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 NO: 2023-105 (Repeat Finding 2022-041) STATE AGENCY: Oklahoma Department of Human Services (DHS) FEDERAL AGENCY: Department of Health and Human Services ALN: 10.542 FEDERAL PROGRAM NAME: Pandemic EBT – Food Benefits FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2022 & 2023 CONTROL CATEGORY: Activities Allowed and Unallowed & Eligibility QUESTIONED COSTS: $782 Criteria: 45 CFR §75.303(a) states, “The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR § 200.400(b) states, “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.” Per the State Plan for Pandemic EBT, Children in School and Child Care, 2021-2022: 4. P-EBT for School Children, A. Eligible Children, “1. The child would be eligible for free or reduced-price meals if the National School Lunch Program and School Breakfast Program were operating normally and therefore an allowable activity. This includes children who are: a. directly certified or determined “other source categorically eligible” for SY 2021-2022, or b. certified through submission of a household application processed by the child’s school district for SY 2021-2022, or c. enrolled in a Community Eligibility Provision school or a school operating under Provisions 2 or 3, or d. on the school’s most current prior year list of directly certified children, children determined other source categorically eligible, or children certified by application and the school district has not made a new school meal eligibility determination for the child in SY 2021- 2022.” 6. Benefit Levels. “…. DHS will issue benefits based upon the actual days each month that each student attends school virtually at the rate of $7.10 per day….” Per the Amendment to Approved State Plan for Pandemic EBT Children in School and/or Child Care, Summer 2022: 3f. For school-aged children, “Oklahoma DHS will issue benefits based upon the May 2022 eligible child file as provided by the State Department of Education (SDE). FNS has made the simplified assumption that graduating seniors will be eligible to receive Summer PEBT and Therefore will be included in the benefit. This file would only include children who were enrolled as of May 2022 and/or graduated in May 2022.” Per the School Year 2021-2022 State Year Plan for Child Care: “Oklahoma has a process in place that will compare the list of those 5 year olds that received school age P-EBT with that of the children that are under the age of 6, and are SNAP recipients that would be eligible for Child Care P-EBT benefits during any specified month to ensure that there is no double issuance or an ineligible issuance of the benefits.” Condition and Context: The Pandemic Electronic Benefits Transfer (P-EBT) program provided payments to households with eligible children enrolled in school or in childcare who would have received free or reduced-price meals at school if not for virtual learning during the COVID-19 pandemic. We tested eligibility for School age children during summer ($19,810 sample dollars), with a population of 915,847 and benefit payments totaling $220,805,215. We noted 1 of 72 (1.39%) school age children during summer received benefits for June 2022 although the child was flagged as not enrolled by SDE. (Questioned costs $391) We tested eligibility for childcare children during the summer ($41,446 sample dollars), with a population of 64,107 and benefit payments totaling $34,971,431. We noted 1 of 72 (1.39%) childcare children during the summer received benefits under both the school-aged plan and the childcare plan in June 2022. (Questioned costs $391) Cause: For the childcare plan, DHS lacks adequate internal controls to ensure a child under the age of 6 did not receive benefits under both the school-age plan and the childcare plan. Effect: Excess benefit payments of $782 ($4,534,829 when projected) were provided to ineligible children or children already receiving benefits. Recommendation: While there was improvement from the prior year, we recommend both DHS and the State Department of Education (SDE) continue to improve internal controls to ensure only eligible people receive benefits and the benefits are accurately calculated. We recommend the SDE and DHS research what caused the mainframe system error to ensure duplicate payments or other erroneous payments are not paid on other benefit types. Although the P-EBT program has ended, the recommendations apply to any program administered by DHS and/or SDE. Views of Responsible Official(s) Contact Person: Sondra Shelby Anticipated Completion Date: N/A Corrective Action Planned: The Department of Human Services agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
Finding 2022-001: Noncompliance with Procurement Policy Requirements Programs - CFDA 21.023 Emergency Rental Assistance Program, and CFDA 93.391 Activities to Support State, Tribal, Local, and Territorial (STLT) Health Department Response to Public Health or Healthcare Crisis Criteria: As required by 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400, respectively), entities are required to maintain written policies, procedures, and standards of conduct (?policies?) for certain areas of its operation. The following sections of the Uniform Guidance require nonfederal entities that receive federal awards to establish written policies, procedures, or standards of conduct: ? Financial management (200.302) ? Federal payment (200.305) ? General procurement standards (200.318) ? Competition (200.319) ? Methods of procurement to be followed (200.320) ? Compensation?fringe benefits (200.431) ? Relocation costs of employees (200.464) ? Travel costs (200.475) Condition: Review of the Organization?s Financial Procedure manual noted it was updated August 2023, with the previous update being done in February 2014 ? prior to the year under audit. The 2014 update did not contain all of the required elements under 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400). Cause: The Financial Procedures have not been updated recently to incorporate the current Federal regulation requirements. Effect: The Organization is not compliant with Federal regulations requiring written policies and procedures. Recommendation: We recommend that the Organization approve and incorporate the policy updates incorporated within the August 2023 updated policies and procedures to ensure compliance with required regulations. Views of Responsible Officials: Management agrees with this recommendation and will review and update its current Financial Procedures to ensure compliance.
