Allowable Costs Information on Federal Program: U.S. Department of Education, Education Stabilization Funds - American Rescue Plan (Elementary and Secondary School Emergency Relief Fund, and Homeless Youth and Children, Assistance Listing numbers 84.425U and 84.425W) passed through the New York State Education Department. Criteria: 2 CFR Section 200.402 stipulates the total cost of a federal award is the sum of the allowable direct and allocable indirect costs minus any applicable credits. In addition, 2 CFR Section 200.403(e) stipulates that costs must be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian Tribes only, as otherwise provided for in that part.Statement of Condition: During our review of the final cost reporting related to Education Stabilization Funding, it was noted that amounts reported did not agree to the underlying accounting records and financial statements. Statement of Cause: The District did not have appropriate internal controls over compliance to reconcile the expenditures reported and claimed under each grant within the Education Stabilization Funds with the underlying accounting records. Statement of Effect: The District is not in compliance with 2 CFR Section 2004.02 and 2 CFR Section 200.403(e). The District has submitted final claims related to expenditure of federal awards that do not agree to the underlying accounting records. For program 84.425U, total expenditures recorded in the general ledger were $9,449,986, however, the expenditures claimed on the final cost report were $9,857,389. The District was paid $9,857,389 under this grant. For program 84.425D, total expenditures recorded in the general ledger were $4,813,366, however, the expenditures claimed on the final cost report were $4,413,838. The budget approved for the costs under this program was $4,773,034. The District was paid $4,773,034 under this grant. In the District financial statements, the District has a liability recorded in the amount of $407,403 which represents the difference between the actual expenditures and expenditures claimed under 84.425U. For 84.425D, as the District expended more than the approved budget amount, there is no receivable recorded related to the amount expended in excess of the approved budget and funds received. Questioned Costs: None Perspective Information: As part of our testing, we review final cost reports in comparison to the underlying accounting records. The expenditures recorded in the general ledger agree to the cumulative amounts that have been reported on the schedule of expenditures of federal awards for each year within the grant period. Expenditures under these programs have been tested throughout the grant period on a test basis to determine compliance with allowability of costs. Repeat Finding: No Recommendation: We recommend that all cost reporting for federal grants be reconciled to the underlying accounting records and reviewed prior to submission. Additionally, we recommend reaching out to the oversight agency to correct the errors. Views of the Responsible Officials: The District will work to determine where the discrepancy derives from and will correct claim reports and resubmit as necessary.
2024-001 - ACTIVITIES ALLOWED OR UNALLOWED / ALLOWABLE COSTS/COST PRINCIPLES (repeat comment) Program: ALN 84.425 Education Stabilization Fund, COVID-19 - ESSER III - Formula Type: Significant deficiency in Internal Control / Immaterial non-compliance Criteria: As detailed by 2 CFR 200.402, the total cost of a Federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits. Condition: During testing of amounts charged to the grants, it was noted that payments for 8 projectors were charged to the grant but were not authorized by the grant. Cause/Effect: This condition appears to be the result of a misunderstanding of costs allowed under this grant. These costs were not in compliance with 2 CFR 200.402. Recommendation: We recommend that the District review all grant agreements to gain a thorough understanding of allowable costs and then establish/modify internal controls to assure that only allowable costs are charged to the grant. View of Responsible Official: Management is in agreement with this recommendation
Finding 2024-002 – ACTIVITIES ALLOWED OR UNALLOWED and ALLOWABLE COSTS/COST PRINCIPLES Type: Significant Deficiency in Internal Control / Noncompliance Program: Title I (ALN 84.010) Condition: Expenditures charged to the grant were over amounts authorized in the grant budget. Criteria: As detailed by 2 CFR 200.402, “the total cost of a Federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits”. Cause: Grant budget was not amended for increases in planned expenditures. Effect: Unallowed costs were charged to the grant based on / compared to MDE approved budgets. Consequently, reimbursements (funding sources) may be overstated. Context: Amounts expended for this grant by function code and/or object code were over the amounts allowed in the MDE approved budget. Recommendation: We recommend that the District review all grant agreements to gain a thorough understanding of allowable costs and then establish internal controls to assure that only allowable costs are charged to the grant. Management’s Resp: Management is in agreement with this recommendation.
Finding 2024-004 – ACTIVITIES ALLOWED OR UNALLOWED and ALLOWABLE COSTS/COST PRINCIPLES Type: Material weakness in internal control over compliance / Noncompliance Program: Title I (ALN 84.010) Condition: Expenditures charged to the grant were not authorized in the grant budget. Criteria: As detailed by 2 CFR 200.402, “the total cost of a Federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits”. Cause: Management’s misunderstanding of costs allowed under this grant. Effect: Unallowed costs were charged to the grant based on comparison to MDE approved budgets. Consequently, reimbursements (funding sources) may be overstated. Context: Amounts expended for this grant by function code and/or object code were over the amounts allowed in the MDE approved budget by $74,502. Recommendation: We recommend that the District review all grant agreements to gain a thorough understanding of allowable costs and then establish internal controls to assure that charges to the grant do not exceed budget. Management’s Resp: Management is in agreement with this recommendation.
Finding 2024-005 – ACTIVITIES ALLOWED OR UNALLOWED and ALLOWABLE COSTS/COST PRINCIPLES (repeat comment) Type: Material weakness in internal control over compliance / Noncompliance Program: COVID 19 Education Stabilization Fund (ALN 84.425U – ESSER III Formula) Condition: Expenditures charged to the grant were not authorized in the grant budget. Criteria: As detailed by 2 CFR 200.402, “the total cost of a Federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits”. Cause: Management’s misunderstanding of costs allowed under this grant. Effect: Unallowed costs were charged to the grant based on comparison to MDE approved budgets. Consequently, reimbursements (funding sources) may be overstated. Context: Amounts expended in the current year for this grant by function code and/or object code were over the amounts allowed in the MDE approved budget by $377,467. Also, supplies and equipment charged to the grant were not approved in the grant. Recommendation: We recommend that the District review all grant agreements to gain a thorough understanding of allowable costs and then establish internal controls to assure that 1) charges to the grant do not exceed budget, and 2) only allowable costs are charged to the grant. Management’s Resp: Management is in agreement with this recommendation.
1. FINDING NUMBER:14 2024 - 006 2. THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Education Stabilization Fund - PY 2023 4. Project No.: 23-4998-E3 5. AL No.: 84.425 6. Passed Through: Illinois State Board of Education 7. Federal Agency: Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) According to 2 CFR Part 200.402 through 200.408, expenditures must be recorded in the period in which they are incurred and must meet the criteria of being necessary, reasonable, and adequately documented. 9. Condition Audit procedures identified that the District claimed $2,097,350 of expenditures on their June 30, 2024 reimbursement claim submitted to the Ilinois State Board of Education, however these expenditures were not received and paid by the District until July/August 2024. 10. Questioned Costs No reportable questioned costs were identified as the District did incur allowable costs in July/August of 2024 that were within the approved federal award agreement. 11. Context Based upon the review of total expenditures claimed under the federal award and the results of testing procedures performed this appears to be an isolated instance. 12. Effect The District did not incur the cost associated with the allowable cost claimed until July/August of 2024. 13. Cause The District's internal controls failed to detect that the expenditures claimed during a reimbursement request was not paid by the District. 14. Recommendation We recommend that the District perform a review of supporting documentation for expenditures claimed during a reimbursement request to ensure that expenditures claimed for reimbursement are for allowable costs that are within the approved federal award agreement and incurred within a reasonable period of time from the reimbursment request. 15. Management's response The district performs a review of supporting documentation for expenditures claimed during a reimbursement request to ensure that expenditures claimed for reimbursement occurred during the fiscal year for which they are being claimed.
1. FINDING NUMBER:14 2024 - 006 2. THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Education Stabilization Fund - PY 2023 4. Project No.: 23-4998-E3 5. AL No.: 84.425 6. Passed Through: Illinois State Board of Education 7. Federal Agency: Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) According to 2 CFR Part 200.402 through 200.408, expenditures must be recorded in the period in which they are incurred and must meet the criteria of being necessary, reasonable, and adequately documented. 9. Condition Audit procedures identified that the District claimed $2,097,350 of expenditures on their June 30, 2024 reimbursement claim submitted to the Ilinois State Board of Education, however these expenditures were not received and paid by the District until July/August 2024. 10. Questioned Costs No reportable questioned costs were identified as the District did incur allowable costs in July/August of 2024 that were within the approved federal award agreement. 11. Context Based upon the review of total expenditures claimed under the federal award and the results of testing procedures performed this appears to be an isolated instance. 12. Effect The District did not incur the cost associated with the allowable cost claimed until July/August of 2024. 13. Cause The District's internal controls failed to detect that the expenditures claimed during a reimbursement request was not paid by the District. 14. Recommendation We recommend that the District perform a review of supporting documentation for expenditures claimed during a reimbursement request to ensure that expenditures claimed for reimbursement are for allowable costs that are within the approved federal award agreement and incurred within a reasonable period of time from the reimbursment request. 15. Management's response The district performs a review of supporting documentation for expenditures claimed during a reimbursement request to ensure that expenditures claimed for reimbursement occurred during the fiscal year for which they are being claimed.
1. FINDING NUMBER:14 2024 - 006 2. THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Education Stabilization Fund - PY 2023 4. Project No.: 23-4998-E3 5. AL No.: 84.425 6. Passed Through: Illinois State Board of Education 7. Federal Agency: Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) According to 2 CFR Part 200.402 through 200.408, expenditures must be recorded in the period in which they are incurred and must meet the criteria of being necessary, reasonable, and adequately documented. 9. Condition Audit procedures identified that the District claimed $2,097,350 of expenditures on their June 30, 2024 reimbursement claim submitted to the Ilinois State Board of Education, however these expenditures were not received and paid by the District until July/August 2024. 10. Questioned Costs No reportable questioned costs were identified as the District did incur allowable costs in July/August of 2024 that were within the approved federal award agreement. 11. Context Based upon the review of total expenditures claimed under the federal award and the results of testing procedures performed this appears to be an isolated instance. 12. Effect The District did not incur the cost associated with the allowable cost claimed until July/August of 2024. 13. Cause The District's internal controls failed to detect that the expenditures claimed during a reimbursement request was not paid by the District. 14. Recommendation We recommend that the District perform a review of supporting documentation for expenditures claimed during a reimbursement request to ensure that expenditures claimed for reimbursement are for allowable costs that are within the approved federal award agreement and incurred within a reasonable period of time from the reimbursment request. 15. Management's response The district performs a review of supporting documentation for expenditures claimed during a reimbursement request to ensure that expenditures claimed for reimbursement occurred during the fiscal year for which they are being claimed.
