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.
FINDING 2023-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): IN0263 Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-004. Condition and Context Prior to receipt of direct State and Local Fiscal Recovery Funds (SLFRF) award funds, all eligible entities were required to execute a Financial Assistance Agreement (Agreement), which included the award terms and conditions that recipients must comply with in carrying out the objectives of their award. Per the Agreement, the City was responsible for the effective administration of the federal award, as well as the application of sound management practices and administration of federal funds in a manner consistent with program objectives and terms and conditions of the award. Activities Allowed or Unallowed, Allowable Costs/Cost Principles As part of sound management of the federal award, the City was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The City had not properly designed or implemented such a system. There was no evidence of segregation of duties, such as an oversight, review, or approval process related to these expenditures that would have ensured that expenditures of award funds were made only for activities and costs that were allowable under the federal award and federal regulations. The City passed Ordinance 2022-45 approving a "commitment of up to but not to exceed $400,000 for Infrastructure at the Junction." However, the City made no formal agreements for the payment of claims in relation to the "Junction" Project. Of the ten claims paid with SLFRF funds during 2023, two claims totaling $400,000 were for the "Junction" project. Both claims were paid without itemized invoices and adequate supporting documentation to support amounts paid. INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF LOGANSPORT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Additionally, the City did not ensure a proper system of internal controls was in place to accurately track expenditures for the SLFRF grant. In 2022, $2.5 million of SLFRF grant funds were transferred out of the City's SLFRF fund into the City of Logansport Project Fund at a financial institution in the name of the City (bank account) and were subsequently comingled with other nonfederal funds as part of a Build Operate Transfer (BOT) Agreement. Of this $2.5 million, $1,626,043 was spent during 2022, leaving $873,957 of the original $2.5 million to be spent in 2023. During 2023, the City disbursed $4,369,454 from its BOT bank account, where SLFRF and other funding sources were comingled without tracking which expenditures were expressly for the purpose of SLFRF. It was not possible to obtain a population of federal expenditures for the BOT expenditures due to this comingling; therefore, a portion of the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements could not be tested. Costs totaling $1,273,957 were not properly documented and were considered questioned costs. The lack of internal controls and noncompliance was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302 states in part: "(a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. . . . (b) The financial management system of each non-Federal entity must provide for the following . . . (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. INDIANA STATE BOARD OF ACCOUNTS 20 CITY OF LOGANSPORT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . . (3) Records that identify adequately the source and application of funds for federally funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. (4) Effective control over, and accountability for, all funds, property, and other assets. . . ." 2 CFR 200.400 states in part: "The application of these cost principles is based on the fundamental premises that: (a) The non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices. (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. (c) The non-Federal entity, in recognition of its own unique combination of staff, facilities, and experience, has the primary responsibility for employing whatever form of sound organization and management techniques may be necessary in order to assure proper and efficient administration of the Federal award. . . ." 2 CFR 200.403(g) states in part: "Be adequately documented. . . ." 2 CFR 200.404 states in part: "A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non- Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: . . . (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost." Cause Due to the lack of internal controls, the City was unable to differentiate expenditures made from federal and nonfederal funds once it commingled nonfederal funds and federal grant awards in a single bank account. Additionally, the City did not obtain appropriate supporting documentation for federal expenditures. INDIANA STATE BOARD OF ACCOUNTS 21 CITY OF LOGANSPORT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The City was unable to identify all the expenditures paid with federal funds and cannot ensure, nor can we determine, expenditures of the grant were not unallowable and adhered to established practices and polices. This could result in the misuse of funds and the potential loss of funding for future federal awards. Questioned Costs We identified $1,273,957 in known questioned costs as noted above in the Condition and Context. Recommendation We recommended that management of the City establish a system of internal controls to ensure that grant award funds are accounted for and tracked in a designated grant fund. All activity of the grant should be in this fund with supporting documentation for each transaction. Additionally, the City should obtain appropriate supporting documentation for all federal grant expenditures. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2023-004: Significant Deficiency – Payroll Allocations Federal grantor: Department of Commerce Condition: The allocation of payroll costs to programs are done manually using spreadsheets instead of done based on entity-wide timesheets. Criteria: Under 2 CFR 200.400, direct costs allocation principle state that if a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship of the work involved, then the costs may be allocated or transferred to benefitted projects on any reasonable documented basis. Further, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal awards as an indirect cost. Costs are required to be adequately documented. Cause: The Chamber is not able to readily determine the amount of payroll costs billable to the grants. Effect: The approach of manually allocating payroll costs to grant projects leaves room for error, and makes it difficult to determine that costs are not being reimbursed by more than one source. Recommendation: The Chamber needs to prepare time studies or require employees to prepare timesheets on an automated system to support the payroll costs allocated to programs. Views of Responsible Officials and Planned Corrective Actions: The Chamber agrees with the finding and is in the process of implementing a better time and expense tracking system that will be effective in 2024.
Finding 2023-003: Material Weakness and Questioned Cost – Grant Claim Support Federal Grantor: U.S. Department of Treasury Passed-through: City and County of Sacramento Condition: The Chamber’s expenditure detail for the grant funded projects do not support the amounts billed to the City and County of Sacramento. The amounts billed were more than the general ledger detail supported. Criteria: A reconciliation of grant project expenses to the grant revenue billed should be performed. The supporting documentation of any reconciling items should be maintained with the grant bills. Also, 2 CFR 200.400 states that accounting practices of the entity be consistent with cost principals required under the CFR and support the accumulation of costs and provide adequate documentation to support costs charged to the Federal award. Cause: The Chamber billed costs to the grant that were not allocated in the accounting system to that grant and a reconciliation was not performed comparing the grant billings to the expense detail. Effect: The expenses billed to the grant may not be correct. Recommendation: The Chamber needs to ensure that expenses to be reimbursed by federal grant funds are recorded in the class code in the accounting system for that grant so that federal grant revenue in the accounting system match the expenses allocated to that grant. The Chamber needs to include in their year-end reconciliations a comparison of grant revenue and expense and ensure they match or can be reconciled. Views of Responsible Officials and Planned Corrective Action: The Chamber agrees with this finding and is in the process of implementing a system for improved grant tracking.
Finding 2023-004: Significant Deficiency – Payroll Allocations Federal grantor: U.S. Department of Treasury Passed-through: City and County of Sacramento Compliance Requirement: Allowable Costs Condition: The allocation of payroll costs to programs are done manually using spreadsheets instead of done based on entity-wide timesheets. Criteria: Under 2 CFR 200.400, direct cost allocation principles state that if a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship of the work involved, then the costs may be allocated or transferred to benefitted projects on any reasonable documented basis. Further, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. Costs are required to be adequately documented. Cause: The Chamber is not able to readily determine the amount of payroll costs billable to the grants. Effect: The approach of manually allocating payroll costs to grant projects leaves room for error, and makes it difficult to determine that costs are not being reimbursed by more than one source. Recommendation: The Chamber needs to prepare time studies or require employees to prepare timesheets on an automated system to support the payroll costs allocated to programs. Views of Responsible Officials and Planned Corrective Actions: The Chamber agrees with the finding and is in the process of implementing a better time and expense tracking system that will be effective in 2024.