Finding 2022-001: Noncompliance with Procurement Policy Requirements Programs - CFDA 21.023 Emergency Rental Assistance Program, and CFDA 93.391 Activities to Support State, Tribal, Local, and Territorial (STLT) Health Department Response to Public Health or Healthcare Crisis Criteria: As required by 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400, respectively), entities are required to maintain written policies, procedures, and standards of conduct (?policies?) for certain areas of its operation. The following sections of the Uniform Guidance require nonfederal entities that receive federal awards to establish written policies, procedures, or standards of conduct: ? Financial management (200.302) ? Federal payment (200.305) ? General procurement standards (200.318) ? Competition (200.319) ? Methods of procurement to be followed (200.320) ? Compensation?fringe benefits (200.431) ? Relocation costs of employees (200.464) ? Travel costs (200.475) Condition: Review of the Organization?s Financial Procedure manual noted it was updated August 2023, with the previous update being done in February 2014 ? prior to the year under audit. The 2014 update did not contain all of the required elements under 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400). Cause: The Financial Procedures have not been updated recently to incorporate the current Federal regulation requirements. Effect: The Organization is not compliant with Federal regulations requiring written policies and procedures. Recommendation: We recommend that the Organization approve and incorporate the policy updates incorporated within the August 2023 updated policies and procedures to ensure compliance with required regulations. Views of Responsible Officials: Management agrees with this recommendation and will review and update its current Financial Procedures to ensure compliance.
Finding 2022-001: Noncompliance with Procurement Policy Requirements Programs - CFDA 21.023 Emergency Rental Assistance Program, and CFDA 93.391 Activities to Support State, Tribal, Local, and Territorial (STLT) Health Department Response to Public Health or Healthcare Crisis Criteria: As required by 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400, respectively), entities are required to maintain written policies, procedures, and standards of conduct (?policies?) for certain areas of its operation. The following sections of the Uniform Guidance require nonfederal entities that receive federal awards to establish written policies, procedures, or standards of conduct: ? Financial management (200.302) ? Federal payment (200.305) ? General procurement standards (200.318) ? Competition (200.319) ? Methods of procurement to be followed (200.320) ? Compensation?fringe benefits (200.431) ? Relocation costs of employees (200.464) ? Travel costs (200.475) Condition: Review of the Organization?s Financial Procedure manual noted it was updated August 2023, with the previous update being done in February 2014 ? prior to the year under audit. The 2014 update did not contain all of the required elements under 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400). Cause: The Financial Procedures have not been updated recently to incorporate the current Federal regulation requirements. Effect: The Organization is not compliant with Federal regulations requiring written policies and procedures. Recommendation: We recommend that the Organization approve and incorporate the policy updates incorporated within the August 2023 updated policies and procedures to ensure compliance with required regulations. Views of Responsible Officials: Management agrees with this recommendation and will review and update its current Financial Procedures to ensure compliance.
"Finding 2022-005 Activities Allowed, Allowable Costs, and Period of Performance – Material Weakness. Criteria: The 2 CFR section 200.400 requires that the Organization must take responsibility for administering the Federal funds in a manner consistent with the underlying agreements, program objectives, and the terms and the conditions of the award. This includes implementing internal controls to ensure that costs are related to activities allowed, the costs are allowable, and the cost are incurred in the period of performance. Condition: The Organization does not have strong document retention policies to demonstrate that costs are for activities allowed, costs are allowable, and incurred in the period of performance. In addition, they did not have systems of controls in place to ensure that expenditures meet the appropriate criteria under Activities Allowed, Allowable Costs, and Period of Performance. The result is that there were several instances in which support for expenditures was not found. In addition, for all transactions that we tested, even though most of the underlying expenditures were allowed, allowable and within the period of performance, there was no system of controls operating at the client to ensure that the costs were consistently appropriate. Cause: The year ended December 31, 2022 was the Organization’s first year receiving federal funding. In addition, there was a lot of turnover in the employees who were involved in processing the transactions related to the award, and a lack of sufficient training. Effect: For 4 selections out of 60 had no available support in the sample that tested activities allowed, allowable costs, and period of performance. The total value of those 4 selections is included in the questioned costs below and these items resulted in the qualified opinion for the Report on Compliance for Each Major Federal Program. Further there were multiple other sample selections that were missing evidence of supervisor approval, had incomplete information, or were inconsistently processed. Questioned Costs: $46,871 of costs that has no available support as described above. Repeat Finding: Not applicable as the Organization is a first time auditee. Recommendation: We recommend that the Organization provide additional training to employees to ensure that controls operate effectively so that only allowable costs are authorized to be charged to the federal awards. Further, we recommend that document retention controls are implemented to support that charges to the federal award are meet the criteria of Activities Allowed and Allowable Costs and Period of Performance. Views of Responsible Official: See Corrective Action Plan."