1. FINDING NUMBER:14 2024 - 004 2. THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Child Nutrition Cluster - PY 2024 and PY 2023 4. Project No.: 24-4220-00, 24-4210-00, 24-4240-24, 23-4220-00, 23-4210-00 5. AL No.: 10.553, 10.555, 10.582 6. Passed Through: Illinois State Board of Education 7. Federal Agency: Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) Expenditures made under the Child Nutrition Cluster are required to be for allowable activities and conform with the Basic Guidelines prescribed in 2 CFR Part 200.402 through .408 (be necessary and reasonable, be accorded conssitent treatment, be adequately documented, etc.) 9. Condition The District has a contract with Open Kitchens for serving meals under the Child Nutrition Cluster. In early fiscal year 2024, the District received notice that the method of payment to this vendor was to change to ACH. After further correspondence, the District remitted an ACH payment for three months of services for $936,828. The District subsequently discovered that the ACH was remitted to a fraudulent vendor. 10. Questioned Costs Questioned costs related to the finding $936,828. 11. Context Based upon the testing procedures performed this appears to be an isolated instance. 12. Effect The District remmitted $936,828 to an unknown and fraudulent vendor. The District was not able to recover these funds. 13. Cause The District's internal controls failed to detect that the vendor was fraudulent. 14. Recommendation We recommend that the District implement stronger internal controls around vendor payment approvals, such as a change in payment method, to ensure that process of approving new forms of payment for vendors is not occurring with outside parties. 15. Management's response The district’s plan is any request through ACH will first get a call to the accounts receivable department at the company to ensure this is the proper way of making payment. The district will also follow up with a second call to our account rep to verify that the information is correct. The original payment to the vendor will be a small portion of the payment to verify the information. After this payment, a call will be made to accounts receivable to ensure payment.
1. FINDING NUMBER:14 2024 - 004 2. THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Child Nutrition Cluster - PY 2024 and PY 2023 4. Project No.: 24-4220-00, 24-4210-00, 24-4240-24, 23-4220-00, 23-4210-00 5. AL No.: 10.553, 10.555, 10.582 6. Passed Through: Illinois State Board of Education 7. Federal Agency: Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) Expenditures made under the Child Nutrition Cluster are required to be for allowable activities and conform with the Basic Guidelines prescribed in 2 CFR Part 200.402 through .408 (be necessary and reasonable, be accorded conssitent treatment, be adequately documented, etc.) 9. Condition The District has a contract with Open Kitchens for serving meals under the Child Nutrition Cluster. In early fiscal year 2024, the District received notice that the method of payment to this vendor was to change to ACH. After further correspondence, the District remitted an ACH payment for three months of services for $936,828. The District subsequently discovered that the ACH was remitted to a fraudulent vendor. 10. Questioned Costs Questioned costs related to the finding $936,828. 11. Context Based upon the testing procedures performed this appears to be an isolated instance. 12. Effect The District remmitted $936,828 to an unknown and fraudulent vendor. The District was not able to recover these funds. 13. Cause The District's internal controls failed to detect that the vendor was fraudulent. 14. Recommendation We recommend that the District implement stronger internal controls around vendor payment approvals, such as a change in payment method, to ensure that process of approving new forms of payment for vendors is not occurring with outside parties. 15. Management's response The district’s plan is any request through ACH will first get a call to the accounts receivable department at the company to ensure this is the proper way of making payment. The district will also follow up with a second call to our account rep to verify that the information is correct. The original payment to the vendor will be a small portion of the payment to verify the information. After this payment, a call will be made to accounts receivable to ensure payment.
1. FINDING NUMBER:14 2024 - 004 2. THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Child Nutrition Cluster - PY 2024 and PY 2023 4. Project No.: 24-4220-00, 24-4210-00, 24-4240-24, 23-4220-00, 23-4210-00 5. AL No.: 10.553, 10.555, 10.582 6. Passed Through: Illinois State Board of Education 7. Federal Agency: Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) Expenditures made under the Child Nutrition Cluster are required to be for allowable activities and conform with the Basic Guidelines prescribed in 2 CFR Part 200.402 through .408 (be necessary and reasonable, be accorded conssitent treatment, be adequately documented, etc.) 9. Condition The District has a contract with Open Kitchens for serving meals under the Child Nutrition Cluster. In early fiscal year 2024, the District received notice that the method of payment to this vendor was to change to ACH. After further correspondence, the District remitted an ACH payment for three months of services for $936,828. The District subsequently discovered that the ACH was remitted to a fraudulent vendor. 10. Questioned Costs Questioned costs related to the finding $936,828. 11. Context Based upon the testing procedures performed this appears to be an isolated instance. 12. Effect The District remmitted $936,828 to an unknown and fraudulent vendor. The District was not able to recover these funds. 13. Cause The District's internal controls failed to detect that the vendor was fraudulent. 14. Recommendation We recommend that the District implement stronger internal controls around vendor payment approvals, such as a change in payment method, to ensure that process of approving new forms of payment for vendors is not occurring with outside parties. 15. Management's response The district’s plan is any request through ACH will first get a call to the accounts receivable department at the company to ensure this is the proper way of making payment. The district will also follow up with a second call to our account rep to verify that the information is correct. The original payment to the vendor will be a small portion of the payment to verify the information. After this payment, a call will be made to accounts receivable to ensure payment.
1. FINDING NUMBER:14 2024 - 005 2. THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Child Nutrition Cluster - PY 2024 and PY 2023 4. Project No.: 24-4220-00, 24-4210-00, 24-4240-24, 23-4220-00, 23-4210-00 5. AL No.: 10.553, 10.555, 10.582 6. Passed Through: Illinois State Board of Education 7. Federal Agency: Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) Expenditures made under the Child Nutrition Cluster are required to be for allowable activities and conform with the Basic Guidelines prescribed in 2 CFR Part 200.402 through .408 (be necessary and reasonable, be accorded consistent treatment, be adequately documented, etc.) 9. Condition It was noted during the audit that ineligible expenditures were charged to the food service expenditure function. These expenditures were for a back-to-school picnic and consisted of backpacks with school supplies that were provided to students. These expenditures should not have been charged to the food service function in the District’s general ledger system. 10. Questioned Costs No reportable questioned costs noted 11. Context Based upon the testing procedures performed this appears to be an isolated instance. 12. Effect The incorrectly coded expenditures do not impact the reimbursement received by the District due to the Child Nutrition Cluster being an open-ended entitlement grant, meaning they provide reimbursements based on the number of eligible meals served rather than all food service expenditures incurred. However, incorrectly charging expenditures to the food service function can result in District overstating the expenditures charged to food service and reporting incorrect profit or loss from the food service program. 13. Cause The lack of proper review and approval processes for invoice entry and payment, led to errounously charging expenditures to the food service function. 14. Recommendation It is recommended that the school district implement stricter controls and training to ensure that all expenditures charged to the CNC grant are eligible and directly related to child nutrition programs. Additionally, the district should review and reallocate any ineligible expenditures identified during the audit. 15. Management's response The district is reviewing all expenditures monthly to ensure all of them are recorded with the proper account code. Any changes needed will get a journal entry through the Proviso Treasurer’s Office.
1. FINDING NUMBER:14 2024 - 005 2. THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Child Nutrition Cluster - PY 2024 and PY 2023 4. Project No.: 24-4220-00, 24-4210-00, 24-4240-24, 23-4220-00, 23-4210-00 5. AL No.: 10.553, 10.555, 10.582 6. Passed Through: Illinois State Board of Education 7. Federal Agency: Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) Expenditures made under the Child Nutrition Cluster are required to be for allowable activities and conform with the Basic Guidelines prescribed in 2 CFR Part 200.402 through .408 (be necessary and reasonable, be accorded consistent treatment, be adequately documented, etc.) 9. Condition It was noted during the audit that ineligible expenditures were charged to the food service expenditure function. These expenditures were for a back-to-school picnic and consisted of backpacks with school supplies that were provided to students. These expenditures should not have been charged to the food service function in the District’s general ledger system. 10. Questioned Costs No reportable questioned costs noted 11. Context Based upon the testing procedures performed this appears to be an isolated instance. 12. Effect The incorrectly coded expenditures do not impact the reimbursement received by the District due to the Child Nutrition Cluster being an open-ended entitlement grant, meaning they provide reimbursements based on the number of eligible meals served rather than all food service expenditures incurred. However, incorrectly charging expenditures to the food service function can result in District overstating the expenditures charged to food service and reporting incorrect profit or loss from the food service program. 13. Cause The lack of proper review and approval processes for invoice entry and payment, led to errounously charging expenditures to the food service function. 14. Recommendation It is recommended that the school district implement stricter controls and training to ensure that all expenditures charged to the CNC grant are eligible and directly related to child nutrition programs. Additionally, the district should review and reallocate any ineligible expenditures identified during the audit. 15. Management's response The district is reviewing all expenditures monthly to ensure all of them are recorded with the proper account code. Any changes needed will get a journal entry through the Proviso Treasurer’s Office.
1. FINDING NUMBER:14 2024 - 005 2. THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Child Nutrition Cluster - PY 2024 and PY 2023 4. Project No.: 24-4220-00, 24-4210-00, 24-4240-24, 23-4220-00, 23-4210-00 5. AL No.: 10.553, 10.555, 10.582 6. Passed Through: Illinois State Board of Education 7. Federal Agency: Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) Expenditures made under the Child Nutrition Cluster are required to be for allowable activities and conform with the Basic Guidelines prescribed in 2 CFR Part 200.402 through .408 (be necessary and reasonable, be accorded consistent treatment, be adequately documented, etc.) 9. Condition It was noted during the audit that ineligible expenditures were charged to the food service expenditure function. These expenditures were for a back-to-school picnic and consisted of backpacks with school supplies that were provided to students. These expenditures should not have been charged to the food service function in the District’s general ledger system. 10. Questioned Costs No reportable questioned costs noted 11. Context Based upon the testing procedures performed this appears to be an isolated instance. 12. Effect The incorrectly coded expenditures do not impact the reimbursement received by the District due to the Child Nutrition Cluster being an open-ended entitlement grant, meaning they provide reimbursements based on the number of eligible meals served rather than all food service expenditures incurred. However, incorrectly charging expenditures to the food service function can result in District overstating the expenditures charged to food service and reporting incorrect profit or loss from the food service program. 13. Cause The lack of proper review and approval processes for invoice entry and payment, led to errounously charging expenditures to the food service function. 14. Recommendation It is recommended that the school district implement stricter controls and training to ensure that all expenditures charged to the CNC grant are eligible and directly related to child nutrition programs. Additionally, the district should review and reallocate any ineligible expenditures identified during the audit. 15. Management's response The district is reviewing all expenditures monthly to ensure all of them are recorded with the proper account code. Any changes needed will get a journal entry through the Proviso Treasurer’s Office.