Finding 2023-001 – Allowable Costs and Activities – Compliance and Control Finding Federal Award. No. 14.231 Emergency Solutions Grant Program – COVID 19 Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: Missouri Department of Social Services Criteria Or Specific Requirement: 2 CFR sections 200.400 through 200.401 provide the general provisions for cost principles. Section 200.400(b) states that the non-Federal entity assumes responsibility of administering Federal funds in a manner consistent with underlying agreements, program objectives and the terms and conditions of the Federal award. Condition: In our nonstatistical sample of 40 transactions, we noted no exceptions as a result of our testing. However, during the current fiscal year, management of the Commission identified certain questionable rental assistance payments. Certain payments have been reported to the appropriate agencies in accordance with regulatory requirements. Cause: The significant amount of Federal dollars awarded, the short period of time required to make awards available and the presence of new requirements for the program were burdensome for management to disburse in compliance with Federal guidelines. Compared to the Commission’s other Federal programs, the program involves a very large number of applications and a high volume of transactions resulting in exposure to error and irregularity. Effect: Instances of known and suspected noncompliance were identified by the Commission. Questioned Costs: The Commission has identified $320,658 of known questioned costs in fiscal year 2023. Context: Approximately 1,300 vendors are set up in the Commission’s system for application of emergency rental assistance. Of the vendors with applications approved for funding, 134 are considered to be known noncompliance for a total amount of known questioned costs of $2,112,621 since fiscal year 2021. After the identification of the first instance of noncompliance, the Commission adjusted and enhanced its procedures for evaluating current and existing applications. As the Commission reviews future applications following their updated policies and procedures, additional vendors could be flagged to investigate prior payments for potential ineligible costs. Identification As A Repeat Finding: Repeat of Finding No. 2022-001. Recommendation: We recommend that management continue to apply resources devoted to mitigating and preventing further exposure to noncompliance. Additionally, we recommend the Commission continue to provide additional training to employees as well as third parties responsible for reviewing and approving applications. Internal controls over allowable costs and activities should ensure procedural improvements are implemented properly. Views Of Responsible Officials: See Management’s review and Corrective Action Plan included at the end of the report. Anticipated Completion Date: The Commission implemented additional compliance review procedures during fiscal years 2021 and 2022, reviewed applications to identify potentially fraudulent applications during fiscal years 2022 and 2023 and expects to conclude its investigation of identified cases during fiscal year 2024. Contact Person: Steve Whitson, Director of Community Programs
Finding 2023-001 – Allowable Costs and Activities – Compliance and Control Finding Federal Award. No. 14.231 Emergency Solutions Grant Program – COVID 19 Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: Missouri Department of Social Services Criteria Or Specific Requirement: 2 CFR sections 200.400 through 200.401 provide the general provisions for cost principles. Section 200.400(b) states that the non-Federal entity assumes responsibility of administering Federal funds in a manner consistent with underlying agreements, program objectives and the terms and conditions of the Federal award. Condition: In our nonstatistical sample of 40 transactions, we noted no exceptions as a result of our testing. However, during the current fiscal year, management of the Commission identified certain questionable rental assistance payments. Certain payments have been reported to the appropriate agencies in accordance with regulatory requirements. Cause: The significant amount of Federal dollars awarded, the short period of time required to make awards available and the presence of new requirements for the program were burdensome for management to disburse in compliance with Federal guidelines. Compared to the Commission’s other Federal programs, the program involves a very large number of applications and a high volume of transactions resulting in exposure to error and irregularity. Effect: Instances of known and suspected noncompliance were identified by the Commission. Questioned Costs: The Commission has identified $320,658 of known questioned costs in fiscal year 2023. Context: Approximately 1,300 vendors are set up in the Commission’s system for application of emergency rental assistance. Of the vendors with applications approved for funding, 134 are considered to be known noncompliance for a total amount of known questioned costs of $2,112,621 since fiscal year 2021. After the identification of the first instance of noncompliance, the Commission adjusted and enhanced its procedures for evaluating current and existing applications. As the Commission reviews future applications following their updated policies and procedures, additional vendors could be flagged to investigate prior payments for potential ineligible costs. Identification As A Repeat Finding: Repeat of Finding No. 2022-001. Recommendation: We recommend that management continue to apply resources devoted to mitigating and preventing further exposure to noncompliance. Additionally, we recommend the Commission continue to provide additional training to employees as well as third parties responsible for reviewing and approving applications. Internal controls over allowable costs and activities should ensure procedural improvements are implemented properly. Views Of Responsible Officials: See Management’s review and Corrective Action Plan included at the end of the report. Anticipated Completion Date: The Commission implemented additional compliance review procedures during fiscal years 2021 and 2022, reviewed applications to identify potentially fraudulent applications during fiscal years 2022 and 2023 and expects to conclude its investigation of identified cases during fiscal year 2024. Contact Person: Steve Whitson, Director of Community Programs
Finding 2023-002 – Allowable Costs and Activities, Eligibility – Compliance and Control Finding Federal Award. No. 21.023 Emergency Rental Assistance Program – COVID 19 Federal Agency: U.S. Department of Treasury Pass-Through Entity: Missouri Department of Economic Development Criteria Or Specific Requirement: 2 CFR sections 200.400 through 200.401 provide the general provisions for cost principles. Section 200.400(b) states that the non-Federal entity assumes responsibility of administering Federal funds in a manner consistent with underlying agreements, program objectives and the terms and conditions of the Federal award. Condition: In our nonstatistical sample of 40 transactions, we noted no exceptions as a result of our testing. However, during the current fiscal year, management of the Commission identified certain questionable rental assistance payments. Certain payments have been reported to the appropriate agencies in accordance with regulatory requirements and other payments are pending further investigation. Cause: The significant amount of Federal dollars awarded, the short period of time required to make awards available and the presence of new requirements under a new program were burdensome for management to disburse in compliance with Federal guidelines. Compared to the Commission’s other Federal programs, the program involves a very large number of applications and a high volume of transactions resulting in exposure to error and irregularity. Effect: Instances of known and suspected noncompliance were identified by the Commission. Questioned Costs: The Commission has identified $1,613,771 of known questioned costs and is actively investigating an additional $2,956,036 of potential questioned costs in fiscal year 2023. Context: Approximately 33,000 vendors are set up in the Commission’s system for application of emergency rental assistance. Of the vendors with applications approved for funding, 350 are considered to be known noncompliance and 225 are being investigated for potential noncompliance. Since fiscal year 2021, $22,461,431 of costs are actively being investigated by the Commission. Of this amount, the Commission has identified $12,293,592 of known questioned costs and $10,167,839 of potential questioned costs that are still being investigated. After the identification of the first instance of noncompliance, the Commission adjusted and enhanced its procedures for evaluating current and existing applications. As the Commission reviews future applications following their updated policies and procedures, additional vendors could be flagged to investigate prior payments for potential ineligible costs. As the direct rental and utility assistance provided in accordance with this program was concluded and the final disbursements made during February 2023, additional internal metrics and compliance review processes are being developed to apply a consistent process for examining any outstanding questioned costs and to make a final determination regarding the eligibility of disbursed funds. Identification As A Repeat Finding: Repeat of Finding No. 2022-002. Recommendation: We recommend that management continue to apply resources devoted to mitigating and preventing further exposure to noncompliance. Additionally, we recommend the Commission continue to provide additional training to employees as well as third parties responsible for reviewing and approving applications. Internal controls over allowable costs and activities should ensure procedural improvements are implemented properly. Views Of Responsible Officials: See Management’s review and Corrective Action Plan included at the end of the report. Anticipated Completion Date: The Commission implemented additional compliance review procedures during fiscal years 2021 and 2022 and expects to conclude its investigation of the fiscal year identified cases during calendar year 2024. Contact Person: Steve Whitson, Director of Community Programs
Finding 2023-003 – Allowable Costs and Activities, Eligibility – Compliance Finding Federal Award. No. 21.026 Homeowner Assistance Fund – COVID 19 Federal Agency: U.S. Department of Treasury Pass-Through Entity: Missouri Department of Economic Development Criteria Or Specific Requirement: 2 CFR sections 200.400 through 200.401 provide the general provisions for cost principles. Section 200.400(b) states that the non-Federal entity assumes responsibility of administering Federal funds in a manner consistent with underlying agreements, program objectives and the terms and conditions of the Federal award. Condition: The Homeowner Assistance Fund was not tested as a major program in 2023. However, during the current fiscal year, management of the Commission identified certain questionable mortgage assistance payments. Certain payments have been reported to the appropriate agencies in accordance with regulatory requirements. Cause: The significant amount of Federal dollars awarded, the short period of time required to make awards available and the presence of new requirements for the program were burdensome for management to disburse in compliance with Federal guidelines. Compared to the Commission’s other Federal programs, the program involves a very large number of applications and a high volume of transactions resulting in exposure to error and irregularity. Effect: Instances of known and suspected noncompliance were identified by the Commission. Questioned Costs: The Commission has identified $174,926 of known questioned costs in fiscal year 2023. Context: Approximately 220 mortgage loan servicers or financial institutions are set up to receive mortgage assistance payments on behalf of mortgagors. The Commission was alerted by another housing finance agency through an industry group regarding a third-party entity impersonating a mortgage company. Upon investigation, the Commission determined the entity was in noncompliance with the program requirements. The Commission reviewed its onboarding procedures for mortgage loan servicers and enhanced its documentation review to prevent noncompliant mortgage loan servicers from participating in the program. Identification As A Repeat Finding: Not a Repeat Finding. Recommendation: We recommend that management continue to apply resources devoted to mitigating and preventing further exposure to noncompliance. Additionally, we recommend the Commission review and consider improvements to its onboarding procedures and related controls for mortgage loan servicers. Views Of Responsible Officials: See Management’s review and Corrective Action Plan included at the end of the report. Anticipated Completion Date: The Commission implemented additional compliance review procedures during fiscal year 2023 and completed its investigation of the identified case. Contact Person: Steve Whitson, Director of Community Program
Finding 2023-01 – No Written Policies or Procedures, or Standards of Conduct Relative to Federal Awards Criteria – Written policies, procedures, or standards of conduct relative to federal awards are required by 2 U.S. Code of Federal Regulations (CFR) Part 200: Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subparts D and E (Sections 2 CFR 200.300 and 200.400, respectively.) Condition – Sanitation District No. 1 does not have formalized written policies, procedures, or standards of conduct relative to federal awards. Effect – Effective and consistent internal control over compliance relative to federal awards cannot be maintained and monitored without written policies, procedures or standards of conduct. Recommendation – Sanitation District No. 1 should prepare written policies, procedures, or standards of conduct that document internal controls necessary to ensure compliance over the expenditure of federal awards. Management’s Response – Management will prepare written policies to ensure internal control over compliance is documented.
Finding 2023-01 – No Written Policies or Procedures, or Standards of Conduct Relative to Federal Awards Criteria – Written policies, procedures, or standards of conduct relative to federal awards are required by 2 U.S. Code of Federal Regulations (CFR) Part 200: Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subparts D and E (Sections 2 CFR 200.300 and 200.400, respectively.) Condition – Sanitation District No. 1 does not have formalized written policies, procedures, or standards of conduct relative to federal awards. Effect – Effective and consistent internal control over compliance relative to federal awards cannot be maintained and monitored without written policies, procedures or standards of conduct. Recommendation – Sanitation District No. 1 should prepare written policies, procedures, or standards of conduct that document internal controls necessary to ensure compliance over the expenditure of federal awards. Management’s Response – Management will prepare written policies to ensure internal control over compliance is documented.
Finding 2023-01 – No Written Policies or Procedures, or Standards of Conduct Relative to Federal Awards. Criteria – Written policies, procedures, or standards of conduct relative to federal awards are required by 2 U.S. Code of Federal Regulations (CFR) Part 200: Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subparts D and E (Sections 2 CFR 200.300 and 200.400, respectively.) Condition – Mental Health America of Northern Kentucky and Southwest Ohio does not have formalized written policies, procedures, or standards of conduct relative to federal awards. Potential Effect – Effective and consistent internal control over compliance relative to federal awards cannot be maintained and monitored without written policies, procedures or standards of conduct. Recommendation – Mental Health America of Northern Kentucky and Southwest Ohio should prepare written policies, procedures, or standards of conduct that document internal controls necessary to ensure compliance over the expenditure of federal awards. Management’s Response – Mental Health America of Northern Kentucky and Southwest Ohio has modified existing written policies and procedures to ensure effective and consistent internal control over documentation compliance relative to the expenditure of federal awards.