Finding 2022-004: Material Weakness Due to Unsupported Administration and Program Operations Costs. Federal Agency: U.S. Department of Treasury Program Title: Emergency Rental Assistance Program Assistance Listing Numbers (ALN): 21.023 Federal Award Years: Year ended December 31, 2022 Pass-through Grantor and identifying numbers: Pierce County; SC-108282, SC-108719 Criteria: Charges to federal awards must meet the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart E - Cost Principles. Specifically CFR 200.400(d) indicates the Organization must support the accumulation of costs and provide for adequate documentation to support costs charged to the Federal award. Condition and Context: Administration and program operation costs charged to the award for the period January 1, 2022 through February 28, 2022 lacked supporting documentation to verify whether there were equivalent administrative and program operation expenses incurred by the Organization. All budgets approved by the Pass-through Grantor allowed for such costs to be reimbursed by the award as long as adequate documentation of how the costs were determined was retained. Since the organization did not retain any such documentation, there is no way of knowing if a portion or all of those administration or program operation costs related to actual activities that were performed related to these programs. The Organization most certainly did incur administration and program operation costs that were legitimate to be remitted to the award. However, with no controls in place to ensure that these costs were appropriately accumulated and documented, the amounts reimbursed by the programs might not be appropriate. During our audit, we were able to fully quantify the full amount of administration and program operations costs that were inappropriately supported through discussions with management of the Organization and reviewing the reimbursement requests that were submitted to the Pass-through Grantor. The amounts included in the questioned costs below is the entire amount of such costs that were charged to the program during the period January 1, 2022 through February 28, 2022. Cause: Helping Hand House did not have processes and controls in place to ensure that documentation to ensure that administrative and program operation costs that were charged to the program were appropriately documented. Effect: There is the potential that the Pass-through grantor may require a repayment of a portion or all of the program and administrative costs that were paid for by the program. As such, a loss contingency disclosure has been included in the notes to the financial statements to indicate that there is the potential that the Pass-through Grantor may require some of these amounts to be repaid. This also is the reason for the qualified opinion in the Report On Compliance for Each Major Federal Program. Known Questioned Costs for ALN 21.023: $76,284 Repeat Finding: This is a partially repeated finding of 2021-004. Recommendation: Our testing of information for the months of March to December 2022 indicated that the client made significant improvements in their documentation, and we did not find similar questioned outside of the time period from January 1, 2022 to February 2028, 2022. We recommend that Helping Hand House continue to develop and document procedures and controls for how administrative and program operation costs will be allocated to the federal awards. This information should be retained so that it can be made available at the request of the Pass-through Grantor, the auditor or other relevant parties. Views of Responsible Official: See Corrective Action Plan.
Finding 2022-004: Material Weakness Due to Unsupported Administration and Program Operations Costs. Federal Agency: U.S. Department of Treasury Program Title: Emergency Rental Assistance Program Assistance Listing Numbers (ALN): 21.023 Federal Award Years: Year ended December 31, 2022 Pass-through Grantor and identifying numbers: Pierce County; SC-108282, SC-108719 Criteria: Charges to federal awards must meet the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart E - Cost Principles. Specifically CFR 200.400(d) indicates the Organization must support the accumulation of costs and provide for adequate documentation to support costs charged to the Federal award. Condition and Context: Administration and program operation costs charged to the award for the period January 1, 2022 through February 28, 2022 lacked supporting documentation to verify whether there were equivalent administrative and program operation expenses incurred by the Organization. All budgets approved by the Pass-through Grantor allowed for such costs to be reimbursed by the award as long as adequate documentation of how the costs were determined was retained. Since the organization did not retain any such documentation, there is no way of knowing if a portion or all of those administration or program operation costs related to actual activities that were performed related to these programs. The Organization most certainly did incur administration and program operation costs that were legitimate to be remitted to the award. However, with no controls in place to ensure that these costs were appropriately accumulated and documented, the amounts reimbursed by the programs might not be appropriate. During our audit, we were able to fully quantify the full amount of administration and program operations costs that were inappropriately supported through discussions with management of the Organization and reviewing the reimbursement requests that were submitted to the Pass-through Grantor. The amounts included in the questioned costs below is the entire amount of such costs that were charged to the program during the period January 1, 2022 through February 28, 2022. Cause: Helping Hand House did not have processes and controls in place to ensure that documentation to ensure that administrative and program operation costs that were charged to the program were appropriately documented. Effect: There is the potential that the Pass-through grantor may require a repayment of a portion or all of the program and administrative costs that were paid for by the program. As such, a loss contingency disclosure has been included in the notes to the financial statements to indicate that there is the potential that the Pass-through Grantor may require some of these amounts to be repaid. This also is the reason for the qualified opinion in the Report On Compliance for Each Major Federal Program. Known Questioned Costs for ALN 21.023: $76,284 Repeat Finding: This is a partially repeated finding of 2021-004. Recommendation: Our testing of information for the months of March to December 2022 indicated that the client made significant improvements in their documentation, and we did not find similar questioned outside of the time period from January 1, 2022 to February 2028, 2022. We recommend that Helping Hand House continue to develop and document procedures and controls for how administrative and program operation costs will be allocated to the federal awards. This information should be retained so that it can be made available at the request of the Pass-through Grantor, the auditor or other relevant parties. Views of Responsible Official: See Corrective Action Plan.
Finding 2022-003: Material Weakness and Questioned Cost – Grant Claim Support Federal grantor: Department of Commerce Condition: The Chamber’s expenditure detail for the grant funded projects do not support the amounts billed to the Department of Commerce. 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. Our reconciliation of these expenses disclosed an overbilling to the grant of approximately $2,500 in 2021. 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 Actions: The Chamber agrees with this finding and is in the process of implementing a system for improved grant tracking.
Finding 2022-004: Significant Deficiency – Grant Claim Support 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 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.
ALLOWABLE ACTIVITIES AND ALLOWABLE COSTS - SIGNIFICANT DEFICIENCY Federal Program Emergency Rental Assistance ALN 21.023; passed through the County of Berks Criteria 2 CFR Section 200.400 requires recipients and subrecipients of federal grant funds to maintain adequate documentation to support costs charged to a federal award. FAQ #5 issued by the Department of Treasury related to this program indicates that Grantees must obtain, if available, a current lease, signed by the applicant and the landlord or sublessor, that identifies the unit where the applicant resides and establishes the rental payment amount. Additionally, FAQ #6 notes that all payments for utilities and home energy costs should be supported by a bill, invoice, or evidence of payment to the provider of the utility or home energy service. Condition/Cause During 2022 payments of rental and utility assistance were entered as batches within the financial accounting software. A separate spreadsheet was utilized to track individual payments included within the batches. The original spreadsheet provided contained data entry errors. After revising for corrections, the detail provided by the Authority outlining individual payments was $472,226 lower than expenses reported in the financial reporting software and could not be reconciled by management. For 6 out of 60 cases tested, the amount paid for rent did not agree to a lease agreement or bills on file for the following reasons: (1) clerical errors, (2) duplicate payments due to multiple staff working on the same file, or (3) failure to request support before payment was made. The Authority did not have controls in place to detect the noncompliance prior to issuing payments. Effect The Authority is not in compliance with the 2 CFR Part 200 requirement to maintain adequate documentation to support costs charged to a federal program. Questioned Costs Known questioned costs are $475,094, which includes $472,226 for which expenditure details could not be provided and $2,868 of unallowable costs detected in our sample of cases. Context The Authority was unable to identify payments made for 1.95% of the population. Within our testing of 60 cases, questioned costs comprise approximately 0.59% of the total costs tested. Repeat Finding Yes. 2021-006. Recommendation We recommend the Authority revisit and strengthen internal controls over tracking individual payments for transactions entered as batches, particularly when related to federal awards. We encourage the Authority to continue working to identify the individual transactions making up the remainder of the federal expenditures under this program. We also recommend the Authority revisit and strengthen internal controls over allowable activities and allowable costs related to grant programs. Management Response See corrective action plan included in this report package.
