Program Name: 93.778 Medicaid Cluster Description: Unallowable Costs and Reporting Condition and Criteria: The District charged payroll costs to the Medicaid program that were also charged to another federal program (IDEA Flow-Through), resulting in duplicate federal reimbursement for the same expenditures (“double-dipping”). Under 2 CFR 200.403 and 2 CFR 200.405, costs must be allocable to a single federal award and must not be charged to multiple programs. During audit testing of payroll charges, we identified employees whose salaries were allocated to both the Medicaid and IDEA Flow-Through programs for overlapping pay periods. Effect: The District’s internal controls failed to prevent or detect duplicate charges of federal payroll costs, resulting in noncompliance with federal cost principles and inaccurate Medicaid claiming. Cause: The condition resulted from control deficiencies in the District’s implementation of the new Skyward “Qmlative” accounting system. Specifically, the District did not select a configuration setting (“cross-reference other federal codes”) necessary to prevent duplicate allocations when importing payroll data for Medicaid claiming. Additionally, the District’s quarterly payroll review procedures focused on verifying employee totals rather than reconciling detailed payroll allocations across federal programs, which contributed to the oversight. Questioned Costs: $345,925 (projected) Auditors’ Recommendation: We recommend that the District strengthen internal controls over payroll cost allocation and Medicaid claiming to ensure that costs are charged to only one federal program. Specifically, the District should review and update the Skyward Qmlative configuration to properly identify and exclude payroll costs already charged to other federal projects, and implement detailed quarterly review procedures to verify that payroll data reconciles across all federal program codes. Views of Responsible Officials and Corrective Action Plan: See attachment for District’s corrective action plan.
ALN 84.010 - Title I - Grant # 241530 2324 - Grant Ending September 30, 2024 Condition and Criteria: 2 CFR 200.403 of the Uniform Guidance mandates that only necessary, and allowable costs be drawn down off of federal grants. During the audit, we found that the prior fiscal year’s accrued payroll, which was drawn off of the grant in the previous fiscal year, was drawn off of the grant a second time in the current fiscal year. Effect: The District unintentionally drew payroll expenses off of the Title I grant a second time. Cause: The prior year accrued payroll related to Title I was not reversed out of the current year expenses prior to the Final Expenditure Report being prepared. Context: Management believed that all accrued payroll had been reversed out of the current fiscal year prior to preparing the Final Expenditure Report and did not intend to draw those expenses a second time. Questioned Costs: $53,509 Auditors' Recommendation: We recommend that management implement procedures to ensure that all accruals charged to federal grants are properly reversed in the subsequent fiscal year to ensure that duplicate draws on those same expenses are not made. Views of Responsible Officials and Planned Corrective Actions: The District understands the issue and will ensure that all payroll accruals are fully reversed at the start of the new fiscal year, to ensure that expenses are not drawn a second time. Please see the attached Corrective Action Plan prepared by the District.
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.
CONDITION: During testing of disbursements charged to the Head Start program, two instances were identified where duplicate payments were made to the same vendor for the same invoice. The payments were charged to the Head Start program. CONTEXT: A sample of 40 disbursements totaling $124,950 was selected from a population of 1,385 disbursements totaling $811,622. The test found two disbursements that were not in compliance with questioned costs totaling $2,824. CRITERIA: 2 CFR § 200.303(a) requires that the School Board must “Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes. Additionally 2 CFR§200.403(a) states that costs must “be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.” CAUSE: The School Board relies on its accounting software’s automated controls to prevent the processing of duplicate invoices. However, the duplicate payments occurred because slightly different invoice numbers were entered into the system, allowing the software to recognize the transactions as unique and process both payments. EFFECT: The federal program may have been overcharged. RECOMMENDATION: The School Board should evaluate their internal controls and review expenses being charged to the Head Start program to ensure they are allowable.
FINDING 2025-001 Information on the federal program: Subject: Special Education Cluster (IDEA) – Internal Controls Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-046-PN01, 22611-046-ARP, 22619-046-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Earmarking Audit Findings: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)...." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:… (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and earmarking compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the earmarking requirements. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: The School Corporation is a member of the Porter County Education Services (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22611-046-PN01, 22611-046-ARP, and 22619- 046-ARP grant awards could not be verified for the individual member schools. Total grant expenditures were posted as expended. The non-public proportionate share expenditures were determined by applying a percentage to the non-public school budgeted expenditures. As such, we were unable to identify if the minimum amount per each applicable member schools’ grant award was expended and properly reported to IDOE, as required. The lack of internal controls was isolated to the 22611-046-PN01, 22611-046-ARP, and 22619-046-ARP grant awards which were fully expended during fiscal year 2024. These three grant awards had minimum earmarking requirements for the Non-Public Proportionate Share of $39,016, $9,471, and $533, respectively. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to monitor the Cooperative and ensure non-public proportionate share funds are appropriately allocated to the member school based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Assistance Listing, Federal Agency, and Program Name - 97.036, U.S. Department of Homeland Security, Disaster Grants - Public Assistance (Presidentially Declared Disasters) Federal Award Identification Number and Year - 752894 and 752895; 2025 Pass through Entity - Michigan State Police (MSP) Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - According to 2 CFR § 200.403(f), which outlines factors affecting the allowability of costs under federal awards, costs must not be included as a cost or used to meet cost-sharing or matching requirements of any other federally financed program in either the current or a prior period. This provision is intended to prevent duplication of federal funding and ensure that each program bears only its fair share of costs. Condition - Costs charged to ALN 97.036 - Disaster Grants - Public Assistance were also charged to ALN 84.425 - Education Stabilization Fund (Elementary and Secondary School Emergency Relief - ESSER) in prior fiscal years, indicating potential duplication of expenditures across federal programs. Questioned Costs - $70,015,657 If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - N/A - questioned costs were determinable. Identification of How Questioned Costs Were Computed - Questioned costs represent all of the expenditures reported on the SEFA for the year ended June 30, 2025. Refer to the Context section below for additional details. Context -In April 2022, FEMA issued an advisory regarding its funding support for the in-person operation of schools and school districts. The advisory clarified that schools and districts could utilize ESSER funds under ALN 84.425, administered by the U.S. Department of Education, to cover upfront costs for health and safety measures. These costs could later be submitted for reimbursement through FEMA’s Public Assistance program. However, the advisory emphasized that once FEMA reimbursement is received, the district must return the corresponding amount to the ESSER grant. The School District was awarded two grants under ALN 97.036 in December 2024 and January 2025. These grants were used to cover costs associated with COVID-19 diagnostic and screening testing. The ESSER grant period concluded on September 30, 2024. On October 16, 2025, the School District received reimbursement from MSP. Cause and Effect - The obligation dates for the FEMA awards occurred after the end of the ESSER grant period under ALN 84.425. Although FEMA’s advisory permitted districts to use ESSER funds for eligible upfront costs, the School District was unable to reimburse the ESSER grant prior to the expiration of its period of availability. As a result, approximately $70 million in expenditures are considered questioned costs. Recommendation - Because the obligation dates for the FEMA awards occurred after the conclusion of the ESSER grant period, we recommend that the School District coordinate with the Michigan Department of Education as the pass-through entity for ESSER funding and the Michigan State Police as the pass-through entity for FEMA funding. This collaboration is essential to address the timing misalignment, which prevented reimbursement to the ESSER grant prior to its period of availability. Views of Responsible Officials and Corrective Action Plan - The School District applied for reimbursement of potentially eligible COVID-19 expenditures in 2022. Per an April 5, 2022 FEMA memo, "FEMA Continues Funding to Support the Safe Operations of Schools," school districts could apply for reimbursement for ESSER-funded expenditures and then, upon approval of application, shift the funds to general fund. “Schools and school districts may utilize FEMA Public Assistance to receive full reimbursement for costs for the purposes above. Schools and districts may also use Elementary and Secondary School Emergency Relief (ESSER) funding from the U.S. Department of Education as a way to provide the up-front cost for the above health and safety measures, and later seek reimbursement through the FEMA Public Assistance process. For example, a local education agency (LEA) may use ESSER funds for costs that may ultimately be covered by FEMA; however, once it receives funds from FEMA for those costs, it must reimburse the ESSER grant account.” FEMA provided district award notification for COVID-19 testing in December 2024 and January 2025. By this time, the ESSER grant had closed on September 30, 2024 and the final expenditure reports for ESSER had been submitted to MDE in November 2024. Therefore, the School District could not complete the allowable general fund swaps. The School District notified Michigan Department of Education and Michigan State Police of the timing issue. Upon request from Michigan State Police, the School District provided documentation that general funds were available to conduct the swaps if the FEMA approval had been received in a timely manner.
Federal Agency: National Science Foundation Federal Program Name: Research and Development Cluster Assistance Listing Number: 47.076 Federal Award Identification Number and Year: R&D - 2025 Award Period: June 1, 2024 to May 31, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: The Code of Federal Regulations 2 CFR Part 200, Subpart E, requires that expenses be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principals (200.403(a)) and allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to the Federal award or cost objective in accordance with relative benefits received (200.405). Condition: We noted that one out of 8 items selected for period of performance was incorrectly coded to an R&D grant. Questioned costs: $100 Context: The University's review and internal controls over R&D grant charges did not identify an expense that had been incorrectly coded. Cause: The University’s processes and controls did not ensure that all expenses charged to R&D grants were valid R&D expenditures. Effect: An incorrect amount of R&D expenditures was drawn down. Repeat Finding: No Recommendation: We recommend that the University review its procedures around review and approval of R&D expenditures to ensure that only valid expenditures are reported. Views of responsible officials: There is no disagreement with the audit finding.