FINDING 2023-007 Subject: COVID-19 - Education Stabilization Fund - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425D Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance to ensure adjustments for payroll were allowed and in conformance with the cost principles. Adjustments were made to payroll disbursement activity between Education Stabilization Fund (ESF) funds. Support for these adjustments was traced to the School Corporation's records to verify the gross payroll activity was properly moved. One adjustment, totaling $27,824, could not be verified. The supporting documentation for this adjustment exceeded the amount of the transaction. Inquiry with School Corporation officials and review of the documentation determined that the amount transferred was based on the remaining grant budget amounts instead of actual payroll disbursements. The $27,824 is considered questioned costs. The ineffective internal controls and noncompliance was limited to the item noted above for the S425D200013 grant award. 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). . . ." INDIANA STATE BOARD OF ACCOUNTS 27 LAKE RIDGE SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . (g) Be adequately documented. . . ." 2 CFR 200.400 states in part: "The application of these cost principles is based on the fundamental premises that: . . . (d) The application of these cost principles should require no significant changes in the internal accounting policies and practices of the non-Federal entity. However, the accounting practices of the non-Federal 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. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, a transfer adjustment was made from one Education Stabilization Fund to another without underlying supporting documentation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $27,824 were identified as detailed in the Condition and Context. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure costs are included in the approved budget, are only requested once, and are not retained if received in error. INDIANA STATE BOARD OF ACCOUNTS 28 LAKE RIDGE SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-007 Subject: COVID-19 - Education Stabilization Fund - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425D Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance to ensure adjustments for payroll were allowed and in conformance with the cost principles. Adjustments were made to payroll disbursement activity between Education Stabilization Fund (ESF) funds. Support for these adjustments was traced to the School Corporation's records to verify the gross payroll activity was properly moved. One adjustment, totaling $27,824, could not be verified. The supporting documentation for this adjustment exceeded the amount of the transaction. Inquiry with School Corporation officials and review of the documentation determined that the amount transferred was based on the remaining grant budget amounts instead of actual payroll disbursements. The $27,824 is considered questioned costs. The ineffective internal controls and noncompliance was limited to the item noted above for the S425D200013 grant award. 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). . . ." INDIANA STATE BOARD OF ACCOUNTS 27 LAKE RIDGE SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . (g) Be adequately documented. . . ." 2 CFR 200.400 states in part: "The application of these cost principles is based on the fundamental premises that: . . . (d) The application of these cost principles should require no significant changes in the internal accounting policies and practices of the non-Federal entity. However, the accounting practices of the non-Federal 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. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, a transfer adjustment was made from one Education Stabilization Fund to another without underlying supporting documentation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $27,824 were identified as detailed in the Condition and Context. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure costs are included in the approved budget, are only requested once, and are not retained if received in error. INDIANA STATE BOARD OF ACCOUNTS 28 LAKE RIDGE SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding Number: 2023-002 State/Educational Agency(s): Arkansas Department of Human Services 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): 6AR300322; 6AR300323; 6AR300342 Federal Award Year(s): 2022 and 2023 Compliance Requirement(s) Affected: Cash Management Type of Finding: Noncompliance and Material Weakness Repeat Finding: Not applicable 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), the non-federal entity is responsible for the 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) CNP Block Consolidated (ALN 10.555). 2) CNP 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. (Note: This correspondence was shared with Agency management during calendar year 2018.) All expenditures are assigned an internal order number to identify the applicable federal program and cost category within AASIS, the State’s accounting system. The Agency’s Division of Child Care and Early Childhood Education (DCCECE) staff are responsible for ensuring expenditures are properly coded in AASIS, and the managerial accounting staff utilize expenditure transactions in AASIS to complete cash draws for direct costs to the program. ALA review of 15 cash draws to determine if funds were drawn from the appropriate grant revealed the following: • Sponsor Administrative and Cash in Lieu expenditures (ALN 10.558), totaling $98,474 and $38,342, respectively, were inappropriately drawn from the CNP Block Consolidated grant (ALN 10.555). (Note: DCCECE transitioned from the Arkansas Department of Human Services to the Arkansas Department of Education on August 1, 2023.) Statistically Valid Sample: Not a statistically valid sample Questioned Costs: $136,816 Cause: DCCECE personnel did not correctly code CACFP Sponsor Administrative expenditures in AASIS, causing managerial accounting staff to draw funds from the incorrect grant award. Additionally, managerial accounting staff did not establish procedures to ensure the Cash in Lieu grant award was adequately funded prior to processing federal cash draws. 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. In addition, ALA staff recommend the Agency strengthen procedures to ensure that staff properly monitor federal cash draws by reconciling with allowable expenditures and request additional funds when necessary. Views of Responsible Officials and Planned Corrective Action: Department of Human Services Response DHS concurs with the finding. The Division of Childcare and Early Childhood Education (DCCECE) utilized a custom software platform to provide payment files to the State’s accounting software, AASIS, to issue payments to recipients. Within this software, the AASIS coding for Sponsor Administrative costs is coded to CNP Block Consolidated (ALN 10.555) instead of CNP CACFP Sponsor Administrative (ALN 10.558) for the questioned costs of $98,474.00. Expense error corrections were not received timely by managerial accounting staff prior to the close out of SFY2023. Effective August 1, 2023, the division formerly known as DCCECE at DHS transitioned to the Arkansas Department of Education (ADE). DHS alerted financial staff with ADE in February 2024 to review the custom software platform to ensure grant expenses are being properly coded now. Due to depleted grant funds in CNP CACFP Cash in Lieu (ALN 10.558), the questioned costs of $38,341.68 in grants funds were manually moved by DHS Managerial Accounting staff into the CNP Block Consolidated grant. Managerial accounting staff have been retrained to ensure adequate federal funds are available prior to drawing. If manual adjustments are required, the division’s CFO, or their designee, must review and approve manual adjustments prior to the managerial accounting staff executing manual adjustments. DHS Office of Finance is developing an internal control documenting the prior approval process. DHS will continue to work in cooperation and coordination with ADE to provide all relevant financial information, documentation, or other items necessary for the administrative functions of DCCECE so as not to disrupt any services. Arkansas Department of Education Response The Arkansas Department of Education, Finance unit monitors federal grant awards by using separate cost centers for each program and award year within. This process provides transparent delineation of expenses and revenues within the State’s accounting system, AASIS. Additionally, ADE Finance owns an established procedure to reconcile federal grant awards for each month, within 90 days of the month’s end. The reconciliation procedure accounts for all activity within the grants and ensures data is aligned from the federal drawdown system to the State’s accounting system, AASIS. Anticipated Completion Date: Department of Human Services Response: 3/31/2024 Arkansas Department of Education Response: The itemized CNP programs are reconciled using ADE procedures as of August 1,2023. ADE ensures the accuracy of data from August 1, 2023, through January 31, 2024. Contact Person: Misty Eubanks Deputy Secretary for Operations and Budget and Interim Chief Financial Officer Department of Human Services P.O. Box 1437, Slot S201 Little Rock, AR 72203-1437 501-320-6327 Misty.Eubanks@dhs.arkansas.gov Amy Thomas Accounting Operations Manager Arkansas Department of Education Four Capitol Mall, Room 204 Little Rock, AR 72201 501-682-3636 Amy.Thomas@ade.arkansas.gov
2023-003 - Control Weakness Related to Cost Allocation Process Award Years: 2018 - 2023 Award Numbers: 1804LADI00, 1904LADI00, 2004LADI00, 2104LADI00, 2201LACSES, 2201LAFOST, 2201LASOSR, 2204LADI00, 2301LACSES, 2301LAFOST, 2301LASOSR, 2304LADI00, SNAP - Letter of Credit Compliance Requirement: Allowable Costs/Cost Principles Repeat Finding: No 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 that expenditures were properly charged and allocated in accordance with the Cost Allocation Plan (CAP), which assigns costs to federal programs. In a statistical sample of 60 transactions out of a population of 241,344 expenditure transactions totaling $387,232,398 allocated to federal programs, two (3%) transactions had the following errors: • For one transaction, the supporting documentation was for a prior fiscal year, which resulted in incorrect percentages being charged to various cost pools affecting non-major federal programs. This error resulted in overbilling the Social Services Block Grant (SSBG) by $10,749 and underbilling Foster Care Title IV-E by $35,357. The amount overbilled to SSBG represents questioned costs. • For one transaction, the cost pool was not included in the CAP in error, and the amendment to the CAP was not submitted timely. 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. Per 45 CFR 95.509(a)(1) and (4), the state shall promptly amend the cost allocation plan and submit the amended plan to the Director, Division of Cost Allocation, if the following events occur: (1) The procedures shown in the existing cost allocation plan become outdated because of organizational changes, changes in federal law or regulations, or significant changes in program levels, affecting the validity of the approved cost allocation procedures. (4) Other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid. Cause: These errors occurred because there was not an effective review process in place and because the department did not ensure the timely correction of errors to the CAP. Effect: Failure to adequately review cost allocation supporting documentation and to ensure that changes are made to the cost allocation plan timely increases the risk that unallowable costs could be charged to federal programs. Recommendation: Management should strengthen internal controls over the review process and update the cost allocation plan for cost pool noted. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-3).
2023-003 - Control Weakness Related to Cost Allocation Process Award Years: 2018 - 2023 Award Numbers: 1804LADI00, 1904LADI00, 2004LADI00, 2104LADI00, 2201LACSES, 2201LAFOST, 2201LASOSR, 2204LADI00, 2301LACSES, 2301LAFOST, 2301LASOSR, 2304LADI00, SNAP - Letter of Credit Compliance Requirement: Allowable Costs/Cost Principles Repeat Finding: No 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 that expenditures were properly charged and allocated in accordance with the Cost Allocation Plan (CAP), which assigns costs to federal programs. In a statistical sample of 60 transactions out of a population of 241,344 expenditure transactions totaling $387,232,398 allocated to federal programs, two (3%) transactions had the following errors: • For one transaction, the supporting documentation was for a prior fiscal year, which resulted in incorrect percentages being charged to various cost pools affecting non-major federal programs. This error resulted in overbilling the Social Services Block Grant (SSBG) by $10,749 and underbilling Foster Care Title IV-E by $35,357. The amount overbilled to SSBG represents questioned costs. • For one transaction, the cost pool was not included in the CAP in error, and the amendment to the CAP was not submitted timely. 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. Per 45 CFR 95.509(a)(1) and (4), the state shall promptly amend the cost allocation plan and submit the amended plan to the Director, Division of Cost Allocation, if the following events occur: (1) The procedures shown in the existing cost allocation plan become outdated because of organizational changes, changes in federal law or regulations, or significant changes in program levels, affecting the validity of the approved cost allocation procedures. (4) Other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid. Cause: These errors occurred because there was not an effective review process in place and because the department did not ensure the timely correction of errors to the CAP. Effect: Failure to adequately review cost allocation supporting documentation and to ensure that changes are made to the cost allocation plan timely increases the risk that unallowable costs could be charged to federal programs. Recommendation: Management should strengthen internal controls over the review process and update the cost allocation plan for cost pool noted. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-3).