Finding 2022-001: Noncompliance with Procurement Policy Requirements Programs - CFDA 21.023 Emergency Rental Assistance Program, and CFDA 93.391 Activities to Support State, Tribal, Local, and Territorial (STLT) Health Department Response to Public Health or Healthcare Crisis Criteria: As required by 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400, respectively), entities are required to maintain written policies, procedures, and standards of conduct (?policies?) for certain areas of its operation. The following sections of the Uniform Guidance require nonfederal entities that receive federal awards to establish written policies, procedures, or standards of conduct: ? Financial management (200.302) ? Federal payment (200.305) ? General procurement standards (200.318) ? Competition (200.319) ? Methods of procurement to be followed (200.320) ? Compensation?fringe benefits (200.431) ? Relocation costs of employees (200.464) ? Travel costs (200.475) Condition: Review of the Organization?s Financial Procedure manual noted it was updated August 2023, with the previous update being done in February 2014 ? prior to the year under audit. The 2014 update did not contain all of the required elements under 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400). Cause: The Financial Procedures have not been updated recently to incorporate the current Federal regulation requirements. Effect: The Organization is not compliant with Federal regulations requiring written policies and procedures. Recommendation: We recommend that the Organization approve and incorporate the policy updates incorporated within the August 2023 updated policies and procedures to ensure compliance with required regulations. Views of Responsible Officials: Management agrees with this recommendation and will review and update its current Financial Procedures to ensure compliance.
Finding 2022-001: Noncompliance with Procurement Policy Requirements Programs - CFDA 21.023 Emergency Rental Assistance Program, and CFDA 93.391 Activities to Support State, Tribal, Local, and Territorial (STLT) Health Department Response to Public Health or Healthcare Crisis Criteria: As required by 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400, respectively), entities are required to maintain written policies, procedures, and standards of conduct (?policies?) for certain areas of its operation. The following sections of the Uniform Guidance require nonfederal entities that receive federal awards to establish written policies, procedures, or standards of conduct: ? Financial management (200.302) ? Federal payment (200.305) ? General procurement standards (200.318) ? Competition (200.319) ? Methods of procurement to be followed (200.320) ? Compensation?fringe benefits (200.431) ? Relocation costs of employees (200.464) ? Travel costs (200.475) Condition: Review of the Organization?s Financial Procedure manual noted it was updated August 2023, with the previous update being done in February 2014 ? prior to the year under audit. The 2014 update did not contain all of the required elements under 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400). Cause: The Financial Procedures have not been updated recently to incorporate the current Federal regulation requirements. Effect: The Organization is not compliant with Federal regulations requiring written policies and procedures. Recommendation: We recommend that the Organization approve and incorporate the policy updates incorporated within the August 2023 updated policies and procedures to ensure compliance with required regulations. Views of Responsible Officials: Management agrees with this recommendation and will review and update its current Financial Procedures to ensure compliance.
Finding 2022-001: Noncompliance with Procurement Policy Requirements Programs - CFDA 21.023 Emergency Rental Assistance Program, and CFDA 93.391 Activities to Support State, Tribal, Local, and Territorial (STLT) Health Department Response to Public Health or Healthcare Crisis Criteria: As required by 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400, respectively), entities are required to maintain written policies, procedures, and standards of conduct (?policies?) for certain areas of its operation. The following sections of the Uniform Guidance require nonfederal entities that receive federal awards to establish written policies, procedures, or standards of conduct: ? Financial management (200.302) ? Federal payment (200.305) ? General procurement standards (200.318) ? Competition (200.319) ? Methods of procurement to be followed (200.320) ? Compensation?fringe benefits (200.431) ? Relocation costs of employees (200.464) ? Travel costs (200.475) Condition: Review of the Organization?s Financial Procedure manual noted it was updated August 2023, with the previous update being done in February 2014 ? prior to the year under audit. The 2014 update did not contain all of the required elements under 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400). Cause: The Financial Procedures have not been updated recently to incorporate the current Federal regulation requirements. Effect: The Organization is not compliant with Federal regulations requiring written policies and procedures. Recommendation: We recommend that the Organization approve and incorporate the policy updates incorporated within the August 2023 updated policies and procedures to ensure compliance with required regulations. Views of Responsible Officials: Management agrees with this recommendation and will review and update its current Financial Procedures to ensure compliance.