Finding 2025.003 – Period of Performance – Significant Deficiency and Noncompliance Assistance Listing Number 14.267 - Continuum of Care, U.S. Department of Housing and Urban Services, Pass-Through Entity: State of Connecticut Department of Housing, Award Number: 24DOH0901CX, Pass-Through Entity: United Way of Southeastern Connecticut, Award Number: 21DOH1001DA Criteria A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award's period of performance that was authorized by the federal awarding agency or pass-through entity (2 CFR sections, 200.308, 200.309 and 200.403(h)). Condition Certain expenses were charged to the grant that were not properly obligated prior to the end of the grant period. Purchase orders were issued without placing the actual order, or the item was ordered after the period of performance concluded. Cause The Council did not have adequate policies, procedures and controls in place to ensure compliance with the requirements regarding period of performance. Effect or Potential Effect Inadequate controls over period of performance led to expenses charged to the grant that were not incurred during the required period of performance. Questioned Costs $2,113 Context We selected 5 expenditures for testing over the period of performance requirement. Out of the 5 expenditures tested, we noted 2 instances where expenditures were not spent or obligated appropriately in the right grant period. Identification as a Repeat Finding This is not a repeat finding. Recommendation We recommend that management implement additional controls and policies over period of performance. Staff who purchase items with grant funds should have additional training on period of performance requirements. Views of Responsible Officials TVCCA recognizes the validity of this finding. TVCCA is strengthening its period-of-performance controls by training all staff with purchasing authority, and finance staff, on grant deadlines, obligation definitions, and allowable spend-down periods. Internal controls will be enhanced by incorporating quarterly cutoff testing into the month-end close checklist. Additionally, cutoff testing results will be monitored quarterly as part of the quarter-end review process.
2025-003 Period of Performance (repeat of finding 2024-005) Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684, H8GC48547, H8LCS51197 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Title 2 CFR 200.403(h) requires that costs be incurred in the approved budget period for the applicable awards and Title 2 CFR 200.403(e) requires that those costs be determined according to generally accepted accounting principles (GAAP). Condition The Organization’s federal expenditures include costs for goods and/or services outside of the approved budget periods for the awards. Cause The Organization’s internal controls over compliance did not include consideration of when the goods were received or services were performed compared to the budget periods for the awards. Lack of understanding of GAAP and the requirements of accrual basis accounting allowed expenditures outside of the applicable budget periods to be claimed as current federal expenditures. Effect The Organization may allocate unallowable costs to the federal awards. Questioned Costs $194,142 (of which $61,155 was previously reported in finding 2025-002 above). Context In a sample of forty transactions, we noted five included expenditures for goods or services that were not provided in the current period. $117,887 of expenditures charged to the program were for goods or services related to future periods. $76,255 of expenditures charged to the program were for goods or services related to previous periods. Recommendation We recommend management personnel authorized to approve expenditures of federal awards be limited to those who have a basic understanding of GAAP and the relationship between the accrual basis of accounting and the period of performance requirements. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.
2025-003 Period of Performance (repeat of finding 2024-005) Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684, H8GC48547, H8LCS51197 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Title 2 CFR 200.403(h) requires that costs be incurred in the approved budget period for the applicable awards and Title 2 CFR 200.403(e) requires that those costs be determined according to generally accepted accounting principles (GAAP). Condition The Organization’s federal expenditures include costs for goods and/or services outside of the approved budget periods for the awards. Cause The Organization’s internal controls over compliance did not include consideration of when the goods were received or services were performed compared to the budget periods for the awards. Lack of understanding of GAAP and the requirements of accrual basis accounting allowed expenditures outside of the applicable budget periods to be claimed as current federal expenditures. Effect The Organization may allocate unallowable costs to the federal awards. Questioned Costs $194,142 (of which $61,155 was previously reported in finding 2025-002 above). Context In a sample of forty transactions, we noted five included expenditures for goods or services that were not provided in the current period. $117,887 of expenditures charged to the program were for goods or services related to future periods. $76,255 of expenditures charged to the program were for goods or services related to previous periods. Recommendation We recommend management personnel authorized to approve expenditures of federal awards be limited to those who have a basic understanding of GAAP and the relationship between the accrual basis of accounting and the period of performance requirements. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.
2024-001 Federal Program: COVID-19 - Emergency Rental Assistance (ERA) Assistance Listing Number: 21.023 Federal Awarding Agency: United States Department of the Treasury Compliance Requirement: Allowable Costs Criteria: 2 CFR 200.403 establishes standards for determining costs allowable for federal awards. Management is responsible for ensuring that recipients of Emergency Rental Assistance funds are eligible, and that their benefit amounts are calculated accurately. Condition: For one payment selected for testing, the Authority calculated the eligible benefit amount incorrectly. Cause: A secondary review was performed of the benefit calculation, but the review did not detect the error. Effect: One beneficiary received more from ERA funds than they were eligible to receive. Questioned costs: The overpayment identified was $350. Context: We tested a sample of 40 individuals that received payments under the program totaling $170,416 of disbursements out of 15,335 total recipients, with total payments of $75,066,010 during 2024. In our testing we identified that one individual selected in our sample was paid $350 more than their documented eligible rent and utility expenses under the program, due to an error in the calculation of the eligible benefit amount. Our sampling methodology is not considered statistically valid. Recommendations: We recommend that the Authority implement additional procedures to ensure that errors in benefit calculations are detected and corrected in a timely manner. Authority’s Response: We agree that the amount paid was an error. As the ERA program ends in 2025, we are working to review all activity, identify errors, and recover amounts paid in error where possible.
Condition: During our audit of federal award expenditures for the fiscal year ended December 31, 2024, we identified certain instances where costs incurred in prior periods were improperly charged to the current year's federal awards. Criteria: 2 CFR 200.403(g) requires that costs must be "determined in accordance with generally accepted accounting principles (“GAAP”).” Additionally, 2 CFR 200.309 states that "a non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance." Cause: Management indicated that year-end processing procedures did not adequately identify and properly allocate expenses to the appropriate period. Effect: Improper period allocation of costs resulted in inaccurate financial reporting of federal award expenditures and potential violation of period of performance requirements. Repeat Finding: No Recommendation: It is recommended that management implement enhanced review procedures for period-end expenses to ensure a proper cutoff, develop a monitoring system to track expenses by period of performance, and a establish a forma process for review and approval of payments made near the end of a reporting period. Views of responsible officials: Management of the Organization concurs with the finding and has implemented a corrective action plan to address the identified deficiency.
Condition: During our audit of federal award expenditures for the fiscal year ended December 31, 2024, we identified certain instances where costs incurred in prior periods were improperly charged to the current year's federal awards. Criteria: 2 CFR 200.403(g) requires that costs must be "determined in accordance with generally accepted accounting principles (“GAAP”).” Additionally, 2 CFR 200.309 states that "a non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance." Cause: Management indicated that year-end processing procedures did not adequately identify and properly allocate expenses to the appropriate period. Effect: Improper period allocation of costs resulted in inaccurate financial reporting of federal award expenditures and potential violation of period of performance requirements. Repeat Finding: No Recommendation: It is recommended that management implement enhanced review procedures for period-end expenses to ensure a proper cutoff, develop a monitoring system to track expenses by period of performance, and a establish a forma process for review and approval of payments made near the end of a reporting period. Views of responsible officials: Management of the Organization concurs with the finding and has implemented a corrective action plan to address the identified deficiency.
Condition: During our audit of federal award expenditures for the fiscal year ended December 31, 2024, we identified certain instances where costs incurred in prior periods were improperly charged to the current year's federal awards. Criteria: 2 CFR 200.403(g) requires that costs must be "determined in accordance with generally accepted accounting principles (“GAAP”).” Additionally, 2 CFR 200.309 states that "a non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance." Cause: Management indicated that year-end processing procedures did not adequately identify and properly allocate expenses to the appropriate period. Effect: Improper period allocation of costs resulted in inaccurate financial reporting of federal award expenditures and potential violation of period of performance requirements. Repeat Finding: No Recommendation: It is recommended that management implement enhanced review procedures for period-end expenses to ensure a proper cutoff, develop a monitoring system to track expenses by period of performance, and a establish a forma process for review and approval of payments made near the end of a reporting period. Views of responsible officials: Management of the Organization concurs with the finding and has implemented a corrective action plan to address the identified deficiency.
Criteria or Specific Requirement: Federal regulations (45 CFR 1635.4(a) and 2 CFR 200.430), state that federal award recipients must base allocations of salaries and wages costs to grants on records that accurately reflect the work performed. Federal regulations (45 CFR 1630.5 and 2 CFR 200.403) state that expenditures are allowable under an LSC (or federal) grant or contract only if the recipient can demonstrate that the cost was consistent with accounting policies and procedures that apply uniformly to both LSC (or, federal)-funded and non-LSC (of, federal) -funded activities. Condition: During our testing we noted: Payroll transactions: Eleven instances of errors totaling a net amount of $2,009 (an absolute value amount of $2,009) where the incorrect percentages were utilized in the allocation of the employee's pay, the incorrect employee's time was used in the allocation of the employee's pay, or there were unsupported amounts added to the allocation of the employee’s pay, and Payroll transactions: Seven instances of errors totaling a net amount of $109 (an absolute value amount of $4,405) where an unsupported allocation percentage was used to allocate the employee's pay to the grant - typically, employee salaries are allocated to LSC and two other private grants using an allocation base of a LSC cost driver for the period divided by the total cost driver coded to the Organization’s general fund. Fringe-benefit transactions: Two instances of an error totaling $91 where an unsupported allocation percentage was used to allocate employer-paid employee insurance costs to the grant - typically, costs are allocated to LSC and two other private grants using an allocation base of a LSC cost driver for the period divided by the total cost driver coded to the Organization’s general fund. Fringe-benefit transactions: Two instances of errors totaling $275 where employer-paid employee insurance and HSA contribution deductions per the employee's pay stub were allocated to the grant at a rate of 100%. Non-payroll and fringe transactions: one instance of an error totaling $884 where an unsupported allocation percentage was used to allocate general costs to the grant - typically, costs are allocated to LSC and two other private grants using an allocation base of a LSC cost driver for the period divided by the total cost driver coded to the Organization’s general fund. Additionally, we noted inconsistency in the general fund (LSC and two other private grants) allocation basis used during the year - grant hours and projected revenue were both utilized at different times during the year. Additionally, we noted that allocations in the general fund are done using projected revenue. However as revenue was recognized as expenses were incurred for the general fund the allocation based on revenue approximated an allocation method based on costs. As such, the costs mentioned above were allocated in an inconsistent manner to other grant costs and were not fully representative of the employees’ time and effort. However, we noted a lower frequency of differences in sample selections that occurred during the last several months of the year after management implemented a change to its allocation processes in response to the prior year audit. 2024 – 002: Cost Allocation of Expenses to LSC Grants (Continued) Questioned Costs: A net amount of $3,150 of allocated salary expense described above, which is related to Assistance Listing Number 09.706060. Context: These 23 instances were noting during testing of 55 disbursements. Cause: The Organization’s cost allocation methodology is primarily based on time and effort records, and periodic calculations of a LSC cost driver for the period divided by the total cost driver coded to the Organization’s general fund, but it often includes manual adjustments based on review of individual time records, expense and other data. Therefore, the methodology is challenging to apply consistently, document contemporaneously, and apply in accordance with federal regulations. Effect: The inclusion of frequent manual adjustments in the Organization’s cost allocation methodology could cause costs to be allocated to grants that are not reflective of the time and effort spent on grant activities and in a manner where costs are not applied uniformly to both LSC (or, federally)-funded and non-LSC (of, federally) -funded activities. Repeat Finding: The finding is a repeat of findings in the immediately prior year. The prior year finding numbers were 2023-003 and 2023-004. Recommendation: We recommend that the Organization consider updating its cost allocation methodology and process to reduce the frequency of manual adjustments based on review of individual time records and expense data and maximize the use of automated allocations that are calculated in a consistent manner that ensure costs are applied uniformly to respective benefited activities, and that are reflective on employees’ time and effort records Views of responsible officials: Management partially agrees with this finding. First, 45 CFR Part 1635 codifies the timekeeping requirement. CLS keeps track of every case and time dedicated by staff in strict compliance with this requirement. Additionally, the distribution of expenses in the general fund, which includes LSC and two other funding sources, represents a fair method and allocation. Regarding the questioned costs, CLS disagrees with the finding of material weakness given the extremely low total dollar value. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. Federal regulations state that expenditures are allowable under an LSC (or federal) grant or contract only if the recipient can demonstrate that the cost was consistent with accounting policies and procedures that apply uniformly to both LSC (or, federal)-funded and non-LSC (of, federal) -funded activities.