2024-005 U.S. Department of Education, Assistance Listing #84.010, Title 1A Disadvantage for the period July 1, 2023 through June 30, 2024 Criteria: Per 2 CFR 200.402, reimbursable costs for a Federal award are the sum of the allowable direct and allocable indirect costs minus any applicable credits. Condition: The School Department requests grant reimbursements on a periodic basis utilizing expense detail recorded in the accounting system’s general ledger. Throughout the year, adjustments may be made to the general ledger to correct errors and misclassifications or to reverse prior period accruals. During 2024, the School Department requested reimbursement for fiscal year 2023 expenses utilizing the expenses recorded on the general ledger. However, several adjustments had been made to reduce grant expenditures that were not captured in the requests. Cause: The School Department misinterpreted the expense detail for the grant by not taking into account negative adjustments to expenses. Effect: Reimbursement requests exceeded net expenditures by $113,884, resulting in questioned costs for the program that should be refunded to the grantor agency. Recommendation: We recommend grant requests be based on net expenditures that take into account all debit and credit activity during the period. Questioned Costs: $113,884
2024-001 - ACTIVITIES ALLOWED OR UNALLOWED / ALLOWABLE COSTS/COST PRINCIPLES (repeat comment) Program: ALN 84.425 Education Stabilization Fund, COVID-19 - ESSER III - Formula Type: Significant deficiency in Internal Control / Immaterial non-compliance Criteria: As detailed by 2 CFR 200.402, the total cost of a Federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits. Condition: During testing of amounts charged to the grants, it was noted that payments for 8 projectors were charged to the grant but were not authorized by the grant. Cause/Effect: This condition appears to be the result of a misunderstanding of costs allowed under this grant. These costs were not in compliance with 2 CFR 200.402. Recommendation: We recommend that the District review all grant agreements to gain a thorough understanding of allowable costs and then establish/modify internal controls to assure that only allowable costs are charged to the grant. View of Responsible Official: Management is in agreement with this recommendation
Finding 2024-002 – ACTIVITIES ALLOWED OR UNALLOWED and ALLOWABLE COSTS/COST PRINCIPLES Type: Significant Deficiency in Internal Control / Noncompliance Program: Title I (ALN 84.010) Condition: Expenditures charged to the grant were over amounts authorized in the grant budget. Criteria: As detailed by 2 CFR 200.402, “the total cost of a Federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits”. Cause: Grant budget was not amended for increases in planned expenditures. Effect: Unallowed costs were charged to the grant based on / compared to MDE approved budgets. Consequently, reimbursements (funding sources) may be overstated. Context: Amounts expended for this grant by function code and/or object code were over the amounts allowed in the MDE approved budget. Recommendation: We recommend that the District review all grant agreements to gain a thorough understanding of allowable costs and then establish internal controls to assure that only allowable costs are charged to the grant. Management’s Resp: Management is in agreement with this recommendation.
Finding 2024-004 – ACTIVITIES ALLOWED OR UNALLOWED and ALLOWABLE COSTS/COST PRINCIPLES Type: Material weakness in internal control over compliance / Noncompliance Program: Title I (ALN 84.010) Condition: Expenditures charged to the grant were not authorized in the grant budget. Criteria: As detailed by 2 CFR 200.402, “the total cost of a Federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits”. Cause: Management’s misunderstanding of costs allowed under this grant. Effect: Unallowed costs were charged to the grant based on comparison to MDE approved budgets. Consequently, reimbursements (funding sources) may be overstated. Context: Amounts expended for this grant by function code and/or object code were over the amounts allowed in the MDE approved budget by $74,502. Recommendation: We recommend that the District review all grant agreements to gain a thorough understanding of allowable costs and then establish internal controls to assure that charges to the grant do not exceed budget. Management’s Resp: Management is in agreement with this recommendation.
Finding 2024-005 – ACTIVITIES ALLOWED OR UNALLOWED and ALLOWABLE COSTS/COST PRINCIPLES (repeat comment) Type: Material weakness in internal control over compliance / Noncompliance Program: COVID 19 Education Stabilization Fund (ALN 84.425U – ESSER III Formula) Condition: Expenditures charged to the grant were not authorized in the grant budget. Criteria: As detailed by 2 CFR 200.402, “the total cost of a Federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits”. Cause: Management’s misunderstanding of costs allowed under this grant. Effect: Unallowed costs were charged to the grant based on comparison to MDE approved budgets. Consequently, reimbursements (funding sources) may be overstated. Context: Amounts expended in the current year for this grant by function code and/or object code were over the amounts allowed in the MDE approved budget by $377,467. Also, supplies and equipment charged to the grant were not approved in the grant. Recommendation: We recommend that the District review all grant agreements to gain a thorough understanding of allowable costs and then establish internal controls to assure that 1) charges to the grant do not exceed budget, and 2) only allowable costs are charged to the grant. Management’s Resp: Management is in agreement with this recommendation.
1. FINDING NUMBER:14 2024 - 006 2. THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Education Stabilization Fund - PY 2023 4. Project No.: 23-4998-E3 5. AL No.: 84.425 6. Passed Through: Illinois State Board of Education 7. Federal Agency: Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) According to 2 CFR Part 200.402 through 200.408, expenditures must be recorded in the period in which they are incurred and must meet the criteria of being necessary, reasonable, and adequately documented. 9. Condition Audit procedures identified that the District claimed $2,097,350 of expenditures on their June 30, 2024 reimbursement claim submitted to the Ilinois State Board of Education, however these expenditures were not received and paid by the District until July/August 2024. 10. Questioned Costs No reportable questioned costs were identified as the District did incur allowable costs in July/August of 2024 that were within the approved federal award agreement. 11. Context Based upon the review of total expenditures claimed under the federal award and the results of testing procedures performed this appears to be an isolated instance. 12. Effect The District did not incur the cost associated with the allowable cost claimed until July/August of 2024. 13. Cause The District's internal controls failed to detect that the expenditures claimed during a reimbursement request was not paid by the District. 14. Recommendation We recommend that the District perform a review of supporting documentation for expenditures claimed during a reimbursement request to ensure that expenditures claimed for reimbursement are for allowable costs that are within the approved federal award agreement and incurred within a reasonable period of time from the reimbursment request. 15. Management's response The district performs a review of supporting documentation for expenditures claimed during a reimbursement request to ensure that expenditures claimed for reimbursement occurred during the fiscal year for which they are being claimed.
1. FINDING NUMBER:14 2024 - 006 2. THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Education Stabilization Fund - PY 2023 4. Project No.: 23-4998-E3 5. AL No.: 84.425 6. Passed Through: Illinois State Board of Education 7. Federal Agency: Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) According to 2 CFR Part 200.402 through 200.408, expenditures must be recorded in the period in which they are incurred and must meet the criteria of being necessary, reasonable, and adequately documented. 9. Condition Audit procedures identified that the District claimed $2,097,350 of expenditures on their June 30, 2024 reimbursement claim submitted to the Ilinois State Board of Education, however these expenditures were not received and paid by the District until July/August 2024. 10. Questioned Costs No reportable questioned costs were identified as the District did incur allowable costs in July/August of 2024 that were within the approved federal award agreement. 11. Context Based upon the review of total expenditures claimed under the federal award and the results of testing procedures performed this appears to be an isolated instance. 12. Effect The District did not incur the cost associated with the allowable cost claimed until July/August of 2024. 13. Cause The District's internal controls failed to detect that the expenditures claimed during a reimbursement request was not paid by the District. 14. Recommendation We recommend that the District perform a review of supporting documentation for expenditures claimed during a reimbursement request to ensure that expenditures claimed for reimbursement are for allowable costs that are within the approved federal award agreement and incurred within a reasonable period of time from the reimbursment request. 15. Management's response The district performs a review of supporting documentation for expenditures claimed during a reimbursement request to ensure that expenditures claimed for reimbursement occurred during the fiscal year for which they are being claimed.
1. FINDING NUMBER:14 2024 - 006 2. THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Education Stabilization Fund - PY 2023 4. Project No.: 23-4998-E3 5. AL No.: 84.425 6. Passed Through: Illinois State Board of Education 7. Federal Agency: Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) According to 2 CFR Part 200.402 through 200.408, expenditures must be recorded in the period in which they are incurred and must meet the criteria of being necessary, reasonable, and adequately documented. 9. Condition Audit procedures identified that the District claimed $2,097,350 of expenditures on their June 30, 2024 reimbursement claim submitted to the Ilinois State Board of Education, however these expenditures were not received and paid by the District until July/August 2024. 10. Questioned Costs No reportable questioned costs were identified as the District did incur allowable costs in July/August of 2024 that were within the approved federal award agreement. 11. Context Based upon the review of total expenditures claimed under the federal award and the results of testing procedures performed this appears to be an isolated instance. 12. Effect The District did not incur the cost associated with the allowable cost claimed until July/August of 2024. 13. Cause The District's internal controls failed to detect that the expenditures claimed during a reimbursement request was not paid by the District. 14. Recommendation We recommend that the District perform a review of supporting documentation for expenditures claimed during a reimbursement request to ensure that expenditures claimed for reimbursement are for allowable costs that are within the approved federal award agreement and incurred within a reasonable period of time from the reimbursment request. 15. Management's response The district performs a review of supporting documentation for expenditures claimed during a reimbursement request to ensure that expenditures claimed for reimbursement occurred during the fiscal year for which they are being claimed.
1. FINDING NUMBER:14 2024 - 004 2. THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Child Nutrition Cluster - PY 2024 and PY 2023 4. Project No.: 24-4220-00, 24-4210-00, 24-4240-24, 23-4220-00, 23-4210-00 5. AL No.: 10.553, 10.555, 10.582 6. Passed Through: Illinois State Board of Education 7. Federal Agency: Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) Expenditures made under the Child Nutrition Cluster are required to be for allowable activities and conform with the Basic Guidelines prescribed in 2 CFR Part 200.402 through .408 (be necessary and reasonable, be accorded conssitent treatment, be adequately documented, etc.) 9. Condition The District has a contract with Open Kitchens for serving meals under the Child Nutrition Cluster. In early fiscal year 2024, the District received notice that the method of payment to this vendor was to change to ACH. After further correspondence, the District remitted an ACH payment for three months of services for $936,828. The District subsequently discovered that the ACH was remitted to a fraudulent vendor. 10. Questioned Costs Questioned costs related to the finding $936,828. 11. Context Based upon the testing procedures performed this appears to be an isolated instance. 12. Effect The District remmitted $936,828 to an unknown and fraudulent vendor. The District was not able to recover these funds. 13. Cause The District's internal controls failed to detect that the vendor was fraudulent. 14. Recommendation We recommend that the District implement stronger internal controls around vendor payment approvals, such as a change in payment method, to ensure that process of approving new forms of payment for vendors is not occurring with outside parties. 15. Management's response The district’s plan is any request through ACH will first get a call to the accounts receivable department at the company to ensure this is the proper way of making payment. The district will also follow up with a second call to our account rep to verify that the information is correct. The original payment to the vendor will be a small portion of the payment to verify the information. After this payment, a call will be made to accounts receivable to ensure payment.