"Finding 2022-005 Activities Allowed, Allowable Costs, and Period of Performance – Material Weakness. Criteria: The 2 CFR section 200.400 requires that the Organization must take responsibility for administering the Federal funds in a manner consistent with the underlying agreements, program objectives, and the terms and the conditions of the award. This includes implementing internal controls to ensure that costs are related to activities allowed, the costs are allowable, and the cost are incurred in the period of performance. Condition: The Organization does not have strong document retention policies to demonstrate that costs are for activities allowed, costs are allowable, and incurred in the period of performance. In addition, they did not have systems of controls in place to ensure that expenditures meet the appropriate criteria under Activities Allowed, Allowable Costs, and Period of Performance. The result is that there were several instances in which support for expenditures was not found. In addition, for all transactions that we tested, even though most of the underlying expenditures were allowed, allowable and within the period of performance, there was no system of controls operating at the client to ensure that the costs were consistently appropriate. Cause: The year ended December 31, 2022 was the Organization’s first year receiving federal funding. In addition, there was a lot of turnover in the employees who were involved in processing the transactions related to the award, and a lack of sufficient training. Effect: For 4 selections out of 60 had no available support in the sample that tested activities allowed, allowable costs, and period of performance. The total value of those 4 selections is included in the questioned costs below and these items resulted in the qualified opinion for the Report on Compliance for Each Major Federal Program. Further there were multiple other sample selections that were missing evidence of supervisor approval, had incomplete information, or were inconsistently processed. Questioned Costs: $46,871 of costs that has no available support as described above. Repeat Finding: Not applicable as the Organization is a first time auditee. Recommendation: We recommend that the Organization provide additional training to employees to ensure that controls operate effectively so that only allowable costs are authorized to be charged to the federal awards. Further, we recommend that document retention controls are implemented to support that charges to the federal award are meet the criteria of Activities Allowed and Allowable Costs and Period of Performance. Views of Responsible Official: See Corrective Action Plan."
Finding 2022-004: Material Weakness Due to Unsupported Administration and Program Operations Costs. Federal Agency: U.S. Department of Treasury Program Title: Emergency Rental Assistance Program Assistance Listing Numbers (ALN): 21.023 Federal Award Years: Year ended December 31, 2022 Pass-through Grantor and identifying numbers: Pierce County; SC-108282, SC-108719 Criteria: Charges to federal awards must meet the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart E - Cost Principles. Specifically CFR 200.400(d) indicates the Organization must support the accumulation of costs and provide for adequate documentation to support costs charged to the Federal award. Condition and Context: Administration and program operation costs charged to the award for the period January 1, 2022 through February 28, 2022 lacked supporting documentation to verify whether there were equivalent administrative and program operation expenses incurred by the Organization. All budgets approved by the Pass-through Grantor allowed for such costs to be reimbursed by the award as long as adequate documentation of how the costs were determined was retained. Since the organization did not retain any such documentation, there is no way of knowing if a portion or all of those administration or program operation costs related to actual activities that were performed related to these programs. The Organization most certainly did incur administration and program operation costs that were legitimate to be remitted to the award. However, with no controls in place to ensure that these costs were appropriately accumulated and documented, the amounts reimbursed by the programs might not be appropriate. During our audit, we were able to fully quantify the full amount of administration and program operations costs that were inappropriately supported through discussions with management of the Organization and reviewing the reimbursement requests that were submitted to the Pass-through Grantor. The amounts included in the questioned costs below is the entire amount of such costs that were charged to the program during the period January 1, 2022 through February 28, 2022. Cause: Helping Hand House did not have processes and controls in place to ensure that documentation to ensure that administrative and program operation costs that were charged to the program were appropriately documented. Effect: There is the potential that the Pass-through grantor may require a repayment of a portion or all of the program and administrative costs that were paid for by the program. As such, a loss contingency disclosure has been included in the notes to the financial statements to indicate that there is the potential that the Pass-through Grantor may require some of these amounts to be repaid. This also is the reason for the qualified opinion in the Report On Compliance for Each Major Federal Program. Known Questioned Costs for ALN 21.023: $76,284 Repeat Finding: This is a partially repeated finding of 2021-004. Recommendation: Our testing of information for the months of March to December 2022 indicated that the client made significant improvements in their documentation, and we did not find similar questioned outside of the time period from January 1, 2022 to February 2028, 2022. We recommend that Helping Hand House continue to develop and document procedures and controls for how administrative and program operation costs will be allocated to the federal awards. This information should be retained so that it can be made available at the request of the Pass-through Grantor, the auditor or other relevant parties. Views of Responsible Official: See Corrective Action Plan.