Criteria or Specific Requirement: Federal regulations (45 CFR 1635.4(a) and 2 CFR 200.430), state that federal award recipients must base allocations of salaries and wages costs to grants on records that accurately reflect the work performed. Federal regulations (45 CFR 1630.5 and 2 CFR 200.403) state that expenditures are allowable under an LSC (or federal) grant or contract only if the recipient can demonstrate that the cost was consistent with accounting policies and procedures that apply uniformly to both LSC (or, federal)-funded and non-LSC (of, federal) -funded activities. Condition: During our testing we noted: Payroll transactions: Eleven instances of errors totaling a net amount of $2,009 (an absolute value amount of $2,009) where the incorrect percentages were utilized in the allocation of the employee's pay, the incorrect employee's time was used in the allocation of the employee's pay, or there were unsupported amounts added to the allocation of the employee’s pay, and Payroll transactions: Seven instances of errors totaling a net amount of $109 (an absolute value amount of $4,405) where an unsupported allocation percentage was used to allocate the employee's pay to the grant - typically, employee salaries are allocated to LSC and two other private grants using an allocation base of a LSC cost driver for the period divided by the total cost driver coded to the Organization’s general fund. Fringe-benefit transactions: Two instances of an error totaling $91 where an unsupported allocation percentage was used to allocate employer-paid employee insurance costs to the grant - typically, costs are allocated to LSC and two other private grants using an allocation base of a LSC cost driver for the period divided by the total cost driver coded to the Organization’s general fund. Fringe-benefit transactions: Two instances of errors totaling $275 where employer-paid employee insurance and HSA contribution deductions per the employee's pay stub were allocated to the grant at a rate of 100%. Non-payroll and fringe transactions: one instance of an error totaling $884 where an unsupported allocation percentage was used to allocate general costs to the grant - typically, costs are allocated to LSC and two other private grants using an allocation base of a LSC cost driver for the period divided by the total cost driver coded to the Organization’s general fund. Additionally, we noted inconsistency in the general fund (LSC and two other private grants) allocation basis used during the year - grant hours and projected revenue were both utilized at different times during the year. Additionally, we noted that allocations in the general fund are done using projected revenue. However as revenue was recognized as expenses were incurred for the general fund the allocation based on revenue approximated an allocation method based on costs. As such, the costs mentioned above were allocated in an inconsistent manner to other grant costs and were not fully representative of the employees’ time and effort. However, we noted a lower frequency of differences in sample selections that occurred during the last several months of the year after management implemented a change to its allocation processes in response to the prior year audit. 2024 – 002: Cost Allocation of Expenses to LSC Grants (Continued) Questioned Costs: A net amount of $3,150 of allocated salary expense described above, which is related to Assistance Listing Number 09.706060. Context: These 23 instances were noting during testing of 55 disbursements. Cause: The Organization’s cost allocation methodology is primarily based on time and effort records, and periodic calculations of a LSC cost driver for the period divided by the total cost driver coded to the Organization’s general fund, but it often includes manual adjustments based on review of individual time records, expense and other data. Therefore, the methodology is challenging to apply consistently, document contemporaneously, and apply in accordance with federal regulations. Effect: The inclusion of frequent manual adjustments in the Organization’s cost allocation methodology could cause costs to be allocated to grants that are not reflective of the time and effort spent on grant activities and in a manner where costs are not applied uniformly to both LSC (or, federally)-funded and non-LSC (of, federally) -funded activities. Repeat Finding: The finding is a repeat of findings in the immediately prior year. The prior year finding numbers were 2023-003 and 2023-004. Recommendation: We recommend that the Organization consider updating its cost allocation methodology and process to reduce the frequency of manual adjustments based on review of individual time records and expense data and maximize the use of automated allocations that are calculated in a consistent manner that ensure costs are applied uniformly to respective benefited activities, and that are reflective on employees’ time and effort records Views of responsible officials: Management partially agrees with this finding. First, 45 CFR Part 1635 codifies the timekeeping requirement. CLS keeps track of every case and time dedicated by staff in strict compliance with this requirement. Additionally, the distribution of expenses in the general fund, which includes LSC and two other funding sources, represents a fair method and allocation. Regarding the questioned costs, CLS disagrees with the finding of material weakness given the extremely low total dollar value. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. Federal regulations state that expenditures are allowable under an LSC (or federal) grant or contract only if the recipient can demonstrate that the cost was consistent with accounting policies and procedures that apply uniformly to both LSC (or, federal)-funded and non-LSC (of, federal) -funded activities.
Criteria or Specific Requirement: Federal regulations (45 CFR 1635.4(a) and 2 CFR 200.430), state that federal award recipients must base allocations of salaries and wages costs to grants on records that accurately reflect the work performed. Federal regulations (45 CFR 1630.5 and 2 CFR 200.403) state that expenditures are allowable under an LSC (or federal) grant or contract only if the recipient can demonstrate that the cost was consistent with accounting policies and procedures that apply uniformly to both LSC (or, federal)-funded and non-LSC (of, federal) -funded activities. Condition: During our testing we noted: Payroll transactions: Eleven instances of errors totaling a net amount of $2,009 (an absolute value amount of $2,009) where the incorrect percentages were utilized in the allocation of the employee's pay, the incorrect employee's time was used in the allocation of the employee's pay, or there were unsupported amounts added to the allocation of the employee’s pay, and Payroll transactions: Seven instances of errors totaling a net amount of $109 (an absolute value amount of $4,405) where an unsupported allocation percentage was used to allocate the employee's pay to the grant - typically, employee salaries are allocated to LSC and two other private grants using an allocation base of a LSC cost driver for the period divided by the total cost driver coded to the Organization’s general fund. Fringe-benefit transactions: Two instances of an error totaling $91 where an unsupported allocation percentage was used to allocate employer-paid employee insurance costs to the grant - typically, costs are allocated to LSC and two other private grants using an allocation base of a LSC cost driver for the period divided by the total cost driver coded to the Organization’s general fund. Fringe-benefit transactions: Two instances of errors totaling $275 where employer-paid employee insurance and HSA contribution deductions per the employee's pay stub were allocated to the grant at a rate of 100%. Non-payroll and fringe transactions: one instance of an error totaling $884 where an unsupported allocation percentage was used to allocate general costs to the grant - typically, costs are allocated to LSC and two other private grants using an allocation base of a LSC cost driver for the period divided by the total cost driver coded to the Organization’s general fund. Additionally, we noted inconsistency in the general fund (LSC and two other private grants) allocation basis used during the year - grant hours and projected revenue were both utilized at different times during the year. Additionally, we noted that allocations in the general fund are done using projected revenue. However as revenue was recognized as expenses were incurred for the general fund the allocation based on revenue approximated an allocation method based on costs. As such, the costs mentioned above were allocated in an inconsistent manner to other grant costs and were not fully representative of the employees’ time and effort. However, we noted a lower frequency of differences in sample selections that occurred during the last several months of the year after management implemented a change to its allocation processes in response to the prior year audit. 2024 – 002: Cost Allocation of Expenses to LSC Grants (Continued) Questioned Costs: A net amount of $3,150 of allocated salary expense described above, which is related to Assistance Listing Number 09.706060. Context: These 23 instances were noting during testing of 55 disbursements. Cause: The Organization’s cost allocation methodology is primarily based on time and effort records, and periodic calculations of a LSC cost driver for the period divided by the total cost driver coded to the Organization’s general fund, but it often includes manual adjustments based on review of individual time records, expense and other data. Therefore, the methodology is challenging to apply consistently, document contemporaneously, and apply in accordance with federal regulations. Effect: The inclusion of frequent manual adjustments in the Organization’s cost allocation methodology could cause costs to be allocated to grants that are not reflective of the time and effort spent on grant activities and in a manner where costs are not applied uniformly to both LSC (or, federally)-funded and non-LSC (of, federally) -funded activities. Repeat Finding: The finding is a repeat of findings in the immediately prior year. The prior year finding numbers were 2023-003 and 2023-004. Recommendation: We recommend that the Organization consider updating its cost allocation methodology and process to reduce the frequency of manual adjustments based on review of individual time records and expense data and maximize the use of automated allocations that are calculated in a consistent manner that ensure costs are applied uniformly to respective benefited activities, and that are reflective on employees’ time and effort records Views of responsible officials: Management partially agrees with this finding. First, 45 CFR Part 1635 codifies the timekeeping requirement. CLS keeps track of every case and time dedicated by staff in strict compliance with this requirement. Additionally, the distribution of expenses in the general fund, which includes LSC and two other funding sources, represents a fair method and allocation. Regarding the questioned costs, CLS disagrees with the finding of material weakness given the extremely low total dollar value. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. Federal regulations state that expenditures are allowable under an LSC (or federal) grant or contract only if the recipient can demonstrate that the cost was consistent with accounting policies and procedures that apply uniformly to both LSC (or, federal)-funded and non-LSC (of, federal) -funded activities.