2023-003 - Control Weakness Related to Cost Allocation Process Award Years: 2018 - 2023 Award Numbers: 1804LADI00, 1904LADI00, 2004LADI00, 2104LADI00, 2201LACSES, 2201LAFOST, 2201LASOSR, 2204LADI00, 2301LACSES, 2301LAFOST, 2301LASOSR, 2304LADI00, SNAP - Letter of Credit Compliance Requirement: Allowable Costs/Cost Principles Repeat Finding: No 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 that expenditures were properly charged and allocated in accordance with the Cost Allocation Plan (CAP), which assigns costs to federal programs. In a statistical sample of 60 transactions out of a population of 241,344 expenditure transactions totaling $387,232,398 allocated to federal programs, two (3%) transactions had the following errors: • For one transaction, the supporting documentation was for a prior fiscal year, which resulted in incorrect percentages being charged to various cost pools affecting non-major federal programs. This error resulted in overbilling the Social Services Block Grant (SSBG) by $10,749 and underbilling Foster Care Title IV-E by $35,357. The amount overbilled to SSBG represents questioned costs. • For one transaction, the cost pool was not included in the CAP in error, and the amendment to the CAP was not submitted timely. 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. Per 45 CFR 95.509(a)(1) and (4), the state shall promptly amend the cost allocation plan and submit the amended plan to the Director, Division of Cost Allocation, if the following events occur: (1) The procedures shown in the existing cost allocation plan become outdated because of organizational changes, changes in federal law or regulations, or significant changes in program levels, affecting the validity of the approved cost allocation procedures. (4) Other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid. Cause: These errors occurred because there was not an effective review process in place and because the department did not ensure the timely correction of errors to the CAP. Effect: Failure to adequately review cost allocation supporting documentation and to ensure that changes are made to the cost allocation plan timely increases the risk that unallowable costs could be charged to federal programs. Recommendation: Management should strengthen internal controls over the review process and update the cost allocation plan for cost pool noted. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-3).
2023-003 - Control Weakness Related to Cost Allocation Process Award Years: 2018 - 2023 Award Numbers: 1804LADI00, 1904LADI00, 2004LADI00, 2104LADI00, 2201LACSES, 2201LAFOST, 2201LASOSR, 2204LADI00, 2301LACSES, 2301LAFOST, 2301LASOSR, 2304LADI00, SNAP - Letter of Credit Compliance Requirement: Allowable Costs/Cost Principles Repeat Finding: No 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 that expenditures were properly charged and allocated in accordance with the Cost Allocation Plan (CAP), which assigns costs to federal programs. In a statistical sample of 60 transactions out of a population of 241,344 expenditure transactions totaling $387,232,398 allocated to federal programs, two (3%) transactions had the following errors: • For one transaction, the supporting documentation was for a prior fiscal year, which resulted in incorrect percentages being charged to various cost pools affecting non-major federal programs. This error resulted in overbilling the Social Services Block Grant (SSBG) by $10,749 and underbilling Foster Care Title IV-E by $35,357. The amount overbilled to SSBG represents questioned costs. • For one transaction, the cost pool was not included in the CAP in error, and the amendment to the CAP was not submitted timely. 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. Per 45 CFR 95.509(a)(1) and (4), the state shall promptly amend the cost allocation plan and submit the amended plan to the Director, Division of Cost Allocation, if the following events occur: (1) The procedures shown in the existing cost allocation plan become outdated because of organizational changes, changes in federal law or regulations, or significant changes in program levels, affecting the validity of the approved cost allocation procedures. (4) Other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid. Cause: These errors occurred because there was not an effective review process in place and because the department did not ensure the timely correction of errors to the CAP. Effect: Failure to adequately review cost allocation supporting documentation and to ensure that changes are made to the cost allocation plan timely increases the risk that unallowable costs could be charged to federal programs. Recommendation: Management should strengthen internal controls over the review process and update the cost allocation plan for cost pool noted. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-3).
2023-003 - Control Weakness Related to Cost Allocation Process Award Years: 2018 - 2023 Award Numbers: 1804LADI00, 1904LADI00, 2004LADI00, 2104LADI00, 2201LACSES, 2201LAFOST, 2201LASOSR, 2204LADI00, 2301LACSES, 2301LAFOST, 2301LASOSR, 2304LADI00, SNAP - Letter of Credit Compliance Requirement: Allowable Costs/Cost Principles Repeat Finding: No 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 that expenditures were properly charged and allocated in accordance with the Cost Allocation Plan (CAP), which assigns costs to federal programs. In a statistical sample of 60 transactions out of a population of 241,344 expenditure transactions totaling $387,232,398 allocated to federal programs, two (3%) transactions had the following errors: • For one transaction, the supporting documentation was for a prior fiscal year, which resulted in incorrect percentages being charged to various cost pools affecting non-major federal programs. This error resulted in overbilling the Social Services Block Grant (SSBG) by $10,749 and underbilling Foster Care Title IV-E by $35,357. The amount overbilled to SSBG represents questioned costs. • For one transaction, the cost pool was not included in the CAP in error, and the amendment to the CAP was not submitted timely. 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. Per 45 CFR 95.509(a)(1) and (4), the state shall promptly amend the cost allocation plan and submit the amended plan to the Director, Division of Cost Allocation, if the following events occur: (1) The procedures shown in the existing cost allocation plan become outdated because of organizational changes, changes in federal law or regulations, or significant changes in program levels, affecting the validity of the approved cost allocation procedures. (4) Other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid. Cause: These errors occurred because there was not an effective review process in place and because the department did not ensure the timely correction of errors to the CAP. Effect: Failure to adequately review cost allocation supporting documentation and to ensure that changes are made to the cost allocation plan timely increases the risk that unallowable costs could be charged to federal programs. Recommendation: Management should strengthen internal controls over the review process and update the cost allocation plan for cost pool noted. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-3).
2023-003 - Control Weakness Related to Cost Allocation Process Award Years: 2018 - 2023 Award Numbers: 1804LADI00, 1904LADI00, 2004LADI00, 2104LADI00, 2201LACSES, 2201LAFOST, 2201LASOSR, 2204LADI00, 2301LACSES, 2301LAFOST, 2301LASOSR, 2304LADI00, SNAP - Letter of Credit Compliance Requirement: Allowable Costs/Cost Principles Repeat Finding: No 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 that expenditures were properly charged and allocated in accordance with the Cost Allocation Plan (CAP), which assigns costs to federal programs. In a statistical sample of 60 transactions out of a population of 241,344 expenditure transactions totaling $387,232,398 allocated to federal programs, two (3%) transactions had the following errors: • For one transaction, the supporting documentation was for a prior fiscal year, which resulted in incorrect percentages being charged to various cost pools affecting non-major federal programs. This error resulted in overbilling the Social Services Block Grant (SSBG) by $10,749 and underbilling Foster Care Title IV-E by $35,357. The amount overbilled to SSBG represents questioned costs. • For one transaction, the cost pool was not included in the CAP in error, and the amendment to the CAP was not submitted timely. 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. Per 45 CFR 95.509(a)(1) and (4), the state shall promptly amend the cost allocation plan and submit the amended plan to the Director, Division of Cost Allocation, if the following events occur: (1) The procedures shown in the existing cost allocation plan become outdated because of organizational changes, changes in federal law or regulations, or significant changes in program levels, affecting the validity of the approved cost allocation procedures. (4) Other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid. Cause: These errors occurred because there was not an effective review process in place and because the department did not ensure the timely correction of errors to the CAP. Effect: Failure to adequately review cost allocation supporting documentation and to ensure that changes are made to the cost allocation plan timely increases the risk that unallowable costs could be charged to federal programs. Recommendation: Management should strengthen internal controls over the review process and update the cost allocation plan for cost pool noted. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-3).
SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (Continued) Ref. No. Compliance and Internal Control over Compliance Findings 2023-005 Allowable Costs – Material Weakness Federal agency: Department of Justice Programs Pass-Through Entity: State of Hawaii Department of the Attorney General Program: ALN No. 16.575 Crime Victim Assistance Criteria: Allowable costs are those costs consistent with the principles set forth in the Uniform Guidance 2 CFR §200 Subpart E – Cost Principles, and found in the laws, regulations, and the provisions of contracts or grant agreements pertaining to the Crime Victim Assistance Program (Program). 2 CFR §200.400 – Policy guide states that the application of the cost principles is based on the fundamental premises that the County, in recognition of its own unique combination of staff, facilities, and experience, has the primary responsibility for employing whatever form of sound organization and management techniques may be necessary in order to assure proper and efficient administration of the Federal award. In addition, the County’s accounting practices must be consistent with the 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. 2 CFR §200.430 – Compensation for personal services states that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees is reasonable for services rendered and conforms to the established written policy of the County and is determined and supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. The County recovers all expenditures through reimbursements from the State of Hawaii Attorney General’s (SOH AG) office on a monthly basis. The Account Clerk prepares a Request for Funds and Cash Balance Form (RFF) for submission and review. All expenditures are summarized using the County’s Finance Enterprise (FE) Form for the respective reimbursement period and is included in the RFF submitted to the SOH AG’s office for reimbursement. Condition: During our testing of allowable costs related to non-payroll expenditures, we noted the following: • Twenty-five (25) out of 25 instances where the County was unable to provide the FE Form for the respective RFF. During our testing of the allowable costs related to payroll expenditures, we noted the following: • Sixteen (16) out of 16 instances where the County was unable to locate the RFF for payroll costs. Cause: The County did not follow its procedures to prepare and review adequate documentation to support the accumulation of costs charged. Effect: Review and preparation of adequate documentation to support accumulated costs help to ensure that the Federal award is used for authorized purposes and is being administered in accordance to 2 CFR §200 Subpart E. Questioned Cost: $ -- Recommendation We recommend the County follow their internal control process to ensure that adequate documentation supports the accumulation of costs charged to the Program as required by 2 CFR §200 Subpart E. Views of Responsible Officials and Planned Corrective Action The County agrees with the finding and the recommendation. See Part IV Corrective Action Plan
2023-024 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 and 93.778 Medicaid Cluster Federal Award Numbers and Years: 2205OR5MAP, 2022; 2205OR5ADM, 2022; 2305OR5MAP, 2023; 2305OR05ADM, 2023 Compliance Requirement: Activities Allowed or Unallowed Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: $3,849 (known) Criteria: 2 CFR 200.1(1); 2 CFR 200.400(a); 42 CFR § 433.32(a) Federal regulations only allow the Medicaid program to charge allowable and supported program expenditures for various program costs at the time of payment for services 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, which the department did not identify during their review process, that resulted in improper payment of Medicaid expenditures: • For one payment, management was unable to provide documentation to support charges related to the Medicaid program, resulting in known federally funded questioned costs of $2,153. • For one payment the expenditure was not related to Medicaid services, resulting in known federally funded questioned costs of $1,697. The above issues occurred due to human error and inadequate record maintenance which could lead to unallowed activities/costs being charged to the Medicaid program. We recommend department management strengthen controls over review to ensure transactions are adequately supported and reviewed. Additionally, we recommend the department reimburse the federal agency for unallowable costs.
2023-024 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 and 93.778 Medicaid Cluster Federal Award Numbers and Years: 2205OR5MAP, 2022; 2205OR5ADM, 2022; 2305OR5MAP, 2023; 2305OR05ADM, 2023 Compliance Requirement: Activities Allowed or Unallowed Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: $3,849 (known) Criteria: 2 CFR 200.1(1); 2 CFR 200.400(a); 42 CFR § 433.32(a) Federal regulations only allow the Medicaid program to charge allowable and supported program expenditures for various program costs at the time of payment for services 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, which the department did not identify during their review process, that resulted in improper payment of Medicaid expenditures: • For one payment, management was unable to provide documentation to support charges related to the Medicaid program, resulting in known federally funded questioned costs of $2,153. • For one payment the expenditure was not related to Medicaid services, resulting in known federally funded questioned costs of $1,697. The above issues occurred due to human error and inadequate record maintenance which could lead to unallowed activities/costs being charged to the Medicaid program. We recommend department management strengthen controls over review to ensure transactions are adequately supported and reviewed. Additionally, we recommend the department reimburse the federal agency for unallowable costs.
Finding 2023-004 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 Native Youth Community Programs ALN: 84.184 and 84.299 Award Numbers: S184G190154-23 and S299A180025-21 Award Years: 2021 for ALN 84.299 and 2023 for ALN 84.184 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: We selected a sample of 25 expenditures transactions for ALN 84.184. The District did not provide supporting documentation for 17 of these transactions. We also selected a sample of 11 expenditures transactions for ALN 84.299. The District did not provide supporting documentation for 8 of these transactions. The District also did not provide detailed payroll distribution reports to select samples from. We selected 2 payroll transactions for ALN 84.184 and 9 payroll transactions for ALN 84.299. The District did not provide the auditors with supporting documentation for any of the payroll transactions selected. This is a repeat finding of 2022-008. 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 for ALN 84.184 are $35,226 and known quested costs for ALN 84.299 are $126,821 due to no supporting documentation provided. Repeat Finding: No. We believe this to be an isolated issue due to employee turnover. 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 2023-004 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 Native Youth Community Programs ALN: 84.184 and 84.299 Award Numbers: S184G190154-23 and S299A180025-21 Award Years: 2021 for ALN 84.299 and 2023 for ALN 84.184 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: We selected a sample of 25 expenditures transactions for ALN 84.184. The District did not provide supporting documentation for 17 of these transactions. We also selected a sample of 11 expenditures transactions for ALN 84.299. The District did not provide supporting documentation for 8 of these transactions. The District also did not provide detailed payroll distribution reports to select samples from. We selected 2 payroll transactions for ALN 84.184 and 9 payroll transactions for ALN 84.299. The District did not provide the auditors with supporting documentation for any of the payroll transactions selected. This is a repeat finding of 2022-008. 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 for ALN 84.184 are $35,226 and known quested costs for ALN 84.299 are $126,821 due to no supporting documentation provided. Repeat Finding: No. We believe this to be an isolated issue due to employee turnover. 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 2023-005 Lack of Internal Control / Noncompliance over Subrecipient Monitoring Material Weakness Material Noncompliance Federal Agency: U.S. Department of Education Federal Program: School Safety National Activities ALN: 84.184 Award Numbers: S184G190154-23 Award Years: 2023 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Subrecipient monitoring principles are defined in 2 CFR 200.400. Condition and Context: We selected 2 of the subrecipients that received pass thru funds. The District did not provide supporting documentation ensuring that adequate subreciepient monitoring activities were being followed. Cause: Lack of internal control over subrecipient monitoring. Effect: The lack of supporting documentation allows for the potential for misstatement of expenditures being charged to the major program for which the subrecipient is not allowed. Questioned Costs: Actual and likely questioned costs estimated to be above the reporting threshold of $25,000. Based on the auditor’s review of program expenditures provided by the District, we estimate that the amount charged by subrecipients to the District was $184,651. Repeat Finding: No. We believe this to be an isolated issue due to employee turnover. Recommendation: We recommend the District adhere to their internal control policies to ensure that the regulations contained in 2 CFR 200 are followed and to ensure that subreipients are appropriately spending passed through federal money. Management’s Response: Management agrees with this finding. See Corrective Action Plan.
Assistance Listing, Federal Agency, and Program Name - 93.778, U.S. Department of Health and Human Services, Medicaid Cluster - Medical Assistance Program Federal Award Identification Number and Year - HCBS000020, 2023 Pass through Entity - Illinois Department of Healthcare and Family Services Finding Type - Significant deficiency and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.400(c) The non Federal entity, in recognition of its own unique combination of staff, facilities, and experience, has the primary responsibility for employing whatever form of sound organization and management techniques may be necessary in order to assure proper and efficient administration of the Federal award. 2 CFR 200.458 Pre-award costs are allowable only to the extent that they would have been allowable if incurred after the date of the Federal award and only with the written approval of the Federal awarding agency. Condition - A duplicate expense was recorded to the program and expenses were recorded to the program prior to the period of performance Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A, see additional information within the context below Context - Five expenses totaling $4,050 were recorded to the grant as pre award expenses without written approval and another expense of $20,229 was recorded twice to the program. Cause and Effect - The Organization recorded journal entries during the year and the process and reviews for the journal entries did not identify expenses were incurred prior to the start of the period of performance. The duplicate expense was identified but not corrected prior finalization of the SEFA. Recommendation - We recommend the Organization increase controls over manual adjustments to record expenses charged to grants. Views of Responsible Officials and Corrective Action Plan - Management acknowledges noncompliance in the current fiscal year and has taken measures to improve internal controls over compliance. Management has instituted procedures to provide a review of journal entries to reclass expenses to grant funded programs and promptly record.
DEPARTMENT OF FINANCE AND ADMINISTRATION MONITORING Material Weakness Material Noncompliance 2023-026 Strengthen Controls to Ensure Compliance with Federal Monitoring Requirements. ALN Number(s) 21.023 COVID-19 Emergency Rental Assistance (ERA) Federal Award No. N/A Questioned Costs N/A Criteria Code of Federal Regulations (2 CFR 200.400) requires the non-federal entity: • To be responsible for the efficient and effective administration of the Federal award through the application of sound management practices. • Assume responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. • Ensure the cost allocation plans or indirect cost proposals, the cognizant agency for indirect costs should generally assure that the non-Federal entity is applying these cost accounting principles on a consistent basis during the review and negotiation of indirect cost proposals. Where wide variations exist in the treatment of a given cost item by the non-Federal entity, the reasonableness and equity of such treatments should be fully considered. Code of Federal Regulations (2 CFR 200.303) requires the Non-federal entity: • 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). • Evaluate and monitor the non-Federal entity’s compliance with statutes, regulations and terms and conditions of Federal awards. Condition The Department of Finance and Administration (DFA) passed federal funds to a third-party administrator, Mississippi Home Corporation (MHC) but did not document this subrecipient relationship via a subaward agreement, nor did DFA monitor and support MHC as a subrecipient. MHC is a quasi-governmental agency and not part of the State of Mississippi’s financial reporting structure. Therefore, due to lack of support of the subrecipient relationship, we the deemed the programs to be administered by DFA. During testing we noted that DFA did not assume responsibility for the administration of the federal award as required by 2 CFR 200.400, nor did they establish and maintain effective internal controls over the federal award as required by 2 CFR 200.303. DFA did not document their review and approval of program costs which included payroll cost charged to the program based on a billing methodology used for program cost charged to U.S. Department of Housing and Urban Development (HUD) housing counseling grants. There was no evidence of DFA’s review and approval over eligibility determined by the MHC or financial and programmatic reports prepared by MHC. Cause The Mississippi Department of Finance and Administration (DFA) does not consider Mississippi Home Corporation as a subrecipient nor does DFA assume responsibility for the direct and material compliance requirements. The program is administered without any responsibility and oversight from the State of Mississippi, the grant recipient. Effect Without proper monitoring there is an increased risk of charging unallowed costs and activity to the program and noncompliance with direct and material compliance requirements. Recommendation We recommend the Department of Finance and Administration strengthen controls to ensure compliance with monitoring processes in order to ensure federal compliance requirements are being met. Repeat Finding Yes; 2022-032. Statistically Valid No.