Finding 2022-004: Material Weakness Due to Unsupported Administration and Program Operations Costs. Federal Agency: U.S. Department of Treasury Program Title: Emergency Rental Assistance Program Assistance Listing Numbers (ALN): 21.023 Federal Award Years: Year ended December 31, 2022 Pass-through Grantor and identifying numbers: Pierce County; SC-108282, SC-108719 Criteria: Charges to federal awards must meet the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart E - Cost Principles. Specifically CFR 200.400(d) indicates the Organization must support the accumulation of costs and provide for adequate documentation to support costs charged to the Federal award. Condition and Context: Administration and program operation costs charged to the award for the period January 1, 2022 through February 28, 2022 lacked supporting documentation to verify whether there were equivalent administrative and program operation expenses incurred by the Organization. All budgets approved by the Pass-through Grantor allowed for such costs to be reimbursed by the award as long as adequate documentation of how the costs were determined was retained. Since the organization did not retain any such documentation, there is no way of knowing if a portion or all of those administration or program operation costs related to actual activities that were performed related to these programs. The Organization most certainly did incur administration and program operation costs that were legitimate to be remitted to the award. However, with no controls in place to ensure that these costs were appropriately accumulated and documented, the amounts reimbursed by the programs might not be appropriate. During our audit, we were able to fully quantify the full amount of administration and program operations costs that were inappropriately supported through discussions with management of the Organization and reviewing the reimbursement requests that were submitted to the Pass-through Grantor. The amounts included in the questioned costs below is the entire amount of such costs that were charged to the program during the period January 1, 2022 through February 28, 2022. Cause: Helping Hand House did not have processes and controls in place to ensure that documentation to ensure that administrative and program operation costs that were charged to the program were appropriately documented. Effect: There is the potential that the Pass-through grantor may require a repayment of a portion or all of the program and administrative costs that were paid for by the program. As such, a loss contingency disclosure has been included in the notes to the financial statements to indicate that there is the potential that the Pass-through Grantor may require some of these amounts to be repaid. This also is the reason for the qualified opinion in the Report On Compliance for Each Major Federal Program. Known Questioned Costs for ALN 21.023: $76,284 Repeat Finding: This is a partially repeated finding of 2021-004. Recommendation: Our testing of information for the months of March to December 2022 indicated that the client made significant improvements in their documentation, and we did not find similar questioned outside of the time period from January 1, 2022 to February 2028, 2022. We recommend that Helping Hand House continue to develop and document procedures and controls for how administrative and program operation costs will be allocated to the federal awards. This information should be retained so that it can be made available at the request of the Pass-through Grantor, the auditor or other relevant parties. Views of Responsible Official: See Corrective Action Plan.
Finding 2022-003: Material Weakness and Questioned Cost – Grant Claim Support Federal grantor: Department of Commerce Condition: The Chamber’s expenditure detail for the grant funded projects do not support the amounts billed to the Department of Commerce. 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. Our reconciliation of these expenses disclosed an overbilling to the grant of approximately $2,500 in 2021. 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 Actions: The Chamber agrees with this finding and is in the process of implementing a system for improved grant tracking.
Finding 2022-004: Significant Deficiency – Grant Claim Support 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 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.
ALLOWABLE ACTIVITIES AND ALLOWABLE COSTS - SIGNIFICANT DEFICIENCY Federal Program Emergency Rental Assistance ALN 21.023; passed through the County of Berks Criteria 2 CFR Section 200.400 requires recipients and subrecipients of federal grant funds to maintain adequate documentation to support costs charged to a federal award. FAQ #5 issued by the Department of Treasury related to this program indicates that Grantees must obtain, if available, a current lease, signed by the applicant and the landlord or sublessor, that identifies the unit where the applicant resides and establishes the rental payment amount. Additionally, FAQ #6 notes that all payments for utilities and home energy costs should be supported by a bill, invoice, or evidence of payment to the provider of the utility or home energy service. Condition/Cause During 2022 payments of rental and utility assistance were entered as batches within the financial accounting software. A separate spreadsheet was utilized to track individual payments included within the batches. The original spreadsheet provided contained data entry errors. After revising for corrections, the detail provided by the Authority outlining individual payments was $472,226 lower than expenses reported in the financial reporting software and could not be reconciled by management. For 6 out of 60 cases tested, the amount paid for rent did not agree to a lease agreement or bills on file for the following reasons: (1) clerical errors, (2) duplicate payments due to multiple staff working on the same file, or (3) failure to request support before payment was made. The Authority did not have controls in place to detect the noncompliance prior to issuing payments. Effect The Authority is not in compliance with the 2 CFR Part 200 requirement to maintain adequate documentation to support costs charged to a federal program. Questioned Costs Known questioned costs are $475,094, which includes $472,226 for which expenditure details could not be provided and $2,868 of unallowable costs detected in our sample of cases. Context The Authority was unable to identify payments made for 1.95% of the population. Within our testing of 60 cases, questioned costs comprise approximately 0.59% of the total costs tested. Repeat Finding Yes. 2021-006. Recommendation We recommend the Authority revisit and strengthen internal controls over tracking individual payments for transactions entered as batches, particularly when related to federal awards. We encourage the Authority to continue working to identify the individual transactions making up the remainder of the federal expenditures under this program. We also recommend the Authority revisit and strengthen internal controls over allowable activities and allowable costs related to grant programs. Management Response See corrective action plan included in this report package.
2022-008 Grant Expenditures (Material Weakness) Criteria: Title 2 CFR Part 200 §200.400. Accounting practices must support the accumulation costs including maintaining adequate documentation to support costs charged to the Federal award. Title 2 CFR Part 200 §200.302 requires that the financial management system must maintain records that sufficiently identify the amount, source, and expenditure of Federal funds. Condition: Actual grant expenses were not accumulated in the Organization’s accounting system by individual grant and indirect costs were not appropriately applied. As discussed at 2022-006, the Organization prepared grant submissions based on estimates of monthly average expenses to be incurred over the life of the grant as opposed to expenses actually incurred. This led to noncompliance of the grant provisions for reimbursement. Cause: The Organization’s accounting system is not properly designed to accumulate expenses by grant. Policies and procedures were not adequately designed for the appropriate level of oversight to ensure that grant submissions complied with grant agreements. Effect: Submissions for grants reimbursement exceeded actual expenses incurred. In addition, because of the failure to assign expenses to individual grants, there is an increased risk that expenditures could be inappropriately charged to government programs. Questioned Costs: Not determinable at the major program level. Perspective: Pervasive, this was not an isolated incident. Repeat Finding: Yes Recommendation: The Organization’s accounting system should be modified to accommodate expense tracking by individual grant and policies and procedures should be implemented to require direct expenses be assigned to specific grants. A method should be established to allocate indirect costs in accordance with federal regulations. Policies and procedures are also needed to provide appropriate oversight of all grant accounting including reporting. Views of Responsible Officials: Management acknowledges the control weaknesses related to the accumulation of grant expenses and accurate completion of grant reimbursement requests. The Organization has undertaken a review of its policies and procedures, including consultation of an outside accounting firm to implement policies and procedures to properly account for grant expenses and accurately prepared requests for reimbursement.