Criteria or Specific Requirement: Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Condition: During our testing, we noted four instances of errors totaling a net error of $906 (an absolute value error of $1,030) where the incorrect number of hours were utilized in the allocation of the employee's pay, the incorrect employee's time was used in the allocation of the employee's pay, or there were unsupported amounts added to the allocation of the employee's pay. As such, the salary costs mentioned above were allocated in an inconsistent manner to other grant payroll costs and were not fully representative of the employees' time and effort and benefit obtained by grant from the allocated cost. Management noted that it performed year-end grant reconciliations to ensure costs were properly allocated to each grant in total. We noted a lower frequency of differences in sample selections that occurred during the last several months of the year after management implemented a change to its allocation processes in response to the prior year audit. Questioned Costs: $906 of allocated salaries expense described above, which is related to Assistance Listing Number 93.044. Context: These five instances were noting during testing of 26 payroll and payroll-related disbursements. Cause: The Organization’s salary, wage and employee benefit cost allocation methodology is primarily based on time and effort records and a periodic calculation of specific grant hours versus general fund hours multiplied by period costs, but it often includes manual adjustments based on review of individual time records and expense data. Therefore, the methodology is challenging to apply consistently, document contemporaneously, and apply in accordance with federal regulations. Effect: The inclusion of frequent manual adjustments and varying allocation bases in the Organization’s salaries, wages, and employee benefit cost allocation methodology could cause costs to be allocated to grants that are not reflective of the time and effort spent on grant activities nor compensation paid to employees during relevant work periods. It could also lead to challenges in maintaining sufficient supporting documentation of such cost allocations. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization consider updating its salaries, wages, and employee benefit cost allocation methodology and process to reduce the frequency of manual adjustments based on review of individual time records and expense data and maximize the use of automated allocations based on employees’ time and effort records, effective compensation during work periods, and that are calculated in a consistent manner. We also recommend that the Organization maintain contemporaneous documentation supporting all cost allocations. Views of responsible officials: Management does not agree with this finding. LSC program letter 22-5 emphasizes the importance of reconciliations of timekeeping reports with labor costs, distribution report or alternative reports. CLS prioritizes this practice of reconciliation and used it during the last months of 2024 to improve internal controls and minimize potential errors. We do not believe that CLA fully and fairly considered CLS’s thorough and complete reconciliation. A “material weakness” is defined as a deficiency “such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis.” Given that reconciliation is part of our internal control process used to prevent and detect/correct any errors, it should have been fully considered and is unfairly excluded from the review. For this reason, CLS considers that this is not a material weakness as the reconciliation caught and corrected these errors. Finally, the total amount of this finding is very low and should not rise to the level of material weakness. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. The aging cluster is not an LSC program and so its relevance to this finding is unclear. Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Such costs should be contemporaneously applied to grants as they are incurred using a system of processes and controls.
Criteria or Specific Requirement: Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Condition: During our testing, we noted four instances of errors totaling a net error of $906 (an absolute value error of $1,030) where the incorrect number of hours were utilized in the allocation of the employee's pay, the incorrect employee's time was used in the allocation of the employee's pay, or there were unsupported amounts added to the allocation of the employee's pay. As such, the salary costs mentioned above were allocated in an inconsistent manner to other grant payroll costs and were not fully representative of the employees' time and effort and benefit obtained by grant from the allocated cost. Management noted that it performed year-end grant reconciliations to ensure costs were properly allocated to each grant in total. We noted a lower frequency of differences in sample selections that occurred during the last several months of the year after management implemented a change to its allocation processes in response to the prior year audit. Questioned Costs: $906 of allocated salaries expense described above, which is related to Assistance Listing Number 93.044. Context: These five instances were noting during testing of 26 payroll and payroll-related disbursements. Cause: The Organization’s salary, wage and employee benefit cost allocation methodology is primarily based on time and effort records and a periodic calculation of specific grant hours versus general fund hours multiplied by period costs, but it often includes manual adjustments based on review of individual time records and expense data. Therefore, the methodology is challenging to apply consistently, document contemporaneously, and apply in accordance with federal regulations. Effect: The inclusion of frequent manual adjustments and varying allocation bases in the Organization’s salaries, wages, and employee benefit cost allocation methodology could cause costs to be allocated to grants that are not reflective of the time and effort spent on grant activities nor compensation paid to employees during relevant work periods. It could also lead to challenges in maintaining sufficient supporting documentation of such cost allocations. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization consider updating its salaries, wages, and employee benefit cost allocation methodology and process to reduce the frequency of manual adjustments based on review of individual time records and expense data and maximize the use of automated allocations based on employees’ time and effort records, effective compensation during work periods, and that are calculated in a consistent manner. We also recommend that the Organization maintain contemporaneous documentation supporting all cost allocations. Views of responsible officials: Management does not agree with this finding. LSC program letter 22-5 emphasizes the importance of reconciliations of timekeeping reports with labor costs, distribution report or alternative reports. CLS prioritizes this practice of reconciliation and used it during the last months of 2024 to improve internal controls and minimize potential errors. We do not believe that CLA fully and fairly considered CLS’s thorough and complete reconciliation. A “material weakness” is defined as a deficiency “such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis.” Given that reconciliation is part of our internal control process used to prevent and detect/correct any errors, it should have been fully considered and is unfairly excluded from the review. For this reason, CLS considers that this is not a material weakness as the reconciliation caught and corrected these errors. Finally, the total amount of this finding is very low and should not rise to the level of material weakness. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. The aging cluster is not an LSC program and so its relevance to this finding is unclear. Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Such costs should be contemporaneously applied to grants as they are incurred using a system of processes and controls.
Criteria or Specific Requirement: Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Condition: During our testing, we noted four instances of errors totaling a net error of $906 (an absolute value error of $1,030) where the incorrect number of hours were utilized in the allocation of the employee's pay, the incorrect employee's time was used in the allocation of the employee's pay, or there were unsupported amounts added to the allocation of the employee's pay. As such, the salary costs mentioned above were allocated in an inconsistent manner to other grant payroll costs and were not fully representative of the employees' time and effort and benefit obtained by grant from the allocated cost. Management noted that it performed year-end grant reconciliations to ensure costs were properly allocated to each grant in total. We noted a lower frequency of differences in sample selections that occurred during the last several months of the year after management implemented a change to its allocation processes in response to the prior year audit. Questioned Costs: $906 of allocated salaries expense described above, which is related to Assistance Listing Number 93.044. Context: These five instances were noting during testing of 26 payroll and payroll-related disbursements. Cause: The Organization’s salary, wage and employee benefit cost allocation methodology is primarily based on time and effort records and a periodic calculation of specific grant hours versus general fund hours multiplied by period costs, but it often includes manual adjustments based on review of individual time records and expense data. Therefore, the methodology is challenging to apply consistently, document contemporaneously, and apply in accordance with federal regulations. Effect: The inclusion of frequent manual adjustments and varying allocation bases in the Organization’s salaries, wages, and employee benefit cost allocation methodology could cause costs to be allocated to grants that are not reflective of the time and effort spent on grant activities nor compensation paid to employees during relevant work periods. It could also lead to challenges in maintaining sufficient supporting documentation of such cost allocations. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization consider updating its salaries, wages, and employee benefit cost allocation methodology and process to reduce the frequency of manual adjustments based on review of individual time records and expense data and maximize the use of automated allocations based on employees’ time and effort records, effective compensation during work periods, and that are calculated in a consistent manner. We also recommend that the Organization maintain contemporaneous documentation supporting all cost allocations. Views of responsible officials: Management does not agree with this finding. LSC program letter 22-5 emphasizes the importance of reconciliations of timekeeping reports with labor costs, distribution report or alternative reports. CLS prioritizes this practice of reconciliation and used it during the last months of 2024 to improve internal controls and minimize potential errors. We do not believe that CLA fully and fairly considered CLS’s thorough and complete reconciliation. A “material weakness” is defined as a deficiency “such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis.” Given that reconciliation is part of our internal control process used to prevent and detect/correct any errors, it should have been fully considered and is unfairly excluded from the review. For this reason, CLS considers that this is not a material weakness as the reconciliation caught and corrected these errors. Finally, the total amount of this finding is very low and should not rise to the level of material weakness. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. The aging cluster is not an LSC program and so its relevance to this finding is unclear. Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Such costs should be contemporaneously applied to grants as they are incurred using a system of processes and controls.
