices of he recipient and subrecipient must be consistent with these cost principles and support the accumulation of costs required by these cost principles, including maintaining adequate documentation to support costs charged to the Federal award. Context: In our testing of employee payroll charged to the health centers program, we observed that 2 of 40 payroll transactions selected for testing did not have a pay rate authorizations on file. Cause: The Organization could not locate the pay rate forms for two employees and could not determine if the forms were not completed or were not properly retained. Effect: There is an increased risk of unauthorized payroll being charged to the health centers program. Recommendation: Management should review its procedures for documentation of pay rate changes. We recommend the Organization periodically review a sample of employee pay rate changes to determine that support is being maintained in accordance with the cost principles of the Uniform Guidance. View of Responsible Officials: Management agrees with the finding and has prepared a corrective action plan.
Criteria: 2 CFR Section 200.400 requires allowable cost principles to be followed in accordance with the Assistance Agreement. Condition: The Organization’s Assistance Agreement limited reimbursement of certain employees’ compensation, excluding the Executive Director, to 92.31% of their total compensation. The Organization requested reimbursement for 100% of certain employees’ compensation. Cause: Subsequent to the Assistance Agreement being awarded and finalized, the Organization negotiated with the grantor to remove the compensation limitation; however, the Assistance Agreement was not updated for this change. Effect: Failure to comply with Assistance Agreement. Questioned Costs: Based on the total labor charged, excluding the Executive Director, there are likely questioned costs, which include direct labor, fringe on direct labor, and general and administrative fringe, totaling approximately $180,000. Recommendation: Management should ensure all negotiated agreements are included in the Assistance Agreement.
Condition: During our audit procedures, we noted management did not implement internal controls over the authorization of expenditures charged to the federal major program under audit. Additionally, it was noted documentation was unavailable to support expenditures charged to the federal program being tested. Criteria: As defined in the Code of Federal Regulations the Organization must establish and maintain effective internal controls over the financial award that provides reasonable assurance that the non-Federal entity is managing the Federal Award in compliance with Federal statutes, regulation, and the terms and conditions of the Federal award per §200.303. These requirements detail all the information that must be included in the Organization’s internal controls. It is also defined in the Code of Federal Regulations the Organization must have adequate documentation to support cost charged to the Federal award per § 200.400. Cause: Controls to review cash disbursements incurred have not been developed and implemented on a consistent basis by the Organization’s management. Adequate documentation has not been stored to support expenditures charged to federal awards. Effect: The absence of controls over authorization and approval incurred leads to an increased risk of errors and noncompliance of the Organization’s financial statements and compliance with federal regulations. The absence of adequate documentation for expenditures charged to federal awards prevents the determination if the expenditures are allowable, necessary, and reasonable for the federal program. Recommendation: We recommend the Organization document the authorization of expenditures charged to federal awards and ensure documentation is available to support such expenditures. Views of Responsible Officials: Management agrees with the finding.