Finding 2022-002: Lack of documentation of review and approval - Material Weakness Program name: Office for Coastal Management Assistance Listing: 11.473 Federal award Identification number: 20 NFWF 339630 Federal award year: 9/1/2020 - 8/31/2023 Federal awarding agency: U.S. Department of Commerce Criteria - In accordance with 2 CFR 200.303, recipients and subrecipients must establish, document and maintain effective internal control over Federal awards. These controls should be in compliance with Federal statutes, regulations, and the terms and conditions of the award, and should align with standards such as the “Standards for Internal Control in the Federal Government” (Green Book) or the COSO framework. This includes controls over: * Payroll: Ensuring labor charges are accurate, allowable, and properly approved (2 CFR 200.430). * Expenses: Ensuring proper documentation and approval. (2 CFR 200.400(d) ) * Reporting: Ensuring financial reports are accurate, complete, and reviewed prior to submission (2 CFR 200.328). Condition - The Organization has limited written processes of certain transaction classes. There was a pervasive lack of documentation of approval over transactions, including payroll, expenses, and reporting. Cause - The Organization did not maintain or consistently apply documentation protocols for internal control reviews. Formal documentation practices were not in place during the audit period. Effect - Lack of documentation as evidence that controls over compliance were being performed. Documentation should be maintained as evidence that sufficient control activities are in place and would effectively prevent or detect and correct noncompliance. Controls must be followed for every transaction and documentation of the control being performed must be maintained. Questioned costs - None identified. Perspective - The deficiency was pervasive across multiple compliance areas and was not isolated to a specific transaction or department. The scope indicates a systemic control weakness during the audit period. Identification of Repeat Findings - This is not a repeat finding. Recommendation - We recommend that the Organization ensure updated policies and procedures are implemented and consistently applied. This includes: * Documented review and approval of all transactions related to payroll, expenses, and reporting. * Maintenance of written evidence supporting such reviews. * Regular training and internal monitoring to ensure control procedures are consistently followed. Management response - See corrective action plan
Finding No.: 2022-004 Federal Agency: U.S. Department of the Treasury Pass-Through Entity: Government of Guam AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 American Rescue Plan 2021 Area: Activities Allowed or Unallowed Questioned Costs: $ --- Criteria: In accordance with applicable activities allowed or unallowed requirements, Fiscal Recovery Funds must be used in one of four eligible use categories. The categories applicable to the Bureau in FY 2022 include the following: a) To respond to the public health emergency or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality; and b) For the provision of government services to the extent of the reduction in revenue due to the COVID?19 public health emergency relative to revenues collected in the most recent full fiscal year prior to the emergency. Furthermore, 2 CFR 200.400(d) requires that accounting practices of the non-Federal entity must provide for adequate documentation to support costs charged to the Federal award. Condition: For 5 (or 8%) of 60 transactions tested, aggregating $2.2 million out of $5.5 million in total Program expenditures, disbursements were made under contract number C22025-B to a provider of full-service marketing, advertising and public relations services for Guam?s 78th Liberation Festivities, including the construction of the Bureau?s parade float, broadcasting, and trophies. Such activities do not appear to satisfy the eligible use category of responding to the public health emergency or its negative economic impacts, and no revenue loss calculation is documented to demonstrate the provision of government services to the extent of the reduction in revenue due to the emergency. The total cost charged to contract number C22025 during FY 2022 is $352,815. Finding No.: 2022-004, Continued Federal Agency: U.S. Department of the Treasury Pass-Through Entity: Government of Guam AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 American Rescue Plan 2021 Area: Activities Allowed or Unallowed Questioned Costs: $ --- Cause: The Bureau did not effectively establish and implement controls over compliance with applicable activities allowed or unallowed requirements. Effect: The Bureau is in noncompliance with applicable activities allowed or unallowed requirements. No questioned cost is reported because the Bureau subsequently obtained written approval on September 20, 2023 from the pass-through entity. Recommendation: Responsible personnel should establish and implement controls over compliance with applicable activities allowed or unallowed requirements. Prior to charging costs to the Federal award, responsible personnel should read the applicable guidance from the U.S. Department of the Treasury and ascertain that the activity is an eligible use of Program funds. Furthermore, any prior approvals from the pass-through entity should be obtained in writing and maintained on file to substantiate costs charged to the Federal award. Views of responsible officials: The Bureau will implement internal controls over compliance with applicable activities allowed or unallowed. Such controls will include obtaining written approval from the pass-through entity for any project and costs charged to the Federal award.