System of Internal Controls Over Compliance for Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Period of Performance Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: State of Nevada Federal Program: Block Grants for Community Mental Health Services (AL# 93.958); Block Grants for Prevention and Treatment of Substance Abuse (AL# 93.959) Criteria: In accordance with 2 CFR 200.400 and 45 CFR 75.303, the Organization is responsible for effective administration of federal awards through sound management practices, to include effective internal controls over supporting documentation for cost allocations. Condition: A primary control over employee time entry and subsequent billing to grants is the review and approval of bimonthly timesheets by supervisors, and this review and approval is indicated by the supervisor signing the timesheet. During our testing, we noted that the signature of supervisors indicating this review was absent from 8 of the 64 timesheets tested for Block Grants for Community Mental Health Services, AL# 93.958 and 11 of the 68 timesheets tested for Block Grants for Prevention and Treatment of Substance Abuse, AL# 93.959. These grants had multiple duplicate employees tested between the two grants. Total unduplicated findings were that the signature of supervisors indicating this review was absent from 11 of the 88 unduplicated timesheets selected, indicating this primary control was not operating effectively during the year. Cause: Digital signatures were utilized during the fiscal year that, at times, did not save properly. Timesheets were not re-reviewed or re-signed if they did not save properly. While a compensating control existed whereby the overall expenditures were reviewed during the request for reimbursement process prior to submission, the primary control was not consistently evidenced. Effect: Lack of indication of review and approval of timesheets could cause inaccurate time entry and inaccurate requests for reimbursements to be processed. Recommendation: We recommend that all timesheets are signed by a supervisor immediately after their review and approval to ensure documentation of the control exists and to ensure timesheet accuracy. We further recommend that, if timesheets with no signature are noted during the request for reimbursement process, they be returned to the supervisor for review and signature prior to the request for reimbursement being submitted. Views of Responsible Officials and Planned Corrective Actions: As of April 2024, the organization implemented a new electronic timekeeping system (SwipeClock) in partnership with a third-party payroll provider. This system includes: • Supervisor approval of all time entries. • A final review by a member of the executive team (CEO, Operations Manager, or Accounting Coordinator). This three-tiered approval process ensures accuracy and accountability in payroll allocation to federal grants.
System of Internal Controls Over Compliance for Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Period of Performance Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: State of Nevada Federal Program: Block Grants for Community Mental Health Services (AL# 93.958); Block Grants for Prevention and Treatment of Substance Abuse (AL# 93.959) Criteria: In accordance with 2 CFR 200.400 and 45 CFR 75.303, the Organization is responsible for effective administration of federal awards through sound management practices, to include effective internal controls over supporting documentation for cost allocations. Condition: A primary control over employee time entry and subsequent billing to grants is the review and approval of bimonthly timesheets by supervisors, and this review and approval is indicated by the supervisor signing the timesheet. During our testing, we noted that the signature of supervisors indicating this review was absent from 8 of the 64 timesheets tested for Block Grants for Community Mental Health Services, AL# 93.958 and 11 of the 68 timesheets tested for Block Grants for Prevention and Treatment of Substance Abuse, AL# 93.959. These grants had multiple duplicate employees tested between the two grants. Total unduplicated findings were that the signature of supervisors indicating this review was absent from 11 of the 88 unduplicated timesheets selected, indicating this primary control was not operating effectively during the year. Cause: Digital signatures were utilized during the fiscal year that, at times, did not save properly. Timesheets were not re-reviewed or re-signed if they did not save properly. While a compensating control existed whereby the overall expenditures were reviewed during the request for reimbursement process prior to submission, the primary control was not consistently evidenced. Effect: Lack of indication of review and approval of timesheets could cause inaccurate time entry and inaccurate requests for reimbursements to be processed. Recommendation: We recommend that all timesheets are signed by a supervisor immediately after their review and approval to ensure documentation of the control exists and to ensure timesheet accuracy. We further recommend that, if timesheets with no signature are noted during the request for reimbursement process, they be returned to the supervisor for review and signature prior to the request for reimbursement being submitted. Views of Responsible Officials and Planned Corrective Actions: As of April 2024, the organization implemented a new electronic timekeeping system (SwipeClock) in partnership with a third-party payroll provider. This system includes: • Supervisor approval of all time entries. • A final review by a member of the executive team (CEO, Operations Manager, or Accounting Coordinator). This three-tiered approval process ensures accuracy and accountability in payroll allocation to federal grants.
System of Internal Controls Over Compliance for Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Period of Performance Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: State of Nevada Federal Program: Block Grants for Community Mental Health Services (AL# 93.958); Block Grants for Prevention and Treatment of Substance Abuse (AL# 93.959) Criteria: In accordance with 2 CFR 200.400 and 45 CFR 75.303, the Organization is responsible for effective administration of federal awards through sound management practices, to include effective internal controls over supporting documentation for cost allocations. Condition: A primary control over employee time entry and subsequent billing to grants is the review and approval of bimonthly timesheets by supervisors, and this review and approval is indicated by the supervisor signing the timesheet. During our testing, we noted that the signature of supervisors indicating this review was absent from 8 of the 64 timesheets tested for Block Grants for Community Mental Health Services, AL# 93.958 and 11 of the 68 timesheets tested for Block Grants for Prevention and Treatment of Substance Abuse, AL# 93.959. These grants had multiple duplicate employees tested between the two grants. Total unduplicated findings were that the signature of supervisors indicating this review was absent from 11 of the 88 unduplicated timesheets selected, indicating this primary control was not operating effectively during the year. Cause: Digital signatures were utilized during the fiscal year that, at times, did not save properly. Timesheets were not re-reviewed or re-signed if they did not save properly. While a compensating control existed whereby the overall expenditures were reviewed during the request for reimbursement process prior to submission, the primary control was not consistently evidenced. Effect: Lack of indication of review and approval of timesheets could cause inaccurate time entry and inaccurate requests for reimbursements to be processed. Recommendation: We recommend that all timesheets are signed by a supervisor immediately after their review and approval to ensure documentation of the control exists and to ensure timesheet accuracy. We further recommend that, if timesheets with no signature are noted during the request for reimbursement process, they be returned to the supervisor for review and signature prior to the request for reimbursement being submitted. Views of Responsible Officials and Planned Corrective Actions: As of April 2024, the organization implemented a new electronic timekeeping system (SwipeClock) in partnership with a third-party payroll provider. This system includes: • Supervisor approval of all time entries. • A final review by a member of the executive team (CEO, Operations Manager, or Accounting Coordinator). This three-tiered approval process ensures accuracy and accountability in payroll allocation to federal grants.
System of Internal Controls Over Compliance for Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Period of Performance Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: State of Nevada Federal Program: Block Grants for Community Mental Health Services (AL# 93.958); Block Grants for Prevention and Treatment of Substance Abuse (AL# 93.959) Criteria: In accordance with 2 CFR 200.400 and 45 CFR 75.303, the Organization is responsible for effective administration of federal awards through sound management practices, to include effective internal controls over supporting documentation for cost allocations. Condition: A primary control over employee time entry and subsequent billing to grants is the review and approval of bimonthly timesheets by supervisors, and this review and approval is indicated by the supervisor signing the timesheet. During our testing, we noted that the signature of supervisors indicating this review was absent from 8 of the 64 timesheets tested for Block Grants for Community Mental Health Services, AL# 93.958 and 11 of the 68 timesheets tested for Block Grants for Prevention and Treatment of Substance Abuse, AL# 93.959. These grants had multiple duplicate employees tested between the two grants. Total unduplicated findings were that the signature of supervisors indicating this review was absent from 11 of the 88 unduplicated timesheets selected, indicating this primary control was not operating effectively during the year. Cause: Digital signatures were utilized during the fiscal year that, at times, did not save properly. Timesheets were not re-reviewed or re-signed if they did not save properly. While a compensating control existed whereby the overall expenditures were reviewed during the request for reimbursement process prior to submission, the primary control was not consistently evidenced. Effect: Lack of indication of review and approval of timesheets could cause inaccurate time entry and inaccurate requests for reimbursements to be processed. Recommendation: We recommend that all timesheets are signed by a supervisor immediately after their review and approval to ensure documentation of the control exists and to ensure timesheet accuracy. We further recommend that, if timesheets with no signature are noted during the request for reimbursement process, they be returned to the supervisor for review and signature prior to the request for reimbursement being submitted. Views of Responsible Officials and Planned Corrective Actions: As of April 2024, the organization implemented a new electronic timekeeping system (SwipeClock) in partnership with a third-party payroll provider. This system includes: • Supervisor approval of all time entries. • A final review by a member of the executive team (CEO, Operations Manager, or Accounting Coordinator). This three-tiered approval process ensures accuracy and accountability in payroll allocation to federal grants.
System of Internal Controls Over Compliance for Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Period of Performance Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: State of Nevada Federal Program: Block Grants for Community Mental Health Services (AL# 93.958); Block Grants for Prevention and Treatment of Substance Abuse (AL# 93.959) Criteria: In accordance with 2 CFR 200.400 and 45 CFR 75.303, the Organization is responsible for effective administration of federal awards through sound management practices, to include effective internal controls over supporting documentation for cost allocations. Condition: A primary control over employee time entry and subsequent billing to grants is the review and approval of bimonthly timesheets by supervisors, and this review and approval is indicated by the supervisor signing the timesheet. During our testing, we noted that the signature of supervisors indicating this review was absent from 8 of the 64 timesheets tested for Block Grants for Community Mental Health Services, AL# 93.958 and 11 of the 68 timesheets tested for Block Grants for Prevention and Treatment of Substance Abuse, AL# 93.959. These grants had multiple duplicate employees tested between the two grants. Total unduplicated findings were that the signature of supervisors indicating this review was absent from 11 of the 88 unduplicated timesheets selected, indicating this primary control was not operating effectively during the year. Cause: Digital signatures were utilized during the fiscal year that, at times, did not save properly. Timesheets were not re-reviewed or re-signed if they did not save properly. While a compensating control existed whereby the overall expenditures were reviewed during the request for reimbursement process prior to submission, the primary control was not consistently evidenced. Effect: Lack of indication of review and approval of timesheets could cause inaccurate time entry and inaccurate requests for reimbursements to be processed. Recommendation: We recommend that all timesheets are signed by a supervisor immediately after their review and approval to ensure documentation of the control exists and to ensure timesheet accuracy. We further recommend that, if timesheets with no signature are noted during the request for reimbursement process, they be returned to the supervisor for review and signature prior to the request for reimbursement being submitted. Views of Responsible Officials and Planned Corrective Actions: As of April 2024, the organization implemented a new electronic timekeeping system (SwipeClock) in partnership with a third-party payroll provider. This system includes: • Supervisor approval of all time entries. • A final review by a member of the executive team (CEO, Operations Manager, or Accounting Coordinator). This three-tiered approval process ensures accuracy and accountability in payroll allocation to federal grants.