Criteria or Specific Requirement: Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Condition: During our testing, we noted four instances of errors totaling a net error of $906 (an absolute value error of $1,030) where the incorrect number of hours were utilized in the allocation of the employee's pay, the incorrect employee's time was used in the allocation of the employee's pay, or there were unsupported amounts added to the allocation of the employee's pay. As such, the salary costs mentioned above were allocated in an inconsistent manner to other grant payroll costs and were not fully representative of the employees' time and effort and benefit obtained by grant from the allocated cost. Management noted that it performed year-end grant reconciliations to ensure costs were properly allocated to each grant in total. We noted a lower frequency of differences in sample selections that occurred during the last several months of the year after management implemented a change to its allocation processes in response to the prior year audit. Questioned Costs: $906 of allocated salaries expense described above, which is related to Assistance Listing Number 93.044. Context: These five instances were noting during testing of 26 payroll and payroll-related disbursements. Cause: The Organization’s salary, wage and employee benefit cost allocation methodology is primarily based on time and effort records and a periodic calculation of specific grant hours versus general fund hours multiplied by period costs, but it often includes manual adjustments based on review of individual time records and expense data. Therefore, the methodology is challenging to apply consistently, document contemporaneously, and apply in accordance with federal regulations. Effect: The inclusion of frequent manual adjustments and varying allocation bases in the Organization’s salaries, wages, and employee benefit cost allocation methodology could cause costs to be allocated to grants that are not reflective of the time and effort spent on grant activities nor compensation paid to employees during relevant work periods. It could also lead to challenges in maintaining sufficient supporting documentation of such cost allocations. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization consider updating its salaries, wages, and employee benefit cost allocation methodology and process to reduce the frequency of manual adjustments based on review of individual time records and expense data and maximize the use of automated allocations based on employees’ time and effort records, effective compensation during work periods, and that are calculated in a consistent manner. We also recommend that the Organization maintain contemporaneous documentation supporting all cost allocations. Views of responsible officials: Management does not agree with this finding. LSC program letter 22-5 emphasizes the importance of reconciliations of timekeeping reports with labor costs, distribution report or alternative reports. CLS prioritizes this practice of reconciliation and used it during the last months of 2024 to improve internal controls and minimize potential errors. We do not believe that CLA fully and fairly considered CLS’s thorough and complete reconciliation. A “material weakness” is defined as a deficiency “such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis.” Given that reconciliation is part of our internal control process used to prevent and detect/correct any errors, it should have been fully considered and is unfairly excluded from the review. For this reason, CLS considers that this is not a material weakness as the reconciliation caught and corrected these errors. Finally, the total amount of this finding is very low and should not rise to the level of material weakness. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. The aging cluster is not an LSC program and so its relevance to this finding is unclear. Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Such costs should be contemporaneously applied to grants as they are incurred using a system of processes and controls.
Criteria or Specific Requirement: Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Condition: During our testing, we noted four instances of errors totaling a net error of $906 (an absolute value error of $1,030) where the incorrect number of hours were utilized in the allocation of the employee's pay, the incorrect employee's time was used in the allocation of the employee's pay, or there were unsupported amounts added to the allocation of the employee's pay. As such, the salary costs mentioned above were allocated in an inconsistent manner to other grant payroll costs and were not fully representative of the employees' time and effort and benefit obtained by grant from the allocated cost. Management noted that it performed year-end grant reconciliations to ensure costs were properly allocated to each grant in total. We noted a lower frequency of differences in sample selections that occurred during the last several months of the year after management implemented a change to its allocation processes in response to the prior year audit. Questioned Costs: $906 of allocated salaries expense described above, which is related to Assistance Listing Number 93.044. Context: These five instances were noting during testing of 26 payroll and payroll-related disbursements. Cause: The Organization’s salary, wage and employee benefit cost allocation methodology is primarily based on time and effort records and a periodic calculation of specific grant hours versus general fund hours multiplied by period costs, but it often includes manual adjustments based on review of individual time records and expense data. Therefore, the methodology is challenging to apply consistently, document contemporaneously, and apply in accordance with federal regulations. Effect: The inclusion of frequent manual adjustments and varying allocation bases in the Organization’s salaries, wages, and employee benefit cost allocation methodology could cause costs to be allocated to grants that are not reflective of the time and effort spent on grant activities nor compensation paid to employees during relevant work periods. It could also lead to challenges in maintaining sufficient supporting documentation of such cost allocations. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization consider updating its salaries, wages, and employee benefit cost allocation methodology and process to reduce the frequency of manual adjustments based on review of individual time records and expense data and maximize the use of automated allocations based on employees’ time and effort records, effective compensation during work periods, and that are calculated in a consistent manner. We also recommend that the Organization maintain contemporaneous documentation supporting all cost allocations. Views of responsible officials: Management does not agree with this finding. LSC program letter 22-5 emphasizes the importance of reconciliations of timekeeping reports with labor costs, distribution report or alternative reports. CLS prioritizes this practice of reconciliation and used it during the last months of 2024 to improve internal controls and minimize potential errors. We do not believe that CLA fully and fairly considered CLS’s thorough and complete reconciliation. A “material weakness” is defined as a deficiency “such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis.” Given that reconciliation is part of our internal control process used to prevent and detect/correct any errors, it should have been fully considered and is unfairly excluded from the review. For this reason, CLS considers that this is not a material weakness as the reconciliation caught and corrected these errors. Finally, the total amount of this finding is very low and should not rise to the level of material weakness. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. The aging cluster is not an LSC program and so its relevance to this finding is unclear. Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Such costs should be contemporaneously applied to grants as they are incurred using a system of processes and controls.
Criteria or Specific Requirement: Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Condition: During our testing, we noted four instances of errors totaling a net error of $906 (an absolute value error of $1,030) where the incorrect number of hours were utilized in the allocation of the employee's pay, the incorrect employee's time was used in the allocation of the employee's pay, or there were unsupported amounts added to the allocation of the employee's pay. As such, the salary costs mentioned above were allocated in an inconsistent manner to other grant payroll costs and were not fully representative of the employees' time and effort and benefit obtained by grant from the allocated cost. Management noted that it performed year-end grant reconciliations to ensure costs were properly allocated to each grant in total. We noted a lower frequency of differences in sample selections that occurred during the last several months of the year after management implemented a change to its allocation processes in response to the prior year audit. Questioned Costs: $906 of allocated salaries expense described above, which is related to Assistance Listing Number 93.044. Context: These five instances were noting during testing of 26 payroll and payroll-related disbursements. Cause: The Organization’s salary, wage and employee benefit cost allocation methodology is primarily based on time and effort records and a periodic calculation of specific grant hours versus general fund hours multiplied by period costs, but it often includes manual adjustments based on review of individual time records and expense data. Therefore, the methodology is challenging to apply consistently, document contemporaneously, and apply in accordance with federal regulations. Effect: The inclusion of frequent manual adjustments and varying allocation bases in the Organization’s salaries, wages, and employee benefit cost allocation methodology could cause costs to be allocated to grants that are not reflective of the time and effort spent on grant activities nor compensation paid to employees during relevant work periods. It could also lead to challenges in maintaining sufficient supporting documentation of such cost allocations. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization consider updating its salaries, wages, and employee benefit cost allocation methodology and process to reduce the frequency of manual adjustments based on review of individual time records and expense data and maximize the use of automated allocations based on employees’ time and effort records, effective compensation during work periods, and that are calculated in a consistent manner. We also recommend that the Organization maintain contemporaneous documentation supporting all cost allocations. Views of responsible officials: Management does not agree with this finding. LSC program letter 22-5 emphasizes the importance of reconciliations of timekeeping reports with labor costs, distribution report or alternative reports. CLS prioritizes this practice of reconciliation and used it during the last months of 2024 to improve internal controls and minimize potential errors. We do not believe that CLA fully and fairly considered CLS’s thorough and complete reconciliation. A “material weakness” is defined as a deficiency “such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis.” Given that reconciliation is part of our internal control process used to prevent and detect/correct any errors, it should have been fully considered and is unfairly excluded from the review. For this reason, CLS considers that this is not a material weakness as the reconciliation caught and corrected these errors. Finally, the total amount of this finding is very low and should not rise to the level of material weakness. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. The aging cluster is not an LSC program and so its relevance to this finding is unclear. Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Such costs should be contemporaneously applied to grants as they are incurred using a system of processes and controls.
Criteria or Specific Requirement: Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Condition: During our testing, we noted four instances of errors totaling a net error of $906 (an absolute value error of $1,030) where the incorrect number of hours were utilized in the allocation of the employee's pay, the incorrect employee's time was used in the allocation of the employee's pay, or there were unsupported amounts added to the allocation of the employee's pay. As such, the salary costs mentioned above were allocated in an inconsistent manner to other grant payroll costs and were not fully representative of the employees' time and effort and benefit obtained by grant from the allocated cost. Management noted that it performed year-end grant reconciliations to ensure costs were properly allocated to each grant in total. We noted a lower frequency of differences in sample selections that occurred during the last several months of the year after management implemented a change to its allocation processes in response to the prior year audit. Questioned Costs: $906 of allocated salaries expense described above, which is related to Assistance Listing Number 93.044. Context: These five instances were noting during testing of 26 payroll and payroll-related disbursements. Cause: The Organization’s salary, wage and employee benefit cost allocation methodology is primarily based on time and effort records and a periodic calculation of specific grant hours versus general fund hours multiplied by period costs, but it often includes manual adjustments based on review of individual time records and expense data. Therefore, the methodology is challenging to apply consistently, document contemporaneously, and apply in accordance with federal regulations. Effect: The inclusion of frequent manual adjustments and varying allocation bases in the Organization’s salaries, wages, and employee benefit cost allocation methodology could cause costs to be allocated to grants that are not reflective of the time and effort spent on grant activities nor compensation paid to employees during relevant work periods. It could also lead to challenges in maintaining sufficient supporting documentation of such cost allocations. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization consider updating its salaries, wages, and employee benefit cost allocation methodology and process to reduce the frequency of manual adjustments based on review of individual time records and expense data and maximize the use of automated allocations based on employees’ time and effort records, effective compensation during work periods, and that are calculated in a consistent manner. We also recommend that the Organization maintain contemporaneous documentation supporting all cost allocations. Views of responsible officials: Management does not agree with this finding. LSC program letter 22-5 emphasizes the importance of reconciliations of timekeeping reports with labor costs, distribution report or alternative reports. CLS prioritizes this practice of reconciliation and used it during the last months of 2024 to improve internal controls and minimize potential errors. We do not believe that CLA fully and fairly considered CLS’s thorough and complete reconciliation. A “material weakness” is defined as a deficiency “such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis.” Given that reconciliation is part of our internal control process used to prevent and detect/correct any errors, it should have been fully considered and is unfairly excluded from the review. For this reason, CLS considers that this is not a material weakness as the reconciliation caught and corrected these errors. Finally, the total amount of this finding is very low and should not rise to the level of material weakness. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. The aging cluster is not an LSC program and so its relevance to this finding is unclear. Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Such costs should be contemporaneously applied to grants as they are incurred using a system of processes and controls.