1. FINDING NUMBER:14 2024 - 004 2. THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Child Nutrition Cluster - PY 2024 and PY 2023 4. Project No.: 24-4220-00, 24-4210-00, 24-4240-24, 23-4220-00, 23-4210-00 5. AL No.: 10.553, 10.555, 10.582 6. Passed Through: Illinois State Board of Education 7. Federal Agency: Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) Expenditures made under the Child Nutrition Cluster are required to be for allowable activities and conform with the Basic Guidelines prescribed in 2 CFR Part 200.402 through .408 (be necessary and reasonable, be accorded conssitent treatment, be adequately documented, etc.) 9. Condition The District has a contract with Open Kitchens for serving meals under the Child Nutrition Cluster. In early fiscal year 2024, the District received notice that the method of payment to this vendor was to change to ACH. After further correspondence, the District remitted an ACH payment for three months of services for $936,828. The District subsequently discovered that the ACH was remitted to a fraudulent vendor. 10. Questioned Costs Questioned costs related to the finding $936,828. 11. Context Based upon the testing procedures performed this appears to be an isolated instance. 12. Effect The District remmitted $936,828 to an unknown and fraudulent vendor. The District was not able to recover these funds. 13. Cause The District's internal controls failed to detect that the vendor was fraudulent. 14. Recommendation We recommend that the District implement stronger internal controls around vendor payment approvals, such as a change in payment method, to ensure that process of approving new forms of payment for vendors is not occurring with outside parties. 15. Management's response The district’s plan is any request through ACH will first get a call to the accounts receivable department at the company to ensure this is the proper way of making payment. The district will also follow up with a second call to our account rep to verify that the information is correct. The original payment to the vendor will be a small portion of the payment to verify the information. After this payment, a call will be made to accounts receivable to ensure payment.
1. FINDING NUMBER:14 2024 - 004 2. THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Child Nutrition Cluster - PY 2024 and PY 2023 4. Project No.: 24-4220-00, 24-4210-00, 24-4240-24, 23-4220-00, 23-4210-00 5. AL No.: 10.553, 10.555, 10.582 6. Passed Through: Illinois State Board of Education 7. Federal Agency: Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) Expenditures made under the Child Nutrition Cluster are required to be for allowable activities and conform with the Basic Guidelines prescribed in 2 CFR Part 200.402 through .408 (be necessary and reasonable, be accorded conssitent treatment, be adequately documented, etc.) 9. Condition The District has a contract with Open Kitchens for serving meals under the Child Nutrition Cluster. In early fiscal year 2024, the District received notice that the method of payment to this vendor was to change to ACH. After further correspondence, the District remitted an ACH payment for three months of services for $936,828. The District subsequently discovered that the ACH was remitted to a fraudulent vendor. 10. Questioned Costs Questioned costs related to the finding $936,828. 11. Context Based upon the testing procedures performed this appears to be an isolated instance. 12. Effect The District remmitted $936,828 to an unknown and fraudulent vendor. The District was not able to recover these funds. 13. Cause The District's internal controls failed to detect that the vendor was fraudulent. 14. Recommendation We recommend that the District implement stronger internal controls around vendor payment approvals, such as a change in payment method, to ensure that process of approving new forms of payment for vendors is not occurring with outside parties. 15. Management's response The district’s plan is any request through ACH will first get a call to the accounts receivable department at the company to ensure this is the proper way of making payment. The district will also follow up with a second call to our account rep to verify that the information is correct. The original payment to the vendor will be a small portion of the payment to verify the information. After this payment, a call will be made to accounts receivable to ensure payment.
1. FINDING NUMBER:14 2024 - 005 2. THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Child Nutrition Cluster - PY 2024 and PY 2023 4. Project No.: 24-4220-00, 24-4210-00, 24-4240-24, 23-4220-00, 23-4210-00 5. AL No.: 10.553, 10.555, 10.582 6. Passed Through: Illinois State Board of Education 7. Federal Agency: Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) Expenditures made under the Child Nutrition Cluster are required to be for allowable activities and conform with the Basic Guidelines prescribed in 2 CFR Part 200.402 through .408 (be necessary and reasonable, be accorded consistent treatment, be adequately documented, etc.) 9. Condition It was noted during the audit that ineligible expenditures were charged to the food service expenditure function. These expenditures were for a back-to-school picnic and consisted of backpacks with school supplies that were provided to students. These expenditures should not have been charged to the food service function in the District’s general ledger system. 10. Questioned Costs No reportable questioned costs noted 11. Context Based upon the testing procedures performed this appears to be an isolated instance. 12. Effect The incorrectly coded expenditures do not impact the reimbursement received by the District due to the Child Nutrition Cluster being an open-ended entitlement grant, meaning they provide reimbursements based on the number of eligible meals served rather than all food service expenditures incurred. However, incorrectly charging expenditures to the food service function can result in District overstating the expenditures charged to food service and reporting incorrect profit or loss from the food service program. 13. Cause The lack of proper review and approval processes for invoice entry and payment, led to errounously charging expenditures to the food service function. 14. Recommendation It is recommended that the school district implement stricter controls and training to ensure that all expenditures charged to the CNC grant are eligible and directly related to child nutrition programs. Additionally, the district should review and reallocate any ineligible expenditures identified during the audit. 15. Management's response The district is reviewing all expenditures monthly to ensure all of them are recorded with the proper account code. Any changes needed will get a journal entry through the Proviso Treasurer’s Office.
1. FINDING NUMBER:14 2024 - 005 2. THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Child Nutrition Cluster - PY 2024 and PY 2023 4. Project No.: 24-4220-00, 24-4210-00, 24-4240-24, 23-4220-00, 23-4210-00 5. AL No.: 10.553, 10.555, 10.582 6. Passed Through: Illinois State Board of Education 7. Federal Agency: Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) Expenditures made under the Child Nutrition Cluster are required to be for allowable activities and conform with the Basic Guidelines prescribed in 2 CFR Part 200.402 through .408 (be necessary and reasonable, be accorded consistent treatment, be adequately documented, etc.) 9. Condition It was noted during the audit that ineligible expenditures were charged to the food service expenditure function. These expenditures were for a back-to-school picnic and consisted of backpacks with school supplies that were provided to students. These expenditures should not have been charged to the food service function in the District’s general ledger system. 10. Questioned Costs No reportable questioned costs noted 11. Context Based upon the testing procedures performed this appears to be an isolated instance. 12. Effect The incorrectly coded expenditures do not impact the reimbursement received by the District due to the Child Nutrition Cluster being an open-ended entitlement grant, meaning they provide reimbursements based on the number of eligible meals served rather than all food service expenditures incurred. However, incorrectly charging expenditures to the food service function can result in District overstating the expenditures charged to food service and reporting incorrect profit or loss from the food service program. 13. Cause The lack of proper review and approval processes for invoice entry and payment, led to errounously charging expenditures to the food service function. 14. Recommendation It is recommended that the school district implement stricter controls and training to ensure that all expenditures charged to the CNC grant are eligible and directly related to child nutrition programs. Additionally, the district should review and reallocate any ineligible expenditures identified during the audit. 15. Management's response The district is reviewing all expenditures monthly to ensure all of them are recorded with the proper account code. Any changes needed will get a journal entry through the Proviso Treasurer’s Office.
1. FINDING NUMBER:14 2024 - 005 2. THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Child Nutrition Cluster - PY 2024 and PY 2023 4. Project No.: 24-4220-00, 24-4210-00, 24-4240-24, 23-4220-00, 23-4210-00 5. AL No.: 10.553, 10.555, 10.582 6. Passed Through: Illinois State Board of Education 7. Federal Agency: Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) Expenditures made under the Child Nutrition Cluster are required to be for allowable activities and conform with the Basic Guidelines prescribed in 2 CFR Part 200.402 through .408 (be necessary and reasonable, be accorded consistent treatment, be adequately documented, etc.) 9. Condition It was noted during the audit that ineligible expenditures were charged to the food service expenditure function. These expenditures were for a back-to-school picnic and consisted of backpacks with school supplies that were provided to students. These expenditures should not have been charged to the food service function in the District’s general ledger system. 10. Questioned Costs No reportable questioned costs noted 11. Context Based upon the testing procedures performed this appears to be an isolated instance. 12. Effect The incorrectly coded expenditures do not impact the reimbursement received by the District due to the Child Nutrition Cluster being an open-ended entitlement grant, meaning they provide reimbursements based on the number of eligible meals served rather than all food service expenditures incurred. However, incorrectly charging expenditures to the food service function can result in District overstating the expenditures charged to food service and reporting incorrect profit or loss from the food service program. 13. Cause The lack of proper review and approval processes for invoice entry and payment, led to errounously charging expenditures to the food service function. 14. Recommendation It is recommended that the school district implement stricter controls and training to ensure that all expenditures charged to the CNC grant are eligible and directly related to child nutrition programs. Additionally, the district should review and reallocate any ineligible expenditures identified during the audit. 15. Management's response The district is reviewing all expenditures monthly to ensure all of them are recorded with the proper account code. Any changes needed will get a journal entry through the Proviso Treasurer’s Office.
2024-005 U.S. Department of Education, Assistance Listing #84.010, Title 1A Disadvantage for the period July 1, 2023 through June 30, 2024 Criteria: Per 2 CFR 200.402, reimbursable costs for a Federal award are the sum of the allowable direct and allocable indirect costs minus any applicable credits. Condition: The School Department requests grant reimbursements on a periodic basis utilizing expense detail recorded in the accounting system’s general ledger. Throughout the year, adjustments may be made to the general ledger to correct errors and misclassifications or to reverse prior period accruals. During 2024, the School Department requested reimbursement for fiscal year 2023 expenses utilizing the expenses recorded on the general ledger. However, several adjustments had been made to reduce grant expenditures that were not captured in the requests. Cause: The School Department misinterpreted the expense detail for the grant by not taking into account negative adjustments to expenses. Effect: Reimbursement requests exceeded net expenditures by $113,884, resulting in questioned costs for the program that should be refunded to the grantor agency. Recommendation: We recommend grant requests be based on net expenditures that take into account all debit and credit activity during the period. Questioned Costs: $113,884
Finding 2023-005 Unallowable and Improperly Documented Direct Expenditures Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance Condition and Context: The Organization failed to establish critical processes and internal controls over direct expenditures to ensure compliance with Uniform Guidance requirements and several compliance issues were identified. As part of audit procedures, 81 transactions were selected in a testing sample from a population of 315 direct expense transactions. Of the transactions tested, the auditors noted 15 instances of payments to contractors for work that were not sufficiently documented to support the allocatable work efforts performed on the grants in which they were charged. The auditors noted 4 instances where the costs charged to the federal grant were determined to not be reasonable, as they were either unallowable per Uniform Guidance, or were outside of the allowable costs approved in the federal award budgets. The auditors noted 1 instance of a transaction being claimed twice on different federal grants. The auditors also noted a significant lack of approvals for costs spent, as well as a failure to maintain adequate documentation, as noted in Finding 2023-003. Criteria: According to Uniform Guidance 2 CFR §200.402 - 405, costs charged to federal awards must be necessary, reasonable, consistent, allocable, and supported be adequate documentation. Federal requirements also mandate that expenditures align with the program budget and adhere to specific limitations on allowable costs. Cause: The Organization failed to implement appropriate policies, procedures, and internal controls that would allow management to properly record, track, and claim direct expenditures compliant with Uniform Guidance requirements. The root cause of these matters appears to be due to a lack of sufficient skills, knowledge, and experience in the grant administrators and leadership roles. Effect: The impact of failing to establish a robust system of processes and internal controls to determine that costs charged against federal grants are necessary, reasonable, consistent, allocable, and properly supported by adequate documentation significantly increases the risk that federal grants would be charged for expenses that did not occur, were not reasonably spent, or were charged against the wrong grant. These issues could lead to the misallocation of federal resources and the diminished impact on the program’s intended outcomes. Overall, the failure to establish sufficient internal controls in these areas greatly increases the risks that federal funds would be spent outside of the Uniform Guidance requirements. Questioned Costs: Known questioned costs of $17,959 were identified. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Organization implement more robust processes and internal controls over their procurement cycle that results in expenditures being properly reviewed and approved. Expenditures should only be approved by individuals with sufficient knowledge of allowable costs and should be familiar with Uniform Guidance and grant document requirements. Source documentation should clearly provide sufficient information to identify the scope of the expenses and to which grant the costs were charged against. The Organization should also better utilize its accounting database to ensure costs are properly tracked and categorized against its grant activities to prevent duplicate claims. Views of Responsible Officials: The Organization retained a licensed CPA firm with significant expertise in financial reporting and single audit compliance. The Organization will develop and implement a formal procurement policy to ensure all contractor and vendor selections are based on program needs and comply with federal regulations. The procurement process will include clear criteria for vendor selection and justification, requirement to document scope of work, deliverables, and costs before engaging contractors, and verification of vendor eligibility against the Suspension and Debarment list.