System of Internal Controls Over Compliance for Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Period of Performance Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: State of Nevada Federal Program: Block Grants for Community Mental Health Services (AL# 93.958); Block Grants for Prevention and Treatment of Substance Abuse (AL# 93.959) Criteria: In accordance with 2 CFR 200.400 and 45 CFR 75.303, the Organization is responsible for effective administration of federal awards through sound management practices, to include effective internal controls over supporting documentation for cost allocations. Condition: A primary control over employee time entry and subsequent billing to grants is the review and approval of bimonthly timesheets by supervisors, and this review and approval is indicated by the supervisor signing the timesheet. During our testing, we noted that the signature of supervisors indicating this review was absent from 8 of the 64 timesheets tested for Block Grants for Community Mental Health Services, AL# 93.958 and 11 of the 68 timesheets tested for Block Grants for Prevention and Treatment of Substance Abuse, AL# 93.959. These grants had multiple duplicate employees tested between the two grants. Total unduplicated findings were that the signature of supervisors indicating this review was absent from 11 of the 88 unduplicated timesheets selected, indicating this primary control was not operating effectively during the year. Cause: Digital signatures were utilized during the fiscal year that, at times, did not save properly. Timesheets were not re-reviewed or re-signed if they did not save properly. While a compensating control existed whereby the overall expenditures were reviewed during the request for reimbursement process prior to submission, the primary control was not consistently evidenced. Effect: Lack of indication of review and approval of timesheets could cause inaccurate time entry and inaccurate requests for reimbursements to be processed. Recommendation: We recommend that all timesheets are signed by a supervisor immediately after their review and approval to ensure documentation of the control exists and to ensure timesheet accuracy. We further recommend that, if timesheets with no signature are noted during the request for reimbursement process, they be returned to the supervisor for review and signature prior to the request for reimbursement being submitted. Views of Responsible Officials and Planned Corrective Actions: As of April 2024, the organization implemented a new electronic timekeeping system (SwipeClock) in partnership with a third-party payroll provider. This system includes: • Supervisor approval of all time entries. • A final review by a member of the executive team (CEO, Operations Manager, or Accounting Coordinator). This three-tiered approval process ensures accuracy and accountability in payroll allocation to federal grants.
System of Internal Controls Over Compliance for Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Period of Performance Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: State of Nevada Federal Program: Block Grants for Community Mental Health Services (AL# 93.958); Block Grants for Prevention and Treatment of Substance Abuse (AL# 93.959) Criteria: In accordance with 2 CFR 200.400 and 45 CFR 75.303, the Organization is responsible for effective administration of federal awards through sound management practices, to include effective internal controls over supporting documentation for cost allocations. Condition: A primary control over employee time entry and subsequent billing to grants is the review and approval of bimonthly timesheets by supervisors, and this review and approval is indicated by the supervisor signing the timesheet. During our testing, we noted that the signature of supervisors indicating this review was absent from 8 of the 64 timesheets tested for Block Grants for Community Mental Health Services, AL# 93.958 and 11 of the 68 timesheets tested for Block Grants for Prevention and Treatment of Substance Abuse, AL# 93.959. These grants had multiple duplicate employees tested between the two grants. Total unduplicated findings were that the signature of supervisors indicating this review was absent from 11 of the 88 unduplicated timesheets selected, indicating this primary control was not operating effectively during the year. Cause: Digital signatures were utilized during the fiscal year that, at times, did not save properly. Timesheets were not re-reviewed or re-signed if they did not save properly. While a compensating control existed whereby the overall expenditures were reviewed during the request for reimbursement process prior to submission, the primary control was not consistently evidenced. Effect: Lack of indication of review and approval of timesheets could cause inaccurate time entry and inaccurate requests for reimbursements to be processed. Recommendation: We recommend that all timesheets are signed by a supervisor immediately after their review and approval to ensure documentation of the control exists and to ensure timesheet accuracy. We further recommend that, if timesheets with no signature are noted during the request for reimbursement process, they be returned to the supervisor for review and signature prior to the request for reimbursement being submitted. Views of Responsible Officials and Planned Corrective Actions: As of April 2024, the organization implemented a new electronic timekeeping system (SwipeClock) in partnership with a third-party payroll provider. This system includes: • Supervisor approval of all time entries. • A final review by a member of the executive team (CEO, Operations Manager, or Accounting Coordinator). This three-tiered approval process ensures accuracy and accountability in payroll allocation to federal grants.
System of Internal Controls Over Compliance for Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Period of Performance Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: State of Nevada Federal Program: Block Grants for Community Mental Health Services (AL# 93.958); Block Grants for Prevention and Treatment of Substance Abuse (AL# 93.959) Criteria: In accordance with 2 CFR 200.400 and 45 CFR 75.303, the Organization is responsible for effective administration of federal awards through sound management practices, to include effective internal controls over supporting documentation for cost allocations. Condition: A primary control over employee time entry and subsequent billing to grants is the review and approval of bimonthly timesheets by supervisors, and this review and approval is indicated by the supervisor signing the timesheet. During our testing, we noted that the signature of supervisors indicating this review was absent from 8 of the 64 timesheets tested for Block Grants for Community Mental Health Services, AL# 93.958 and 11 of the 68 timesheets tested for Block Grants for Prevention and Treatment of Substance Abuse, AL# 93.959. These grants had multiple duplicate employees tested between the two grants. Total unduplicated findings were that the signature of supervisors indicating this review was absent from 11 of the 88 unduplicated timesheets selected, indicating this primary control was not operating effectively during the year. Cause: Digital signatures were utilized during the fiscal year that, at times, did not save properly. Timesheets were not re-reviewed or re-signed if they did not save properly. While a compensating control existed whereby the overall expenditures were reviewed during the request for reimbursement process prior to submission, the primary control was not consistently evidenced. Effect: Lack of indication of review and approval of timesheets could cause inaccurate time entry and inaccurate requests for reimbursements to be processed. Recommendation: We recommend that all timesheets are signed by a supervisor immediately after their review and approval to ensure documentation of the control exists and to ensure timesheet accuracy. We further recommend that, if timesheets with no signature are noted during the request for reimbursement process, they be returned to the supervisor for review and signature prior to the request for reimbursement being submitted. Views of Responsible Officials and Planned Corrective Actions: As of April 2024, the organization implemented a new electronic timekeeping system (SwipeClock) in partnership with a third-party payroll provider. This system includes: • Supervisor approval of all time entries. • A final review by a member of the executive team (CEO, Operations Manager, or Accounting Coordinator). This three-tiered approval process ensures accuracy and accountability in payroll allocation to federal grants.