Criteria or Specific Requirement: Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Condition: During our testing, we noted four instances of errors totaling a net error of $906 (an absolute value error of $1,030) where the incorrect number of hours were utilized in the allocation of the employee's pay, the incorrect employee's time was used in the allocation of the employee's pay, or there were unsupported amounts added to the allocation of the employee's pay. As such, the salary costs mentioned above were allocated in an inconsistent manner to other grant payroll costs and were not fully representative of the employees' time and effort and benefit obtained by grant from the allocated cost. Management noted that it performed year-end grant reconciliations to ensure costs were properly allocated to each grant in total. We noted a lower frequency of differences in sample selections that occurred during the last several months of the year after management implemented a change to its allocation processes in response to the prior year audit. Questioned Costs: $906 of allocated salaries expense described above, which is related to Assistance Listing Number 93.044. Context: These five instances were noting during testing of 26 payroll and payroll-related disbursements. Cause: The Organization’s salary, wage and employee benefit cost allocation methodology is primarily based on time and effort records and a periodic calculation of specific grant hours versus general fund hours multiplied by period costs, but it often includes manual adjustments based on review of individual time records and expense data. Therefore, the methodology is challenging to apply consistently, document contemporaneously, and apply in accordance with federal regulations. Effect: The inclusion of frequent manual adjustments and varying allocation bases in the Organization’s salaries, wages, and employee benefit cost allocation methodology could cause costs to be allocated to grants that are not reflective of the time and effort spent on grant activities nor compensation paid to employees during relevant work periods. It could also lead to challenges in maintaining sufficient supporting documentation of such cost allocations. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization consider updating its salaries, wages, and employee benefit cost allocation methodology and process to reduce the frequency of manual adjustments based on review of individual time records and expense data and maximize the use of automated allocations based on employees’ time and effort records, effective compensation during work periods, and that are calculated in a consistent manner. We also recommend that the Organization maintain contemporaneous documentation supporting all cost allocations. Views of responsible officials: Management does not agree with this finding. LSC program letter 22-5 emphasizes the importance of reconciliations of timekeeping reports with labor costs, distribution report or alternative reports. CLS prioritizes this practice of reconciliation and used it during the last months of 2024 to improve internal controls and minimize potential errors. We do not believe that CLA fully and fairly considered CLS’s thorough and complete reconciliation. A “material weakness” is defined as a deficiency “such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis.” Given that reconciliation is part of our internal control process used to prevent and detect/correct any errors, it should have been fully considered and is unfairly excluded from the review. For this reason, CLS considers that this is not a material weakness as the reconciliation caught and corrected these errors. Finally, the total amount of this finding is very low and should not rise to the level of material weakness. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. The aging cluster is not an LSC program and so its relevance to this finding is unclear. Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Such costs should be contemporaneously applied to grants as they are incurred using a system of processes and controls.
Criteria or Specific Requirement: Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Condition: During our testing, we noted four instances of errors totaling a net error of $906 (an absolute value error of $1,030) where the incorrect number of hours were utilized in the allocation of the employee's pay, the incorrect employee's time was used in the allocation of the employee's pay, or there were unsupported amounts added to the allocation of the employee's pay. As such, the salary costs mentioned above were allocated in an inconsistent manner to other grant payroll costs and were not fully representative of the employees' time and effort and benefit obtained by grant from the allocated cost. Management noted that it performed year-end grant reconciliations to ensure costs were properly allocated to each grant in total. We noted a lower frequency of differences in sample selections that occurred during the last several months of the year after management implemented a change to its allocation processes in response to the prior year audit. Questioned Costs: $906 of allocated salaries expense described above, which is related to Assistance Listing Number 93.044. Context: These five instances were noting during testing of 26 payroll and payroll-related disbursements. Cause: The Organization’s salary, wage and employee benefit cost allocation methodology is primarily based on time and effort records and a periodic calculation of specific grant hours versus general fund hours multiplied by period costs, but it often includes manual adjustments based on review of individual time records and expense data. Therefore, the methodology is challenging to apply consistently, document contemporaneously, and apply in accordance with federal regulations. Effect: The inclusion of frequent manual adjustments and varying allocation bases in the Organization’s salaries, wages, and employee benefit cost allocation methodology could cause costs to be allocated to grants that are not reflective of the time and effort spent on grant activities nor compensation paid to employees during relevant work periods. It could also lead to challenges in maintaining sufficient supporting documentation of such cost allocations. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization consider updating its salaries, wages, and employee benefit cost allocation methodology and process to reduce the frequency of manual adjustments based on review of individual time records and expense data and maximize the use of automated allocations based on employees’ time and effort records, effective compensation during work periods, and that are calculated in a consistent manner. We also recommend that the Organization maintain contemporaneous documentation supporting all cost allocations. Views of responsible officials: Management does not agree with this finding. LSC program letter 22-5 emphasizes the importance of reconciliations of timekeeping reports with labor costs, distribution report or alternative reports. CLS prioritizes this practice of reconciliation and used it during the last months of 2024 to improve internal controls and minimize potential errors. We do not believe that CLA fully and fairly considered CLS’s thorough and complete reconciliation. A “material weakness” is defined as a deficiency “such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis.” Given that reconciliation is part of our internal control process used to prevent and detect/correct any errors, it should have been fully considered and is unfairly excluded from the review. For this reason, CLS considers that this is not a material weakness as the reconciliation caught and corrected these errors. Finally, the total amount of this finding is very low and should not rise to the level of material weakness. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. The aging cluster is not an LSC program and so its relevance to this finding is unclear. Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Such costs should be contemporaneously applied to grants as they are incurred using a system of processes and controls.
Criteria or Specific Requirement: Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Condition: During our testing, we noted four instances of errors totaling a net error of $906 (an absolute value error of $1,030) where the incorrect number of hours were utilized in the allocation of the employee's pay, the incorrect employee's time was used in the allocation of the employee's pay, or there were unsupported amounts added to the allocation of the employee's pay. As such, the salary costs mentioned above were allocated in an inconsistent manner to other grant payroll costs and were not fully representative of the employees' time and effort and benefit obtained by grant from the allocated cost. Management noted that it performed year-end grant reconciliations to ensure costs were properly allocated to each grant in total. We noted a lower frequency of differences in sample selections that occurred during the last several months of the year after management implemented a change to its allocation processes in response to the prior year audit. Questioned Costs: $906 of allocated salaries expense described above, which is related to Assistance Listing Number 93.044. Context: These five instances were noting during testing of 26 payroll and payroll-related disbursements. Cause: The Organization’s salary, wage and employee benefit cost allocation methodology is primarily based on time and effort records and a periodic calculation of specific grant hours versus general fund hours multiplied by period costs, but it often includes manual adjustments based on review of individual time records and expense data. Therefore, the methodology is challenging to apply consistently, document contemporaneously, and apply in accordance with federal regulations. Effect: The inclusion of frequent manual adjustments and varying allocation bases in the Organization’s salaries, wages, and employee benefit cost allocation methodology could cause costs to be allocated to grants that are not reflective of the time and effort spent on grant activities nor compensation paid to employees during relevant work periods. It could also lead to challenges in maintaining sufficient supporting documentation of such cost allocations. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization consider updating its salaries, wages, and employee benefit cost allocation methodology and process to reduce the frequency of manual adjustments based on review of individual time records and expense data and maximize the use of automated allocations based on employees’ time and effort records, effective compensation during work periods, and that are calculated in a consistent manner. We also recommend that the Organization maintain contemporaneous documentation supporting all cost allocations. Views of responsible officials: Management does not agree with this finding. LSC program letter 22-5 emphasizes the importance of reconciliations of timekeeping reports with labor costs, distribution report or alternative reports. CLS prioritizes this practice of reconciliation and used it during the last months of 2024 to improve internal controls and minimize potential errors. We do not believe that CLA fully and fairly considered CLS’s thorough and complete reconciliation. A “material weakness” is defined as a deficiency “such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis.” Given that reconciliation is part of our internal control process used to prevent and detect/correct any errors, it should have been fully considered and is unfairly excluded from the review. For this reason, CLS considers that this is not a material weakness as the reconciliation caught and corrected these errors. Finally, the total amount of this finding is very low and should not rise to the level of material weakness. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. The aging cluster is not an LSC program and so its relevance to this finding is unclear. Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Such costs should be contemporaneously applied to grants as they are incurred using a system of processes and controls.
Criteria or Specific Requirement: Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Condition: During our testing, we noted four instances of errors totaling a net error of $906 (an absolute value error of $1,030) where the incorrect number of hours were utilized in the allocation of the employee's pay, the incorrect employee's time was used in the allocation of the employee's pay, or there were unsupported amounts added to the allocation of the employee's pay. As such, the salary costs mentioned above were allocated in an inconsistent manner to other grant payroll costs and were not fully representative of the employees' time and effort and benefit obtained by grant from the allocated cost. Management noted that it performed year-end grant reconciliations to ensure costs were properly allocated to each grant in total. We noted a lower frequency of differences in sample selections that occurred during the last several months of the year after management implemented a change to its allocation processes in response to the prior year audit. Questioned Costs: $906 of allocated salaries expense described above, which is related to Assistance Listing Number 93.044. Context: These five instances were noting during testing of 26 payroll and payroll-related disbursements. Cause: The Organization’s salary, wage and employee benefit cost allocation methodology is primarily based on time and effort records and a periodic calculation of specific grant hours versus general fund hours multiplied by period costs, but it often includes manual adjustments based on review of individual time records and expense data. Therefore, the methodology is challenging to apply consistently, document contemporaneously, and apply in accordance with federal regulations. Effect: The inclusion of frequent manual adjustments and varying allocation bases in the Organization’s salaries, wages, and employee benefit cost allocation methodology could cause costs to be allocated to grants that are not reflective of the time and effort spent on grant activities nor compensation paid to employees during relevant work periods. It could also lead to challenges in maintaining sufficient supporting documentation of such cost allocations. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization consider updating its salaries, wages, and employee benefit cost allocation methodology and process to reduce the frequency of manual adjustments based on review of individual time records and expense data and maximize the use of automated allocations based on employees’ time and effort records, effective compensation during work periods, and that are calculated in a consistent manner. We also recommend that the Organization maintain contemporaneous documentation supporting all cost allocations. Views of responsible officials: Management does not agree with this finding. LSC program letter 22-5 emphasizes the importance of reconciliations of timekeeping reports with labor costs, distribution report or alternative reports. CLS prioritizes this practice of reconciliation and used it during the last months of 2024 to improve internal controls and minimize potential errors. We do not believe that CLA fully and fairly considered CLS’s thorough and complete reconciliation. A “material weakness” is defined as a deficiency “such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis.” Given that reconciliation is part of our internal control process used to prevent and detect/correct any errors, it should have been fully considered and is unfairly excluded from the review. For this reason, CLS considers that this is not a material weakness as the reconciliation caught and corrected these errors. Finally, the total amount of this finding is very low and should not rise to the level of material weakness. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. The aging cluster is not an LSC program and so its relevance to this finding is unclear. Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Such costs should be contemporaneously applied to grants as they are incurred using a system of processes and controls.