Finding 2023-005 Unallowable and Improperly Documented Direct Expenditures Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance Condition and Context: The Organization failed to establish critical processes and internal controls over direct expenditures to ensure compliance with Uniform Guidance requirements and several compliance issues were identified. As part of audit procedures, 81 transactions were selected in a testing sample from a population of 315 direct expense transactions. Of the transactions tested, the auditors noted 15 instances of payments to contractors for work that were not sufficiently documented to support the allocatable work efforts performed on the grants in which they were charged. The auditors noted 4 instances where the costs charged to the federal grant were determined to not be reasonable, as they were either unallowable per Uniform Guidance, or were outside of the allowable costs approved in the federal award budgets. The auditors noted 1 instance of a transaction being claimed twice on different federal grants. The auditors also noted a significant lack of approvals for costs spent, as well as a failure to maintain adequate documentation, as noted in Finding 2023-003. Criteria: According to Uniform Guidance 2 CFR §200.402 - 405, costs charged to federal awards must be necessary, reasonable, consistent, allocable, and supported be adequate documentation. Federal requirements also mandate that expenditures align with the program budget and adhere to specific limitations on allowable costs. Cause: The Organization failed to implement appropriate policies, procedures, and internal controls that would allow management to properly record, track, and claim direct expenditures compliant with Uniform Guidance requirements. The root cause of these matters appears to be due to a lack of sufficient skills, knowledge, and experience in the grant administrators and leadership roles. Effect: The impact of failing to establish a robust system of processes and internal controls to determine that costs charged against federal grants are necessary, reasonable, consistent, allocable, and properly supported by adequate documentation significantly increases the risk that federal grants would be charged for expenses that did not occur, were not reasonably spent, or were charged against the wrong grant. These issues could lead to the misallocation of federal resources and the diminished impact on the program’s intended outcomes. Overall, the failure to establish sufficient internal controls in these areas greatly increases the risks that federal funds would be spent outside of the Uniform Guidance requirements. Questioned Costs: Known questioned costs of $17,959 were identified. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Organization implement more robust processes and internal controls over their procurement cycle that results in expenditures being properly reviewed and approved. Expenditures should only be approved by individuals with sufficient knowledge of allowable costs and should be familiar with Uniform Guidance and grant document requirements. Source documentation should clearly provide sufficient information to identify the scope of the expenses and to which grant the costs were charged against. The Organization should also better utilize its accounting database to ensure costs are properly tracked and categorized against its grant activities to prevent duplicate claims. Views of Responsible Officials: The Organization retained a licensed CPA firm with significant expertise in financial reporting and single audit compliance. The Organization will develop and implement a formal procurement policy to ensure all contractor and vendor selections are based on program needs and comply with federal regulations. The procurement process will include clear criteria for vendor selection and justification, requirement to document scope of work, deliverables, and costs before engaging contractors, and verification of vendor eligibility against the Suspension and Debarment list.
Finding 2023-005 Unallowable and Improperly Documented Direct Expenditures Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance Condition and Context: The Organization failed to establish critical processes and internal controls over direct expenditures to ensure compliance with Uniform Guidance requirements and several compliance issues were identified. As part of audit procedures, 81 transactions were selected in a testing sample from a population of 315 direct expense transactions. Of the transactions tested, the auditors noted 15 instances of payments to contractors for work that were not sufficiently documented to support the allocatable work efforts performed on the grants in which they were charged. The auditors noted 4 instances where the costs charged to the federal grant were determined to not be reasonable, as they were either unallowable per Uniform Guidance, or were outside of the allowable costs approved in the federal award budgets. The auditors noted 1 instance of a transaction being claimed twice on different federal grants. The auditors also noted a significant lack of approvals for costs spent, as well as a failure to maintain adequate documentation, as noted in Finding 2023-003. Criteria: According to Uniform Guidance 2 CFR §200.402 - 405, costs charged to federal awards must be necessary, reasonable, consistent, allocable, and supported be adequate documentation. Federal requirements also mandate that expenditures align with the program budget and adhere to specific limitations on allowable costs. Cause: The Organization failed to implement appropriate policies, procedures, and internal controls that would allow management to properly record, track, and claim direct expenditures compliant with Uniform Guidance requirements. The root cause of these matters appears to be due to a lack of sufficient skills, knowledge, and experience in the grant administrators and leadership roles. Effect: The impact of failing to establish a robust system of processes and internal controls to determine that costs charged against federal grants are necessary, reasonable, consistent, allocable, and properly supported by adequate documentation significantly increases the risk that federal grants would be charged for expenses that did not occur, were not reasonably spent, or were charged against the wrong grant. These issues could lead to the misallocation of federal resources and the diminished impact on the program’s intended outcomes. Overall, the failure to establish sufficient internal controls in these areas greatly increases the risks that federal funds would be spent outside of the Uniform Guidance requirements. Questioned Costs: Known questioned costs of $17,959 were identified. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Organization implement more robust processes and internal controls over their procurement cycle that results in expenditures being properly reviewed and approved. Expenditures should only be approved by individuals with sufficient knowledge of allowable costs and should be familiar with Uniform Guidance and grant document requirements. Source documentation should clearly provide sufficient information to identify the scope of the expenses and to which grant the costs were charged against. The Organization should also better utilize its accounting database to ensure costs are properly tracked and categorized against its grant activities to prevent duplicate claims. Views of Responsible Officials: The Organization retained a licensed CPA firm with significant expertise in financial reporting and single audit compliance. The Organization will develop and implement a formal procurement policy to ensure all contractor and vendor selections are based on program needs and comply with federal regulations. The procurement process will include clear criteria for vendor selection and justification, requirement to document scope of work, deliverables, and costs before engaging contractors, and verification of vendor eligibility against the Suspension and Debarment list.
Finding 2023-005 Unallowable and Improperly Documented Direct Expenditures Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance Condition and Context: The Organization failed to establish critical processes and internal controls over direct expenditures to ensure compliance with Uniform Guidance requirements and several compliance issues were identified. As part of audit procedures, 81 transactions were selected in a testing sample from a population of 315 direct expense transactions. Of the transactions tested, the auditors noted 15 instances of payments to contractors for work that were not sufficiently documented to support the allocatable work efforts performed on the grants in which they were charged. The auditors noted 4 instances where the costs charged to the federal grant were determined to not be reasonable, as they were either unallowable per Uniform Guidance, or were outside of the allowable costs approved in the federal award budgets. The auditors noted 1 instance of a transaction being claimed twice on different federal grants. The auditors also noted a significant lack of approvals for costs spent, as well as a failure to maintain adequate documentation, as noted in Finding 2023-003. Criteria: According to Uniform Guidance 2 CFR §200.402 - 405, costs charged to federal awards must be necessary, reasonable, consistent, allocable, and supported be adequate documentation. Federal requirements also mandate that expenditures align with the program budget and adhere to specific limitations on allowable costs. Cause: The Organization failed to implement appropriate policies, procedures, and internal controls that would allow management to properly record, track, and claim direct expenditures compliant with Uniform Guidance requirements. The root cause of these matters appears to be due to a lack of sufficient skills, knowledge, and experience in the grant administrators and leadership roles. Effect: The impact of failing to establish a robust system of processes and internal controls to determine that costs charged against federal grants are necessary, reasonable, consistent, allocable, and properly supported by adequate documentation significantly increases the risk that federal grants would be charged for expenses that did not occur, were not reasonably spent, or were charged against the wrong grant. These issues could lead to the misallocation of federal resources and the diminished impact on the program’s intended outcomes. Overall, the failure to establish sufficient internal controls in these areas greatly increases the risks that federal funds would be spent outside of the Uniform Guidance requirements. Questioned Costs: Known questioned costs of $17,959 were identified. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Organization implement more robust processes and internal controls over their procurement cycle that results in expenditures being properly reviewed and approved. Expenditures should only be approved by individuals with sufficient knowledge of allowable costs and should be familiar with Uniform Guidance and grant document requirements. Source documentation should clearly provide sufficient information to identify the scope of the expenses and to which grant the costs were charged against. The Organization should also better utilize its accounting database to ensure costs are properly tracked and categorized against its grant activities to prevent duplicate claims. Views of Responsible Officials: The Organization retained a licensed CPA firm with significant expertise in financial reporting and single audit compliance. The Organization will develop and implement a formal procurement policy to ensure all contractor and vendor selections are based on program needs and comply with federal regulations. The procurement process will include clear criteria for vendor selection and justification, requirement to document scope of work, deliverables, and costs before engaging contractors, and verification of vendor eligibility against the Suspension and Debarment list.