Finding 2023-001 – Allowable Costs and Activities – Compliance and Control Finding Federal Award. No. 14.231 Emergency Solutions Grant Program – COVID 19 Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: Missouri Department of Social Services Criteria Or Specific Requirement: 2 CFR sections 200.400 through 200.401 provide the general provisions for cost principles. Section 200.400(b) states that the non-Federal entity assumes responsibility of administering Federal funds in a manner consistent with underlying agreements, program objectives and the terms and conditions of the Federal award. Condition: In our nonstatistical sample of 40 transactions, we noted no exceptions as a result of our testing. However, during the current fiscal year, management of the Commission identified certain questionable rental assistance payments. Certain payments have been reported to the appropriate agencies in accordance with regulatory requirements. Cause: The significant amount of Federal dollars awarded, the short period of time required to make awards available and the presence of new requirements for the program were burdensome for management to disburse in compliance with Federal guidelines. Compared to the Commission’s other Federal programs, the program involves a very large number of applications and a high volume of transactions resulting in exposure to error and irregularity. Effect: Instances of known and suspected noncompliance were identified by the Commission. Questioned Costs: The Commission has identified $320,658 of known questioned costs in fiscal year 2023. Context: Approximately 1,300 vendors are set up in the Commission’s system for application of emergency rental assistance. Of the vendors with applications approved for funding, 134 are considered to be known noncompliance for a total amount of known questioned costs of $2,112,621 since fiscal year 2021. After the identification of the first instance of noncompliance, the Commission adjusted and enhanced its procedures for evaluating current and existing applications. As the Commission reviews future applications following their updated policies and procedures, additional vendors could be flagged to investigate prior payments for potential ineligible costs. Identification As A Repeat Finding: Repeat of Finding No. 2022-001. Recommendation: We recommend that management continue to apply resources devoted to mitigating and preventing further exposure to noncompliance. Additionally, we recommend the Commission continue to provide additional training to employees as well as third parties responsible for reviewing and approving applications. Internal controls over allowable costs and activities should ensure procedural improvements are implemented properly. Views Of Responsible Officials: See Management’s review and Corrective Action Plan included at the end of the report. Anticipated Completion Date: The Commission implemented additional compliance review procedures during fiscal years 2021 and 2022, reviewed applications to identify potentially fraudulent applications during fiscal years 2022 and 2023 and expects to conclude its investigation of identified cases during fiscal year 2024. Contact Person: Steve Whitson, Director of Community Programs
Finding 2023-001 – Allowable Costs and Activities – Compliance and Control Finding Federal Award. No. 14.231 Emergency Solutions Grant Program – COVID 19 Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: Missouri Department of Social Services Criteria Or Specific Requirement: 2 CFR sections 200.400 through 200.401 provide the general provisions for cost principles. Section 200.400(b) states that the non-Federal entity assumes responsibility of administering Federal funds in a manner consistent with underlying agreements, program objectives and the terms and conditions of the Federal award. Condition: In our nonstatistical sample of 40 transactions, we noted no exceptions as a result of our testing. However, during the current fiscal year, management of the Commission identified certain questionable rental assistance payments. Certain payments have been reported to the appropriate agencies in accordance with regulatory requirements. Cause: The significant amount of Federal dollars awarded, the short period of time required to make awards available and the presence of new requirements for the program were burdensome for management to disburse in compliance with Federal guidelines. Compared to the Commission’s other Federal programs, the program involves a very large number of applications and a high volume of transactions resulting in exposure to error and irregularity. Effect: Instances of known and suspected noncompliance were identified by the Commission. Questioned Costs: The Commission has identified $320,658 of known questioned costs in fiscal year 2023. Context: Approximately 1,300 vendors are set up in the Commission’s system for application of emergency rental assistance. Of the vendors with applications approved for funding, 134 are considered to be known noncompliance for a total amount of known questioned costs of $2,112,621 since fiscal year 2021. After the identification of the first instance of noncompliance, the Commission adjusted and enhanced its procedures for evaluating current and existing applications. As the Commission reviews future applications following their updated policies and procedures, additional vendors could be flagged to investigate prior payments for potential ineligible costs. Identification As A Repeat Finding: Repeat of Finding No. 2022-001. Recommendation: We recommend that management continue to apply resources devoted to mitigating and preventing further exposure to noncompliance. Additionally, we recommend the Commission continue to provide additional training to employees as well as third parties responsible for reviewing and approving applications. Internal controls over allowable costs and activities should ensure procedural improvements are implemented properly. Views Of Responsible Officials: See Management’s review and Corrective Action Plan included at the end of the report. Anticipated Completion Date: The Commission implemented additional compliance review procedures during fiscal years 2021 and 2022, reviewed applications to identify potentially fraudulent applications during fiscal years 2022 and 2023 and expects to conclude its investigation of identified cases during fiscal year 2024. Contact Person: Steve Whitson, Director of Community Programs
Finding 2023-002 – Allowable Costs and Activities, Eligibility – Compliance and Control Finding Federal Award. No. 21.023 Emergency Rental Assistance Program – COVID 19 Federal Agency: U.S. Department of Treasury Pass-Through Entity: Missouri Department of Economic Development Criteria Or Specific Requirement: 2 CFR sections 200.400 through 200.401 provide the general provisions for cost principles. Section 200.400(b) states that the non-Federal entity assumes responsibility of administering Federal funds in a manner consistent with underlying agreements, program objectives and the terms and conditions of the Federal award. Condition: In our nonstatistical sample of 40 transactions, we noted no exceptions as a result of our testing. However, during the current fiscal year, management of the Commission identified certain questionable rental assistance payments. Certain payments have been reported to the appropriate agencies in accordance with regulatory requirements and other payments are pending further investigation. Cause: The significant amount of Federal dollars awarded, the short period of time required to make awards available and the presence of new requirements under a new program were burdensome for management to disburse in compliance with Federal guidelines. Compared to the Commission’s other Federal programs, the program involves a very large number of applications and a high volume of transactions resulting in exposure to error and irregularity. Effect: Instances of known and suspected noncompliance were identified by the Commission. Questioned Costs: The Commission has identified $1,613,771 of known questioned costs and is actively investigating an additional $2,956,036 of potential questioned costs in fiscal year 2023. Context: Approximately 33,000 vendors are set up in the Commission’s system for application of emergency rental assistance. Of the vendors with applications approved for funding, 350 are considered to be known noncompliance and 225 are being investigated for potential noncompliance. Since fiscal year 2021, $22,461,431 of costs are actively being investigated by the Commission. Of this amount, the Commission has identified $12,293,592 of known questioned costs and $10,167,839 of potential questioned costs that are still being investigated. After the identification of the first instance of noncompliance, the Commission adjusted and enhanced its procedures for evaluating current and existing applications. As the Commission reviews future applications following their updated policies and procedures, additional vendors could be flagged to investigate prior payments for potential ineligible costs. As the direct rental and utility assistance provided in accordance with this program was concluded and the final disbursements made during February 2023, additional internal metrics and compliance review processes are being developed to apply a consistent process for examining any outstanding questioned costs and to make a final determination regarding the eligibility of disbursed funds. Identification As A Repeat Finding: Repeat of Finding No. 2022-002. Recommendation: We recommend that management continue to apply resources devoted to mitigating and preventing further exposure to noncompliance. Additionally, we recommend the Commission continue to provide additional training to employees as well as third parties responsible for reviewing and approving applications. Internal controls over allowable costs and activities should ensure procedural improvements are implemented properly. Views Of Responsible Officials: See Management’s review and Corrective Action Plan included at the end of the report. Anticipated Completion Date: The Commission implemented additional compliance review procedures during fiscal years 2021 and 2022 and expects to conclude its investigation of the fiscal year identified cases during calendar year 2024. Contact Person: Steve Whitson, Director of Community Programs
Finding 2023-003 – Allowable Costs and Activities, Eligibility – Compliance Finding Federal Award. No. 21.026 Homeowner Assistance Fund – COVID 19 Federal Agency: U.S. Department of Treasury Pass-Through Entity: Missouri Department of Economic Development Criteria Or Specific Requirement: 2 CFR sections 200.400 through 200.401 provide the general provisions for cost principles. Section 200.400(b) states that the non-Federal entity assumes responsibility of administering Federal funds in a manner consistent with underlying agreements, program objectives and the terms and conditions of the Federal award. Condition: The Homeowner Assistance Fund was not tested as a major program in 2023. However, during the current fiscal year, management of the Commission identified certain questionable mortgage assistance payments. Certain payments have been reported to the appropriate agencies in accordance with regulatory requirements. Cause: The significant amount of Federal dollars awarded, the short period of time required to make awards available and the presence of new requirements for the program were burdensome for management to disburse in compliance with Federal guidelines. Compared to the Commission’s other Federal programs, the program involves a very large number of applications and a high volume of transactions resulting in exposure to error and irregularity. Effect: Instances of known and suspected noncompliance were identified by the Commission. Questioned Costs: The Commission has identified $174,926 of known questioned costs in fiscal year 2023. Context: Approximately 220 mortgage loan servicers or financial institutions are set up to receive mortgage assistance payments on behalf of mortgagors. The Commission was alerted by another housing finance agency through an industry group regarding a third-party entity impersonating a mortgage company. Upon investigation, the Commission determined the entity was in noncompliance with the program requirements. The Commission reviewed its onboarding procedures for mortgage loan servicers and enhanced its documentation review to prevent noncompliant mortgage loan servicers from participating in the program. Identification As A Repeat Finding: Not a Repeat Finding. Recommendation: We recommend that management continue to apply resources devoted to mitigating and preventing further exposure to noncompliance. Additionally, we recommend the Commission review and consider improvements to its onboarding procedures and related controls for mortgage loan servicers. Views Of Responsible Officials: See Management’s review and Corrective Action Plan included at the end of the report. Anticipated Completion Date: The Commission implemented additional compliance review procedures during fiscal year 2023 and completed its investigation of the identified case. Contact Person: Steve Whitson, Director of Community Program
Finding 2023-01 – No Written Policies or Procedures, or Standards of Conduct Relative to Federal Awards Criteria – Written policies, procedures, or standards of conduct relative to federal awards are required by 2 U.S. Code of Federal Regulations (CFR) Part 200: Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subparts D and E (Sections 2 CFR 200.300 and 200.400, respectively.) Condition – Sanitation District No. 1 does not have formalized written policies, procedures, or standards of conduct relative to federal awards. Effect – Effective and consistent internal control over compliance relative to federal awards cannot be maintained and monitored without written policies, procedures or standards of conduct. Recommendation – Sanitation District No. 1 should prepare written policies, procedures, or standards of conduct that document internal controls necessary to ensure compliance over the expenditure of federal awards. Management’s Response – Management will prepare written policies to ensure internal control over compliance is documented.
Finding 2023-01 – No Written Policies or Procedures, or Standards of Conduct Relative to Federal Awards Criteria – Written policies, procedures, or standards of conduct relative to federal awards are required by 2 U.S. Code of Federal Regulations (CFR) Part 200: Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subparts D and E (Sections 2 CFR 200.300 and 200.400, respectively.) Condition – Sanitation District No. 1 does not have formalized written policies, procedures, or standards of conduct relative to federal awards. Effect – Effective and consistent internal control over compliance relative to federal awards cannot be maintained and monitored without written policies, procedures or standards of conduct. Recommendation – Sanitation District No. 1 should prepare written policies, procedures, or standards of conduct that document internal controls necessary to ensure compliance over the expenditure of federal awards. Management’s Response – Management will prepare written policies to ensure internal control over compliance is documented.
Finding 2023-01 – No Written Policies or Procedures, or Standards of Conduct Relative to Federal Awards. Criteria – Written policies, procedures, or standards of conduct relative to federal awards are required by 2 U.S. Code of Federal Regulations (CFR) Part 200: Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subparts D and E (Sections 2 CFR 200.300 and 200.400, respectively.) Condition – Mental Health America of Northern Kentucky and Southwest Ohio does not have formalized written policies, procedures, or standards of conduct relative to federal awards. Potential Effect – Effective and consistent internal control over compliance relative to federal awards cannot be maintained and monitored without written policies, procedures or standards of conduct. Recommendation – Mental Health America of Northern Kentucky and Southwest Ohio should prepare written policies, procedures, or standards of conduct that document internal controls necessary to ensure compliance over the expenditure of federal awards. Management’s Response – Mental Health America of Northern Kentucky and Southwest Ohio has modified existing written policies and procedures to ensure effective and consistent internal control over documentation compliance relative to the expenditure of federal awards.