Criteria or Specific Requirement: Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Condition: During our testing, we noted four instances of errors totaling a net error of $906 (an absolute value error of $1,030) where the incorrect number of hours were utilized in the allocation of the employee's pay, the incorrect employee's time was used in the allocation of the employee's pay, or there were unsupported amounts added to the allocation of the employee's pay. As such, the salary costs mentioned above were allocated in an inconsistent manner to other grant payroll costs and were not fully representative of the employees' time and effort and benefit obtained by grant from the allocated cost. Management noted that it performed year-end grant reconciliations to ensure costs were properly allocated to each grant in total. We noted a lower frequency of differences in sample selections that occurred during the last several months of the year after management implemented a change to its allocation processes in response to the prior year audit. Questioned Costs: $906 of allocated salaries expense described above, which is related to Assistance Listing Number 93.044. Context: These five instances were noting during testing of 26 payroll and payroll-related disbursements. Cause: The Organization’s salary, wage and employee benefit cost allocation methodology is primarily based on time and effort records and a periodic calculation of specific grant hours versus general fund hours multiplied by period costs, but it often includes manual adjustments based on review of individual time records and expense data. Therefore, the methodology is challenging to apply consistently, document contemporaneously, and apply in accordance with federal regulations. Effect: The inclusion of frequent manual adjustments and varying allocation bases in the Organization’s salaries, wages, and employee benefit cost allocation methodology could cause costs to be allocated to grants that are not reflective of the time and effort spent on grant activities nor compensation paid to employees during relevant work periods. It could also lead to challenges in maintaining sufficient supporting documentation of such cost allocations. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization consider updating its salaries, wages, and employee benefit cost allocation methodology and process to reduce the frequency of manual adjustments based on review of individual time records and expense data and maximize the use of automated allocations based on employees’ time and effort records, effective compensation during work periods, and that are calculated in a consistent manner. We also recommend that the Organization maintain contemporaneous documentation supporting all cost allocations. Views of responsible officials: Management does not agree with this finding. LSC program letter 22-5 emphasizes the importance of reconciliations of timekeeping reports with labor costs, distribution report or alternative reports. CLS prioritizes this practice of reconciliation and used it during the last months of 2024 to improve internal controls and minimize potential errors. We do not believe that CLA fully and fairly considered CLS’s thorough and complete reconciliation. A “material weakness” is defined as a deficiency “such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis.” Given that reconciliation is part of our internal control process used to prevent and detect/correct any errors, it should have been fully considered and is unfairly excluded from the review. For this reason, CLS considers that this is not a material weakness as the reconciliation caught and corrected these errors. Finally, the total amount of this finding is very low and should not rise to the level of material weakness. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. The aging cluster is not an LSC program and so its relevance to this finding is unclear. Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Such costs should be contemporaneously applied to grants as they are incurred using a system of processes and controls.
Criteria or Specific Requirement: Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Condition: During our testing, we noted four instances of errors totaling a net error of $906 (an absolute value error of $1,030) where the incorrect number of hours were utilized in the allocation of the employee's pay, the incorrect employee's time was used in the allocation of the employee's pay, or there were unsupported amounts added to the allocation of the employee's pay. As such, the salary costs mentioned above were allocated in an inconsistent manner to other grant payroll costs and were not fully representative of the employees' time and effort and benefit obtained by grant from the allocated cost. Management noted that it performed year-end grant reconciliations to ensure costs were properly allocated to each grant in total. We noted a lower frequency of differences in sample selections that occurred during the last several months of the year after management implemented a change to its allocation processes in response to the prior year audit. Questioned Costs: $906 of allocated salaries expense described above, which is related to Assistance Listing Number 93.044. Context: These five instances were noting during testing of 26 payroll and payroll-related disbursements. Cause: The Organization’s salary, wage and employee benefit cost allocation methodology is primarily based on time and effort records and a periodic calculation of specific grant hours versus general fund hours multiplied by period costs, but it often includes manual adjustments based on review of individual time records and expense data. Therefore, the methodology is challenging to apply consistently, document contemporaneously, and apply in accordance with federal regulations. Effect: The inclusion of frequent manual adjustments and varying allocation bases in the Organization’s salaries, wages, and employee benefit cost allocation methodology could cause costs to be allocated to grants that are not reflective of the time and effort spent on grant activities nor compensation paid to employees during relevant work periods. It could also lead to challenges in maintaining sufficient supporting documentation of such cost allocations. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization consider updating its salaries, wages, and employee benefit cost allocation methodology and process to reduce the frequency of manual adjustments based on review of individual time records and expense data and maximize the use of automated allocations based on employees’ time and effort records, effective compensation during work periods, and that are calculated in a consistent manner. We also recommend that the Organization maintain contemporaneous documentation supporting all cost allocations. Views of responsible officials: Management does not agree with this finding. LSC program letter 22-5 emphasizes the importance of reconciliations of timekeeping reports with labor costs, distribution report or alternative reports. CLS prioritizes this practice of reconciliation and used it during the last months of 2024 to improve internal controls and minimize potential errors. We do not believe that CLA fully and fairly considered CLS’s thorough and complete reconciliation. A “material weakness” is defined as a deficiency “such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis.” Given that reconciliation is part of our internal control process used to prevent and detect/correct any errors, it should have been fully considered and is unfairly excluded from the review. For this reason, CLS considers that this is not a material weakness as the reconciliation caught and corrected these errors. Finally, the total amount of this finding is very low and should not rise to the level of material weakness. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. The aging cluster is not an LSC program and so its relevance to this finding is unclear. Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Such costs should be contemporaneously applied to grants as they are incurred using a system of processes and controls.
Criteria or Specific Requirement: Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Condition: During our testing, we noted four instances of errors totaling a net error of $906 (an absolute value error of $1,030) where the incorrect number of hours were utilized in the allocation of the employee's pay, the incorrect employee's time was used in the allocation of the employee's pay, or there were unsupported amounts added to the allocation of the employee's pay. As such, the salary costs mentioned above were allocated in an inconsistent manner to other grant payroll costs and were not fully representative of the employees' time and effort and benefit obtained by grant from the allocated cost. Management noted that it performed year-end grant reconciliations to ensure costs were properly allocated to each grant in total. We noted a lower frequency of differences in sample selections that occurred during the last several months of the year after management implemented a change to its allocation processes in response to the prior year audit. Questioned Costs: $906 of allocated salaries expense described above, which is related to Assistance Listing Number 93.044. Context: These five instances were noting during testing of 26 payroll and payroll-related disbursements. Cause: The Organization’s salary, wage and employee benefit cost allocation methodology is primarily based on time and effort records and a periodic calculation of specific grant hours versus general fund hours multiplied by period costs, but it often includes manual adjustments based on review of individual time records and expense data. Therefore, the methodology is challenging to apply consistently, document contemporaneously, and apply in accordance with federal regulations. Effect: The inclusion of frequent manual adjustments and varying allocation bases in the Organization’s salaries, wages, and employee benefit cost allocation methodology could cause costs to be allocated to grants that are not reflective of the time and effort spent on grant activities nor compensation paid to employees during relevant work periods. It could also lead to challenges in maintaining sufficient supporting documentation of such cost allocations. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization consider updating its salaries, wages, and employee benefit cost allocation methodology and process to reduce the frequency of manual adjustments based on review of individual time records and expense data and maximize the use of automated allocations based on employees’ time and effort records, effective compensation during work periods, and that are calculated in a consistent manner. We also recommend that the Organization maintain contemporaneous documentation supporting all cost allocations. Views of responsible officials: Management does not agree with this finding. LSC program letter 22-5 emphasizes the importance of reconciliations of timekeeping reports with labor costs, distribution report or alternative reports. CLS prioritizes this practice of reconciliation and used it during the last months of 2024 to improve internal controls and minimize potential errors. We do not believe that CLA fully and fairly considered CLS’s thorough and complete reconciliation. A “material weakness” is defined as a deficiency “such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis.” Given that reconciliation is part of our internal control process used to prevent and detect/correct any errors, it should have been fully considered and is unfairly excluded from the review. For this reason, CLS considers that this is not a material weakness as the reconciliation caught and corrected these errors. Finally, the total amount of this finding is very low and should not rise to the level of material weakness. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. The aging cluster is not an LSC program and so its relevance to this finding is unclear. Federal regulations (CFR 200.403), state that allowable costs must be consistent with policies and procedures of federal award recipients that apply uniformly to both federally-financed and other activities of the Organization. It also states that costs must be adequately documented. Such costs should be contemporaneously applied to grants as they are incurred using a system of processes and controls.
2024-002 Twenty-First Century Community Learning Centers – Assistance Listing No. 84.287 Significant Deficiency in Internal Control Over Compliance and Noncompliance – Appropriate Review of Expenditures Claimed B. Allowable Costs/Cost Principles and C. Cash Management Criteria: In accordance with 2 CFR § 200.403(e), expenses must be determined under generally accepted accounting principles (GAAP) to be considered allowable unless otherwise noted in 2 CFR 200. In accordance with 2 CFR § 200.305(b), the draws under reimbursable grants must be limited to the minimum amount needed and drawn down after expenses have incurred. Condition and Context: During our testing of expenses charged to the federal program, we identified one transaction which the Organization prepaid for services to be rendered in 2025. The prepaid expense were charged to the SEFA in 2024 which does not match when they should be recognized as expenses under GAAP. The expenses were claimed for reimbursement prior to being incurred based on GAAP. Total questioned costs for this instance were $8,750. The population was considered the month of December as these were went the prepayments were made. The error rate for the defined population was 93.85% resulting in likely questioned costs of $14,393. Our sample was not statistically valid. Cause and Effect: The issue appears to have resulted from a lack of adequate review procedures to ensure that expenses charged to the federal award align with recognition under GAAP. As a result, the entity claimed expenditures which may be unallowable. Claimed expenditures which may be unallowable and drawn prior to being incurred. Recommendation: We recommend that management strengthen its review procedures over expense cutoff to ensure that expenditures are recognized on the SEFA in alignment with GAAP and are drawn down appropriately under the cost reimbursement method. Additionally, training should be provided to accounting personnel on Uniform Guidance compliance and GAAP requirements related to expense recognition. Views of Responsible Officials and Planned Corrective Action: We agree with the recommendation and plan to have the corrective action implemented by August 2025.