Finding 2023-005 Unallowable and Improperly Documented Direct Expenditures Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance Condition and Context: The Organization failed to establish critical processes and internal controls over direct expenditures to ensure compliance with Uniform Guidance requirements and several compliance issues were identified. As part of audit procedures, 81 transactions were selected in a testing sample from a population of 315 direct expense transactions. Of the transactions tested, the auditors noted 15 instances of payments to contractors for work that were not sufficiently documented to support the allocatable work efforts performed on the grants in which they were charged. The auditors noted 4 instances where the costs charged to the federal grant were determined to not be reasonable, as they were either unallowable per Uniform Guidance, or were outside of the allowable costs approved in the federal award budgets. The auditors noted 1 instance of a transaction being claimed twice on different federal grants. The auditors also noted a significant lack of approvals for costs spent, as well as a failure to maintain adequate documentation, as noted in Finding 2023-003. Criteria: According to Uniform Guidance 2 CFR §200.402 - 405, costs charged to federal awards must be necessary, reasonable, consistent, allocable, and supported be adequate documentation. Federal requirements also mandate that expenditures align with the program budget and adhere to specific limitations on allowable costs. Cause: The Organization failed to implement appropriate policies, procedures, and internal controls that would allow management to properly record, track, and claim direct expenditures compliant with Uniform Guidance requirements. The root cause of these matters appears to be due to a lack of sufficient skills, knowledge, and experience in the grant administrators and leadership roles. Effect: The impact of failing to establish a robust system of processes and internal controls to determine that costs charged against federal grants are necessary, reasonable, consistent, allocable, and properly supported by adequate documentation significantly increases the risk that federal grants would be charged for expenses that did not occur, were not reasonably spent, or were charged against the wrong grant. These issues could lead to the misallocation of federal resources and the diminished impact on the program’s intended outcomes. Overall, the failure to establish sufficient internal controls in these areas greatly increases the risks that federal funds would be spent outside of the Uniform Guidance requirements. Questioned Costs: Known questioned costs of $17,959 were identified. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Organization implement more robust processes and internal controls over their procurement cycle that results in expenditures being properly reviewed and approved. Expenditures should only be approved by individuals with sufficient knowledge of allowable costs and should be familiar with Uniform Guidance and grant document requirements. Source documentation should clearly provide sufficient information to identify the scope of the expenses and to which grant the costs were charged against. The Organization should also better utilize its accounting database to ensure costs are properly tracked and categorized against its grant activities to prevent duplicate claims. Views of Responsible Officials: The Organization retained a licensed CPA firm with significant expertise in financial reporting and single audit compliance. The Organization will develop and implement a formal procurement policy to ensure all contractor and vendor selections are based on program needs and comply with federal regulations. The procurement process will include clear criteria for vendor selection and justification, requirement to document scope of work, deliverables, and costs before engaging contractors, and verification of vendor eligibility against the Suspension and Debarment list.
Finding 2023-005 Unallowable and Improperly Documented Direct Expenditures Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance Condition and Context: The Organization failed to establish critical processes and internal controls over direct expenditures to ensure compliance with Uniform Guidance requirements and several compliance issues were identified. As part of audit procedures, 81 transactions were selected in a testing sample from a population of 315 direct expense transactions. Of the transactions tested, the auditors noted 15 instances of payments to contractors for work that were not sufficiently documented to support the allocatable work efforts performed on the grants in which they were charged. The auditors noted 4 instances where the costs charged to the federal grant were determined to not be reasonable, as they were either unallowable per Uniform Guidance, or were outside of the allowable costs approved in the federal award budgets. The auditors noted 1 instance of a transaction being claimed twice on different federal grants. The auditors also noted a significant lack of approvals for costs spent, as well as a failure to maintain adequate documentation, as noted in Finding 2023-003. Criteria: According to Uniform Guidance 2 CFR §200.402 - 405, costs charged to federal awards must be necessary, reasonable, consistent, allocable, and supported be adequate documentation. Federal requirements also mandate that expenditures align with the program budget and adhere to specific limitations on allowable costs. Cause: The Organization failed to implement appropriate policies, procedures, and internal controls that would allow management to properly record, track, and claim direct expenditures compliant with Uniform Guidance requirements. The root cause of these matters appears to be due to a lack of sufficient skills, knowledge, and experience in the grant administrators and leadership roles. Effect: The impact of failing to establish a robust system of processes and internal controls to determine that costs charged against federal grants are necessary, reasonable, consistent, allocable, and properly supported by adequate documentation significantly increases the risk that federal grants would be charged for expenses that did not occur, were not reasonably spent, or were charged against the wrong grant. These issues could lead to the misallocation of federal resources and the diminished impact on the program’s intended outcomes. Overall, the failure to establish sufficient internal controls in these areas greatly increases the risks that federal funds would be spent outside of the Uniform Guidance requirements. Questioned Costs: Known questioned costs of $17,959 were identified. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Organization implement more robust processes and internal controls over their procurement cycle that results in expenditures being properly reviewed and approved. Expenditures should only be approved by individuals with sufficient knowledge of allowable costs and should be familiar with Uniform Guidance and grant document requirements. Source documentation should clearly provide sufficient information to identify the scope of the expenses and to which grant the costs were charged against. The Organization should also better utilize its accounting database to ensure costs are properly tracked and categorized against its grant activities to prevent duplicate claims. Views of Responsible Officials: The Organization retained a licensed CPA firm with significant expertise in financial reporting and single audit compliance. The Organization will develop and implement a formal procurement policy to ensure all contractor and vendor selections are based on program needs and comply with federal regulations. The procurement process will include clear criteria for vendor selection and justification, requirement to document scope of work, deliverables, and costs before engaging contractors, and verification of vendor eligibility against the Suspension and Debarment list.
Finding 2023-005 Unallowable and Improperly Documented Direct Expenditures Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance Condition and Context: The Organization failed to establish critical processes and internal controls over direct expenditures to ensure compliance with Uniform Guidance requirements and several compliance issues were identified. As part of audit procedures, 81 transactions were selected in a testing sample from a population of 315 direct expense transactions. Of the transactions tested, the auditors noted 15 instances of payments to contractors for work that were not sufficiently documented to support the allocatable work efforts performed on the grants in which they were charged. The auditors noted 4 instances where the costs charged to the federal grant were determined to not be reasonable, as they were either unallowable per Uniform Guidance, or were outside of the allowable costs approved in the federal award budgets. The auditors noted 1 instance of a transaction being claimed twice on different federal grants. The auditors also noted a significant lack of approvals for costs spent, as well as a failure to maintain adequate documentation, as noted in Finding 2023-003. Criteria: According to Uniform Guidance 2 CFR §200.402 - 405, costs charged to federal awards must be necessary, reasonable, consistent, allocable, and supported be adequate documentation. Federal requirements also mandate that expenditures align with the program budget and adhere to specific limitations on allowable costs. Cause: The Organization failed to implement appropriate policies, procedures, and internal controls that would allow management to properly record, track, and claim direct expenditures compliant with Uniform Guidance requirements. The root cause of these matters appears to be due to a lack of sufficient skills, knowledge, and experience in the grant administrators and leadership roles. Effect: The impact of failing to establish a robust system of processes and internal controls to determine that costs charged against federal grants are necessary, reasonable, consistent, allocable, and properly supported by adequate documentation significantly increases the risk that federal grants would be charged for expenses that did not occur, were not reasonably spent, or were charged against the wrong grant. These issues could lead to the misallocation of federal resources and the diminished impact on the program’s intended outcomes. Overall, the failure to establish sufficient internal controls in these areas greatly increases the risks that federal funds would be spent outside of the Uniform Guidance requirements. Questioned Costs: Known questioned costs of $17,959 were identified. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Organization implement more robust processes and internal controls over their procurement cycle that results in expenditures being properly reviewed and approved. Expenditures should only be approved by individuals with sufficient knowledge of allowable costs and should be familiar with Uniform Guidance and grant document requirements. Source documentation should clearly provide sufficient information to identify the scope of the expenses and to which grant the costs were charged against. The Organization should also better utilize its accounting database to ensure costs are properly tracked and categorized against its grant activities to prevent duplicate claims. Views of Responsible Officials: The Organization retained a licensed CPA firm with significant expertise in financial reporting and single audit compliance. The Organization will develop and implement a formal procurement policy to ensure all contractor and vendor selections are based on program needs and comply with federal regulations. The procurement process will include clear criteria for vendor selection and justification, requirement to document scope of work, deliverables, and costs before engaging contractors, and verification of vendor eligibility against the Suspension and Debarment list.
Finding 2023-005 Unallowable and Improperly Documented Direct Expenditures Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance Condition and Context: The Organization failed to establish critical processes and internal controls over direct expenditures to ensure compliance with Uniform Guidance requirements and several compliance issues were identified. As part of audit procedures, 81 transactions were selected in a testing sample from a population of 315 direct expense transactions. Of the transactions tested, the auditors noted 15 instances of payments to contractors for work that were not sufficiently documented to support the allocatable work efforts performed on the grants in which they were charged. The auditors noted 4 instances where the costs charged to the federal grant were determined to not be reasonable, as they were either unallowable per Uniform Guidance, or were outside of the allowable costs approved in the federal award budgets. The auditors noted 1 instance of a transaction being claimed twice on different federal grants. The auditors also noted a significant lack of approvals for costs spent, as well as a failure to maintain adequate documentation, as noted in Finding 2023-003. Criteria: According to Uniform Guidance 2 CFR §200.402 - 405, costs charged to federal awards must be necessary, reasonable, consistent, allocable, and supported be adequate documentation. Federal requirements also mandate that expenditures align with the program budget and adhere to specific limitations on allowable costs. Cause: The Organization failed to implement appropriate policies, procedures, and internal controls that would allow management to properly record, track, and claim direct expenditures compliant with Uniform Guidance requirements. The root cause of these matters appears to be due to a lack of sufficient skills, knowledge, and experience in the grant administrators and leadership roles. Effect: The impact of failing to establish a robust system of processes and internal controls to determine that costs charged against federal grants are necessary, reasonable, consistent, allocable, and properly supported by adequate documentation significantly increases the risk that federal grants would be charged for expenses that did not occur, were not reasonably spent, or were charged against the wrong grant. These issues could lead to the misallocation of federal resources and the diminished impact on the program’s intended outcomes. Overall, the failure to establish sufficient internal controls in these areas greatly increases the risks that federal funds would be spent outside of the Uniform Guidance requirements. Questioned Costs: Known questioned costs of $17,959 were identified. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Organization implement more robust processes and internal controls over their procurement cycle that results in expenditures being properly reviewed and approved. Expenditures should only be approved by individuals with sufficient knowledge of allowable costs and should be familiar with Uniform Guidance and grant document requirements. Source documentation should clearly provide sufficient information to identify the scope of the expenses and to which grant the costs were charged against. The Organization should also better utilize its accounting database to ensure costs are properly tracked and categorized against its grant activities to prevent duplicate claims. Views of Responsible Officials: The Organization retained a licensed CPA firm with significant expertise in financial reporting and single audit compliance. The Organization will develop and implement a formal procurement policy to ensure all contractor and vendor selections are based on program needs and comply with federal regulations. The procurement process will include clear criteria for vendor selection and justification, requirement to document scope of work, deliverables, and costs before engaging contractors, and verification of vendor eligibility against the Suspension and Debarment list.