Finding No.: 2022-004 Federal Agency: U.S. Department of the Treasury Pass-Through Entity: Government of Guam AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 American Rescue Plan 2021 Area: Activities Allowed or Unallowed Questioned Costs: $ --- Criteria: In accordance with applicable activities allowed or unallowed requirements, Fiscal Recovery Funds must be used in one of four eligible use categories. The categories applicable to the Bureau in FY 2022 include the following: a) To respond to the public health emergency or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality; and b) For the provision of government services to the extent of the reduction in revenue due to the COVID?19 public health emergency relative to revenues collected in the most recent full fiscal year prior to the emergency. Furthermore, 2 CFR 200.400(d) requires that accounting practices of the non-Federal entity must provide for adequate documentation to support costs charged to the Federal award. Condition: For 5 (or 8%) of 60 transactions tested, aggregating $2.2 million out of $5.5 million in total Program expenditures, disbursements were made under contract number C22025-B to a provider of full-service marketing, advertising and public relations services for Guam?s 78th Liberation Festivities, including the construction of the Bureau?s parade float, broadcasting, and trophies. Such activities do not appear to satisfy the eligible use category of responding to the public health emergency or its negative economic impacts, and no revenue loss calculation is documented to demonstrate the provision of government services to the extent of the reduction in revenue due to the emergency. The total cost charged to contract number C22025 during FY 2022 is $352,815. Finding No.: 2022-004, Continued Federal Agency: U.S. Department of the Treasury Pass-Through Entity: Government of Guam AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 American Rescue Plan 2021 Area: Activities Allowed or Unallowed Questioned Costs: $ --- Cause: The Bureau did not effectively establish and implement controls over compliance with applicable activities allowed or unallowed requirements. Effect: The Bureau is in noncompliance with applicable activities allowed or unallowed requirements. No questioned cost is reported because the Bureau subsequently obtained written approval on September 20, 2023 from the pass-through entity. Recommendation: Responsible personnel should establish and implement controls over compliance with applicable activities allowed or unallowed requirements. Prior to charging costs to the Federal award, responsible personnel should read the applicable guidance from the U.S. Department of the Treasury and ascertain that the activity is an eligible use of Program funds. Furthermore, any prior approvals from the pass-through entity should be obtained in writing and maintained on file to substantiate costs charged to the Federal award. Views of responsible officials: The Bureau will implement internal controls over compliance with applicable activities allowed or unallowed. Such controls will include obtaining written approval from the pass-through entity for any project and costs charged to the Federal award.
2022-003 ? Formal Policies for Federal Awards Information on the Federal Program: U.S. Small Business Administration Assistance Listing Number: 59.008 Assistance Listing Name: Economic Injury Disaster Loan Criteria ? The Code of Federal Regulation (CFR) Section ?200.300 and Section ?200.400 states in part: (1) The non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices. (2) 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. (3) 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. (4) 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. (5) In reviewing, negotiating and approving 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 their 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. See the definition of indirect (facilities & administrative (F&A)) costs in ? 200.1 of this part. (6) For non-Federal entities that educate and engage students in research, the dual role of students as both trainees and employees (including pre- and post-doctoral staff) contributing to the completion of Federal awards for research must be recognized in the application of these principles. (7) The non-Federal entity may not earn or keep any profit resulting from Federal financial assistance, unless explicitly authorized by the terms and conditions of the Federal award. Condition ? During the year ended August 31, 2022, the Center received additional EIDL funds. Prior to the COVID-19 pandemic, the Center did not receive and spend federal dollars in excess of the limit that require a single audit to be performed. Due to the lack of expertise surrounding controls on Federal awards, the Center did not adopt and approve written policies surrounding Federal awards. Cause ? The written policies over Federal awards were not established during fiscal year 2022 and therefore the Center was not in compliance with CFR Section ?200.300 and Section ?200.400. Effect ? The Center was not able to provide written policies as required by CFR Section ?200.300 and Section ?200.400. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the Center?s major program. The nature of this finding is detailed in the condition section above. Repeat Finding: This is not a repeat finding. Recommendation ? We recommend management attend federal award trainings to ensure the documented policies and procedures can be performed as necessary. This will ensure the Center is in compliance with compliance requirements surrounding Federal awards. Views of Responsible Officials ? Beck Center for the Arts concurs with the finding and the recommendation. Management with the Center?s Audit Committee will review and document policies and procedures for managing federal awards to supplement existing policies and procedures associated with awards from non-federal funders. The Center?s corrective action plan is described in Managements Corrective Action Plan included at page 42 of this reporting package.
2022-003 ? Formal Policies for Federal Awards Information on the Federal Program: U.S. Small Business Administration Assistance Listing Number: 59.008 Assistance Listing Name: Economic Injury Disaster Loan Criteria ? The Code of Federal Regulation (CFR) Section ?200.300 and Section ?200.400 states in part: (1) The non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices. (2) 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. (3) 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. (4) 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. (5) In reviewing, negotiating and approving 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 their 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. See the definition of indirect (facilities & administrative (F&A)) costs in ? 200.1 of this part. (6) For non-Federal entities that educate and engage students in research, the dual role of students as both trainees and employees (including pre- and post-doctoral staff) contributing to the completion of Federal awards for research must be recognized in the application of these principles. (7) The non-Federal entity may not earn or keep any profit resulting from Federal financial assistance, unless explicitly authorized by the terms and conditions of the Federal award. Condition ? During the year ended August 31, 2022, the Center received additional EIDL funds. Prior to the COVID-19 pandemic, the Center did not receive and spend federal dollars in excess of the limit that require a single audit to be performed. Due to the lack of expertise surrounding controls on Federal awards, the Center did not adopt and approve written policies surrounding Federal awards. Cause ? The written policies over Federal awards were not established during fiscal year 2022 and therefore the Center was not in compliance with CFR Section ?200.300 and Section ?200.400. Effect ? The Center was not able to provide written policies as required by CFR Section ?200.300 and Section ?200.400. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the Center?s major program. The nature of this finding is detailed in the condition section above. Repeat Finding: This is not a repeat finding. Recommendation ? We recommend management attend federal award trainings to ensure the documented policies and procedures can be performed as necessary. This will ensure the Center is in compliance with compliance requirements surrounding Federal awards. Views of Responsible Officials ? Beck Center for the Arts concurs with the finding and the recommendation. Management with the Center?s Audit Committee will review and document policies and procedures for managing federal awards to supplement existing policies and procedures associated with awards from non-federal funders. The Center?s corrective action plan is described in Managements Corrective Action Plan included at page 42 of this reporting package.