Finding 2023-005 Unallowable and Improperly Documented Direct Expenditures Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance Condition and Context: The Organization failed to establish critical processes and internal controls over direct expenditures to ensure compliance with Uniform Guidance requirements and several compliance issues were identified. As part of audit procedures, 81 transactions were selected in a testing sample from a population of 315 direct expense transactions. Of the transactions tested, the auditors noted 15 instances of payments to contractors for work that were not sufficiently documented to support the allocatable work efforts performed on the grants in which they were charged. The auditors noted 4 instances where the costs charged to the federal grant were determined to not be reasonable, as they were either unallowable per Uniform Guidance, or were outside of the allowable costs approved in the federal award budgets. The auditors noted 1 instance of a transaction being claimed twice on different federal grants. The auditors also noted a significant lack of approvals for costs spent, as well as a failure to maintain adequate documentation, as noted in Finding 2023-003. Criteria: According to Uniform Guidance 2 CFR §200.402 - 405, costs charged to federal awards must be necessary, reasonable, consistent, allocable, and supported be adequate documentation. Federal requirements also mandate that expenditures align with the program budget and adhere to specific limitations on allowable costs. Cause: The Organization failed to implement appropriate policies, procedures, and internal controls that would allow management to properly record, track, and claim direct expenditures compliant with Uniform Guidance requirements. The root cause of these matters appears to be due to a lack of sufficient skills, knowledge, and experience in the grant administrators and leadership roles. Effect: The impact of failing to establish a robust system of processes and internal controls to determine that costs charged against federal grants are necessary, reasonable, consistent, allocable, and properly supported by adequate documentation significantly increases the risk that federal grants would be charged for expenses that did not occur, were not reasonably spent, or were charged against the wrong grant. These issues could lead to the misallocation of federal resources and the diminished impact on the program’s intended outcomes. Overall, the failure to establish sufficient internal controls in these areas greatly increases the risks that federal funds would be spent outside of the Uniform Guidance requirements. Questioned Costs: Known questioned costs of $17,959 were identified. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Organization implement more robust processes and internal controls over their procurement cycle that results in expenditures being properly reviewed and approved. Expenditures should only be approved by individuals with sufficient knowledge of allowable costs and should be familiar with Uniform Guidance and grant document requirements. Source documentation should clearly provide sufficient information to identify the scope of the expenses and to which grant the costs were charged against. The Organization should also better utilize its accounting database to ensure costs are properly tracked and categorized against its grant activities to prevent duplicate claims. Views of Responsible Officials: The Organization retained a licensed CPA firm with significant expertise in financial reporting and single audit compliance. The Organization will develop and implement a formal procurement policy to ensure all contractor and vendor selections are based on program needs and comply with federal regulations. The procurement process will include clear criteria for vendor selection and justification, requirement to document scope of work, deliverables, and costs before engaging contractors, and verification of vendor eligibility against the Suspension and Debarment list.
Finding 2023-005 Unallowable and Improperly Documented Direct Expenditures Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance Condition and Context: The Organization failed to establish critical processes and internal controls over direct expenditures to ensure compliance with Uniform Guidance requirements and several compliance issues were identified. As part of audit procedures, 81 transactions were selected in a testing sample from a population of 315 direct expense transactions. Of the transactions tested, the auditors noted 15 instances of payments to contractors for work that were not sufficiently documented to support the allocatable work efforts performed on the grants in which they were charged. The auditors noted 4 instances where the costs charged to the federal grant were determined to not be reasonable, as they were either unallowable per Uniform Guidance, or were outside of the allowable costs approved in the federal award budgets. The auditors noted 1 instance of a transaction being claimed twice on different federal grants. The auditors also noted a significant lack of approvals for costs spent, as well as a failure to maintain adequate documentation, as noted in Finding 2023-003. Criteria: According to Uniform Guidance 2 CFR §200.402 - 405, costs charged to federal awards must be necessary, reasonable, consistent, allocable, and supported be adequate documentation. Federal requirements also mandate that expenditures align with the program budget and adhere to specific limitations on allowable costs. Cause: The Organization failed to implement appropriate policies, procedures, and internal controls that would allow management to properly record, track, and claim direct expenditures compliant with Uniform Guidance requirements. The root cause of these matters appears to be due to a lack of sufficient skills, knowledge, and experience in the grant administrators and leadership roles. Effect: The impact of failing to establish a robust system of processes and internal controls to determine that costs charged against federal grants are necessary, reasonable, consistent, allocable, and properly supported by adequate documentation significantly increases the risk that federal grants would be charged for expenses that did not occur, were not reasonably spent, or were charged against the wrong grant. These issues could lead to the misallocation of federal resources and the diminished impact on the program’s intended outcomes. Overall, the failure to establish sufficient internal controls in these areas greatly increases the risks that federal funds would be spent outside of the Uniform Guidance requirements. Questioned Costs: Known questioned costs of $17,959 were identified. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Organization implement more robust processes and internal controls over their procurement cycle that results in expenditures being properly reviewed and approved. Expenditures should only be approved by individuals with sufficient knowledge of allowable costs and should be familiar with Uniform Guidance and grant document requirements. Source documentation should clearly provide sufficient information to identify the scope of the expenses and to which grant the costs were charged against. The Organization should also better utilize its accounting database to ensure costs are properly tracked and categorized against its grant activities to prevent duplicate claims. Views of Responsible Officials: The Organization retained a licensed CPA firm with significant expertise in financial reporting and single audit compliance. The Organization will develop and implement a formal procurement policy to ensure all contractor and vendor selections are based on program needs and comply with federal regulations. The procurement process will include clear criteria for vendor selection and justification, requirement to document scope of work, deliverables, and costs before engaging contractors, and verification of vendor eligibility against the Suspension and Debarment list.
Finding 2023-001 – ACTIVITIES ALLOWED OR UNALLOWED and ALLOWABLE COSTS/COST PRINCIPLES Type: Material Weakness in Internal Control Program: Health Center Cluster (ALN 93.224) Criteria: As detailed by 2 CFR 200.402, “The total cost of a Federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits.” Condition: The CMHSP was unable to provide supporting documentation for some expenses charged to the grants. Cause/Effect: In previous years, the process to charge injectable supplies expenses to the grant was to allocate these expenses from Health Center program to the grant through a journal entry. During fiscal year 2023, the cost of injectable supplies paid through the Health Center program decreased significantly. However, when journal entries were prepared, a review of actual costs was not done to ensure that the expenses allocated through the journal entry were supported by appropriate documentation. Therefore, some costs charged to the grant for injectable supplies exceeded amounts that were supported by appropriate documentation. Approximately $241,151 of injectable supplies expenses charged to the grant were not supported by appropriate documentation (i.e.: invoices). Context: These unsupported injectable supplies expenses could have been completely replaced with allowable payroll and related fringe benefit expenses. Recommendation: We recommend that the CMHSP establish internal controls to ensure that all expenses charged to the grant are supported with appropriate documentation. Management’s Resp: We are in agreement with this finding.
Finding 2023-002 – ACTIVITIES ALLOWED OR UNALLOWED and ALLOWABLE COSTS/COST PRINCIPLES Type: Significant Deficiency in Internal Control / Noncompliance Program: Health Center Cluster (ALN 93.224) Condition: Expenditures charged to the grant were not authorized in the grant budget. Criteria: As detailed by 2 CFR 200.402, “The total cost of a Federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits.” Cause: Management’s misunderstanding of costs allowed under this grant. Effect: Costs were charged to the grant in excess of approved budgets. Context: Amounts expended for 1 of 3 grant categories exceeded the approved budget for that category. Recommendation: We recommend that the CMHSP review all grant agreements to gain a thorough understanding of allowable costs and then establish internal controls to assure that only allowable costs are charged to the grant. Management’s Resp: We are in agreement with this finding.
Finding 2023-001 – ACTIVITIES ALLOWED OR UNALLOWED and ALLOWABLE COSTS/COST PRINCIPLES Type: Material Weakness in Internal Control Program: Health Center Cluster (ALN 93.224) Criteria: As detailed by 2 CFR 200.402, “The total cost of a Federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits.” Condition: The CMHSP was unable to provide supporting documentation for some expenses charged to the grants. Cause/Effect: In previous years, the process to charge injectable supplies expenses to the grant was to allocate these expenses from Health Center program to the grant through a journal entry. During fiscal year 2023, the cost of injectable supplies paid through the Health Center program decreased significantly. However, when journal entries were prepared, a review of actual costs was not done to ensure that the expenses allocated through the journal entry were supported by appropriate documentation. Therefore, some costs charged to the grant for injectable supplies exceeded amounts that were supported by appropriate documentation. Approximately $241,151 of injectable supplies expenses charged to the grant were not supported by appropriate documentation (i.e.: invoices). Context: These unsupported injectable supplies expenses could have been completely replaced with allowable payroll and related fringe benefit expenses. Recommendation: We recommend that the CMHSP establish internal controls to ensure that all expenses charged to the grant are supported with appropriate documentation. Management’s Resp: We are in agreement with this finding.
Finding 2023-002 – ACTIVITIES ALLOWED OR UNALLOWED and ALLOWABLE COSTS/COST PRINCIPLES Type: Significant Deficiency in Internal Control / Noncompliance Program: Health Center Cluster (ALN 93.224) Condition: Expenditures charged to the grant were not authorized in the grant budget. Criteria: As detailed by 2 CFR 200.402, “The total cost of a Federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits.” Cause: Management’s misunderstanding of costs allowed under this grant. Effect: Costs were charged to the grant in excess of approved budgets. Context: Amounts expended for 1 of 3 grant categories exceeded the approved budget for that category. Recommendation: We recommend that the CMHSP review all grant agreements to gain a thorough understanding of allowable costs and then establish internal controls to assure that only allowable costs are charged to the grant. Management’s Resp: We are in agreement with this finding.
2023-001 - ACTIVITIES ALLOWED OR UNALLOWED / ALLOWABLE COSTS/COST PRINCIPLES Program: ALN 84.425 Education Stabilization Fund, COVID-19 - ESSER III - Formula Type: Significant deficiency in Internal Control / Immaterial non-compliance Criteria: As detailed by 2 CFR 200.402, the total cost of a Federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits. Condition: During testing of amounts charged to the grants, it was noted that payments for 6 laptops were charged to the grant but were not authorized by the grant. Cause/Effect: This condition appears to be the result of a misunderstanding of costs allowed under this grant. These costs were not in compliance with 2 CFR 200.402. Recommendation: We recommend that the District review all grant agreements to gain a thorough understanding of allowable costs and then establish/modify internal controls to assure that only allowable costs are charged to the grant. View of Responsible Official: Management is in agreement with this recommendation
2023-004 - ACTIVITIES ALLOWED OR UNALLOWED / ALLOWABLE COSTS/COST PRINCIPLES Type: Significant Deficiency in Internal Control / Non-compliance Program: ALN 84.425 Education Stabilization Fund, COVID-19 - ESSER II - Formula Criteria: As detailed in 2 CFR 200.402, the total cost of a Federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits. Condition: During testing of grant disbursements, it was noted that a charge for a sound system was not authorized by the grant. The total amount charged to the grant for this purchase was $20,050. Cause/Effect: This condition appears to be the result of a misunderstanding of costs allowed under this grant. These costs were not in compliance with 2 CFR 200.402. Recommendation: We recommend that the District review all grant agreements to gain a thorough understanding of allowable costs and then establish/modify internal controls to assure that only allowable costs are charged to the grant. View of Responsible Official: Management is in agreement with this recommendation
2023-025 Improve Controls over Manual Journal Entries Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Labor Pass-Through Entity: None AL Numbers and Titles: 17.207 – Employment Service/Wagner-Peyser Funded Activities 17.801 – Jobs for Veterans State Grant Federal Award Numbers: ES387252255A13 (Year: 2022), ES367492155A13 (Year: 2021), ES353382055A13 (Year: 2020), ES333881955A13 (Year: 2019), DV35790SG1 (Year: 2020), DV37869SG2 (Year: 2021) Questioned Costs: $1,220,638 Description: The Georgia Department of Labor should improve internal controls over manual journal entries for the Employment Services Cluster. Background Information: The Georgia Department of Labor (DOL) is responsible for the administration and monitoring of Georgia's Employment Services Cluster programs, including carrying out the Employment Services/Wagner-Peyser (ES) funded activities, as well as the Jobs for Veterans State Grant (JVSG) funded activities. The main purpose of the ES program is to improve the functioning of the nation’s labor markets by bringing together individuals seeking employment and employers seeking workers. The main purpose of the JVSG program is to provide career services to meet the employment needs of eligible veterans, to conduct outreach to employers in the area to assist veterans in gaining employment, and to facilitate employment, training, and placement services furnished to veterans. Operation of the Employment Services Cluster programs transferred to the Technical College System of Georgia (TCSG) in January 2023. Criteria: As a recipient of federal awards, the DOL is required to establish and maintain effective internal controls over federal awards that provide reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.402 state, that “the total cost of a federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits.” In addition, provisions included in the Uniform Guidance, Section 200.403(g) state, in part, that costs must “be adequately documented.” Condition: Our audit of the Employment Services Cluster revealed deficiencies related to manual journal entries (MJE) booked to re-rate program expenditures. Auditors identified a population of 70 MJE’s and selected a total of 11 items for testing. Of those 11 MJE’s one item was an individually selected item (ISI) and an additional 10 were randomly selected using a non-statistical sampling method. Auditors found that the one ISI and two of the randomly selected MJEs were for unallowable expenditures given they were charged to the program well after the authority to carry out program activities was transferred to TCSG. Additionally, the one ISI and seven randomly selected MJEs did not have adequate documentation to support the allowability of costs being charged to the program. Questioned Costs: Upon testing a sample of $603,291 of MJE’s, known questioned costs of $383,294 were identified. Using the total population amount of $2,635,054, we project likely questioned costs to be approximately $1,674,153. In addition, known questioned costs identified for the ISI tested totaled $837,344; therefore, the known questioned costs identified for MJE’s throughout the sample and ISI tested totaled $1,220,638. Cause: The Employment Services Cluster moved to TCSG in January 2023, which had already been a delay in transfer to TCSG as it should have been as of July 1, 2022. Based on the actual transfer of the program in January 2023 DOL completed final ETA-9130 reports for the grants transferring to TCSG, which were to be submitted by February 14, 2023. The reports submitted to the U.S. Department of Labor’s Employment and Training Administration by the DOL included expenditures (the three MJE’s noted in the condition section above) that were not incurred until after the programs and program staff had moved to the TCSG and after the actual reports were submitted. Additionally, the existing internal control system in place did not provide adequate documentation to be maintained or provided for the eight additional MJEs identified as unsupported in our testing. Effect: The inclusion of unallowable costs in program expenditures and not maintaining adequate documentation of manual journal entries resulted in noncompliance with federal regulations and the Uniform Guidance. In addition, without effective controls, the DOL increases its risk of charging unallowable costs to federal programs. This may prevent the DOL from effectively administering federal programs in the future. Furthermore, the U.S. Department of Labor may require repayment of costs that are determined to be unallowable, and the State of Georgia could be responsible for such repayment. Recommendation: The DOL should ensure that all current and future business practices follow the established policies and procedures of the Uniform Guidance, the U.S. Department of Labor, and the State of Georgia. Where vulnerable, the DOL should modify its policies and procedures to ensure that costs being charged via manual journal entries are allowable and adequately documented, including original invoices for costs being moved to other federal programs. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately. Views of Responsible Officials: We concur with this finding.
2023-025 Improve Controls over Manual Journal Entries Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Labor Pass-Through Entity: None AL Numbers and Titles: 17.207 – Employment Service/Wagner-Peyser Funded Activities 17.801 – Jobs for Veterans State Grant Federal Award Numbers: ES387252255A13 (Year: 2022), ES367492155A13 (Year: 2021), ES353382055A13 (Year: 2020), ES333881955A13 (Year: 2019), DV35790SG1 (Year: 2020), DV37869SG2 (Year: 2021) Questioned Costs: $1,220,638 Description: The Georgia Department of Labor should improve internal controls over manual journal entries for the Employment Services Cluster. Background Information: The Georgia Department of Labor (DOL) is responsible for the administration and monitoring of Georgia's Employment Services Cluster programs, including carrying out the Employment Services/Wagner-Peyser (ES) funded activities, as well as the Jobs for Veterans State Grant (JVSG) funded activities. The main purpose of the ES program is to improve the functioning of the nation’s labor markets by bringing together individuals seeking employment and employers seeking workers. The main purpose of the JVSG program is to provide career services to meet the employment needs of eligible veterans, to conduct outreach to employers in the area to assist veterans in gaining employment, and to facilitate employment, training, and placement services furnished to veterans. Operation of the Employment Services Cluster programs transferred to the Technical College System of Georgia (TCSG) in January 2023. Criteria: As a recipient of federal awards, the DOL is required to establish and maintain effective internal controls over federal awards that provide reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.402 state, that “the total cost of a federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits.” In addition, provisions included in the Uniform Guidance, Section 200.403(g) state, in part, that costs must “be adequately documented.” Condition: Our audit of the Employment Services Cluster revealed deficiencies related to manual journal entries (MJE) booked to re-rate program expenditures. Auditors identified a population of 70 MJE’s and selected a total of 11 items for testing. Of those 11 MJE’s one item was an individually selected item (ISI) and an additional 10 were randomly selected using a non-statistical sampling method. Auditors found that the one ISI and two of the randomly selected MJEs were for unallowable expenditures given they were charged to the program well after the authority to carry out program activities was transferred to TCSG. Additionally, the one ISI and seven randomly selected MJEs did not have adequate documentation to support the allowability of costs being charged to the program. Questioned Costs: Upon testing a sample of $603,291 of MJE’s, known questioned costs of $383,294 were identified. Using the total population amount of $2,635,054, we project likely questioned costs to be approximately $1,674,153. In addition, known questioned costs identified for the ISI tested totaled $837,344; therefore, the known questioned costs identified for MJE’s throughout the sample and ISI tested totaled $1,220,638. Cause: The Employment Services Cluster moved to TCSG in January 2023, which had already been a delay in transfer to TCSG as it should have been as of July 1, 2022. Based on the actual transfer of the program in January 2023 DOL completed final ETA-9130 reports for the grants transferring to TCSG, which were to be submitted by February 14, 2023. The reports submitted to the U.S. Department of Labor’s Employment and Training Administration by the DOL included expenditures (the three MJE’s noted in the condition section above) that were not incurred until after the programs and program staff had moved to the TCSG and after the actual reports were submitted. Additionally, the existing internal control system in place did not provide adequate documentation to be maintained or provided for the eight additional MJEs identified as unsupported in our testing. Effect: The inclusion of unallowable costs in program expenditures and not maintaining adequate documentation of manual journal entries resulted in noncompliance with federal regulations and the Uniform Guidance. In addition, without effective controls, the DOL increases its risk of charging unallowable costs to federal programs. This may prevent the DOL from effectively administering federal programs in the future. Furthermore, the U.S. Department of Labor may require repayment of costs that are determined to be unallowable, and the State of Georgia could be responsible for such repayment. Recommendation: The DOL should ensure that all current and future business practices follow the established policies and procedures of the Uniform Guidance, the U.S. Department of Labor, and the State of Georgia. Where vulnerable, the DOL should modify its policies and procedures to ensure that costs being charged via manual journal entries are allowable and adequately documented, including original invoices for costs being moved to other federal programs. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately. Views of Responsible Officials: We concur with this finding.
Finding 2023-003 – ACTIVITIES ALLOWED OR UNALLOWED and ALLOWABLE COSTS/COST PRINCIPLES Type: Significant Deficiency in Internal Control / Noncompliance Program: COVID 19 Education Stabilization Fund (ALN 84.425D – ESSER II Formula, and ALN 84.425U – ESSER III Formula) Condition: Expenditures charged to the grant were not authorized in the grant budget. Criteria: As detailed by 2 CFR 200.402, “the total cost of a Federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits”. Cause: Management’s misunderstanding of costs allowed under this grant. Effect: Unallowed costs were charged to the grant based on / compared to MDE approved budgets. Consequently, reimbursements (funding sources) may be overstated. Context: Amounts expended for these grants by function code and/or object code were over the amounts allowed in the MDE approved budget. Recommendation: We recommend that the District review all grant agreements to gain a thorough understanding of allowable costs and then establish internal controls to assure that only allowable costs are charged to the grant. Management’s Resp: Management is in agreement with this recommendation.
Finding 2023-003 – ACTIVITIES ALLOWED OR UNALLOWED and ALLOWABLE COSTS/COST PRINCIPLES Type: Significant Deficiency in Internal Control / Noncompliance Program: COVID 19 Education Stabilization Fund (ALN 84.425D – ESSER II Formula, and ALN 84.425U – ESSER III Formula) Condition: Expenditures charged to the grant were not authorized in the grant budget. Criteria: As detailed by 2 CFR 200.402, “the total cost of a Federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits”. Cause: Management’s misunderstanding of costs allowed under this grant. Effect: Unallowed costs were charged to the grant based on / compared to MDE approved budgets. Consequently, reimbursements (funding sources) may be overstated. Context: Amounts expended for these grants by function code and/or object code were over the amounts allowed in the MDE approved budget. Recommendation: We recommend that the District review all grant agreements to gain a thorough understanding of allowable costs and then establish internal controls to assure that only allowable costs are charged to the grant. Management’s Resp: Management is in agreement with this recommendation.
2023-001 - ACTIVITIES ALLOWED OR UNALLOWED / ALLOWABLE COSTS/COST PRINCIPLES Program: ALN 84.425 Education Stabilization Fund, COVID-19 - ESSER III - Formula Type: Significant deficiency in Internal Control / Immaterial non-compliance Criteria: As detailed by 2 CFR 200.402, the total cost of a Federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits. Condition: During testing of amounts charged to the grants, it was noted that payments for 6 laptops were charged to the grant but were not authorized by the grant. Cause/Effect: This condition appears to be the result of a misunderstanding of costs allowed under this grant. These costs were not in compliance with 2 CFR 200.402. Recommendation: We recommend that the District review all grant agreements to gain a thorough understanding of allowable costs and then establish/modify internal controls to assure that only allowable costs are charged to the grant. View of Responsible Official: Management is in agreement with this recommendation