2024-001 Allowable Compensation Costs Material Weakness in Internal Control Over Compliance 16.575 Crime Victim Assistance Criteria – 2 CFR Section 200.403 states that costs must be necessary and reasonable for the performance of the federal award. Costs must also conform to any limitations or exclusions set forth in the federal award as to types or amount of cost items. In addition, 2 CFR Section 200.430 states that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition and Context – Through a financial review by a pass-through entity, compensation costs of $32,302 were identified as unallowed under the terms of the federal award for the budget period July 1, 2023 to June 30, 2024. These costs included $19,259 in calendar year 2023 and $13,043 in calendar year 2024. Cause – CCAHT did not have internal controls in place to ensure that salaries and wages claimed for reimbursement was accurate, allowable, and properly allocated. Effect – CCAHT submitted salaries and wages for reimbursement that were unallowed under the terms of the federal award. Questioned Costs – This resulted in known questioned costs of $32,302. Repeat Finding - No Recommendations – We recommend CCAHT implement internal controls to ensure all costs charged to the program are accurate, allowable, and properly allocated in accordance with the terms of the federal award, and that there is proper review and approval. Management’s Response – Management concurs with the audit recommendations. See Management’s Corrective Action Plan.
2024-001 Allowable Compensation Costs Material Weakness in Internal Control Over Compliance 16.575 Crime Victim Assistance Criteria – 2 CFR Section 200.403 states that costs must be necessary and reasonable for the performance of the federal award. Costs must also conform to any limitations or exclusions set forth in the federal award as to types or amount of cost items. In addition, 2 CFR Section 200.430 states that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition and Context – Through a financial review by a pass-through entity, compensation costs of $32,302 were identified as unallowed under the terms of the federal award for the budget period July 1, 2023 to June 30, 2024. These costs included $19,259 in calendar year 2023 and $13,043 in calendar year 2024. Cause – CCAHT did not have internal controls in place to ensure that salaries and wages claimed for reimbursement was accurate, allowable, and properly allocated. Effect – CCAHT submitted salaries and wages for reimbursement that were unallowed under the terms of the federal award. Questioned Costs – This resulted in known questioned costs of $32,302. Repeat Finding - No Recommendations – We recommend CCAHT implement internal controls to ensure all costs charged to the program are accurate, allowable, and properly allocated in accordance with the terms of the federal award, and that there is proper review and approval. Management’s Response – Management concurs with the audit recommendations. See Management’s Corrective Action Plan.
2024-001 Allowable Compensation Costs Material Weakness in Internal Control Over Compliance 16.575 Crime Victim Assistance Criteria – 2 CFR Section 200.403 states that costs must be necessary and reasonable for the performance of the federal award. Costs must also conform to any limitations or exclusions set forth in the federal award as to types or amount of cost items. In addition, 2 CFR Section 200.430 states that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition and Context – Through a financial review by a pass-through entity, compensation costs of $32,302 were identified as unallowed under the terms of the federal award for the budget period July 1, 2023 to June 30, 2024. These costs included $19,259 in calendar year 2023 and $13,043 in calendar year 2024. Cause – CCAHT did not have internal controls in place to ensure that salaries and wages claimed for reimbursement was accurate, allowable, and properly allocated. Effect – CCAHT submitted salaries and wages for reimbursement that were unallowed under the terms of the federal award. Questioned Costs – This resulted in known questioned costs of $32,302. Repeat Finding - No Recommendations – We recommend CCAHT implement internal controls to ensure all costs charged to the program are accurate, allowable, and properly allocated in accordance with the terms of the federal award, and that there is proper review and approval. Management’s Response – Management concurs with the audit recommendations. See Management’s Corrective Action Plan.
Federal agency: U.S. Department of Health and Human Services Federal program title: Health Centers Cluster Assistance Listing Number: 93.224/93.527 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 6/1/24-5/31/25 Type of Finding: Compliance and Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: A nonfederal entity may only charge allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency made the federal award that were authorized by the federal awarding agency (2 CFR sections 200.308, 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Condition: Cost incurred prior to the start of the period of performance were charged to the grant. Questioned Costs: $2,979 Context: Two of thirteen transactions selected for testing. Cause: These costs related to a payroll period which crossed over two different grant budget periods, and the costs allocated to the grant were not prorated for the number of days within the period of performance. Effect: Unallowable costs may be allocated to the grant. Repeat Finding: No. Recommendation: We recommend that only costs incurred during the period of performance be charged to the grant. For payroll in which pay periods extend over multiple budget periods, we recommend prorating the amount charged to the grant by the days worked within the grant period. Views of Responsible Officials: There is no disagreement with the audit finding.
Federal agency: U.S. Department of Health and Human Services Federal program title: Health Centers Cluster Assistance Listing Number: 93.224/93.527 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 6/1/24-5/31/25 Type of Finding: Compliance and Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: A nonfederal entity may only charge allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency made the federal award that were authorized by the federal awarding agency (2 CFR sections 200.308, 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Condition: Cost incurred prior to the start of the period of performance were charged to the grant. Questioned Costs: $2,979 Context: Two of thirteen transactions selected for testing. Cause: These costs related to a payroll period which crossed over two different grant budget periods, and the costs allocated to the grant were not prorated for the number of days within the period of performance. Effect: Unallowable costs may be allocated to the grant. Repeat Finding: No. Recommendation: We recommend that only costs incurred during the period of performance be charged to the grant. For payroll in which pay periods extend over multiple budget periods, we recommend prorating the amount charged to the grant by the days worked within the grant period. Views of Responsible Officials: There is no disagreement with the audit finding.
Assistance Listing Number(s): 20.509 Name of Federal Program or Cluster: Formula Grants for Rural Areas and Tribal Transit Program Name of Federal Agency: Department of Transportation Federal Award Identification Number: CY2024 WETAP Federal Award Year: January 1, 2024 through December 31, 2024 Criteria: According to 2 CFR §200.436(b)(1), “The depreciation cost is not allowable for equipment that was paid for by the Federal Government either directly or through a non-federal entity's federal award.” Additionally, costs charged to a federal award must be allowable, allocable, and reasonable per 2 CFR §200.403. Condition: During the preliminary review of expenditures charged to federal programs, it was noted that depreciation expense was recorded for a vehicle that had been 100% federally funded in a prior year. The depreciation was charged to the major federal program in the current fiscal year. Cause: The depreciation was charged due to a lack of review procedures to ensure that federally funded assets are excluded from depreciation calculations allocated to federal awards. Effect or Potential Effect and Questioned Costs: As a result, unallowable costs were charged to the federal program, which may result in questioned costs and potential repayment to the federal agency, as well as noncompliance with federal cost principles. Context: The error was not a part of our sample. It was discovered as a year-end journal entry. Repeat Finding: No Recommendation: Management should conduct a review of depreciation charges for the current and future years to ensure that federally funded assets are excluded from depreciation allocations to federal programs.
2024 001 Activities Allowed or Unallowed and Allowable Costs/Cost Principles U.S. Department of Homeland Security: Passed through the State of New Jersey, Department of Law and Public Safety: Disaster Grants – Public Assistance (Presidentially Declared Disasters) – ALN 97.036 Federal Grant Numbers and Years State of New Jersey pass through number: UH1WX Project #2365 – Award Year 2024 (Application 696220) Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Prior Year Findings: 2023-001 Criteria Compliance – Program Specific The Federal Emergency Management Agency (FEMA), as part of the U.S. Department of Homeland Security, evaluates the eligibility of all costs claimed by the applicant. Not all costs incurred as a result of the incident are eligible. (PAPPG v4) Chapter 4, page(s) 51 54; Chapter 6, page(s) 65 & 93 95. Cost must be: • Directly tied to the performance of eligible work; • Adequately documented (2 CFR section 200.403(g)); • Reduced by all applicable credits, such as insurance proceeds and salvage values (Stafford Act section 312, 42 USC section 5155, and 2 CFR section 200.406); • Authorized and not prohibited under federal, state, territorial, tribal, or local government laws or regulations; • Consistent with applicant’s internal policies, regulations, and procedures that apply uniformly to both federal awards and other activities of the applicant; and • Necessary and reasonable to accomplish the work properly and efficiently (2 CFR section 200.403). 1. Applicant (Force Account) Labor FEMA refers to the applicant’s personnel as “force account.” FEMA reimburses force account labor based on actual hourly rates plus the cost of the employee’s actual fringe benefits. FEMA calculates the fringe benefit cost based on a percentage of the hourly pay rate. Because certain items in a benefit package are not dependent on hours worked (e.g., health insurance), the percentage for overtime is usually different than the percentage for straight time. Compliance – General Per 2 CFR Section 200.430, charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally assisted and all other activities compensated by the non federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non federal entity. Internal Control Per 2 CFR section 200.303(a), a non federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition and Context The New Jersey Turnpike Authority (the “Authority”), through the State of New Jersey, Department of Homeland Security (the State), administers the federal Disaster Grants – Public Assistance (Presidentially Declared Disasters) program and is reimbursed for eligible expenditures when a presidentially declared disaster occurs. For the Authority’s force account labor costs, the Authority utilizes manual Daily Worksheets (timesheets) as the official records for time and effort worked during an event by the Authority’s personnel. These timesheets are then entered into the Authority’s information system (PeopleSoft) for review and approval, reconciling back to the information entered on the respective timesheet. For thirteen of sixty timesheets selected for testwork, the Authority was unable to provide the timesheets as the official record for the time and effort charged to the federal program. However, the Authority successfully demonstrated through PeopleSoft system that the time and effort charged to the federal program was properly reviewed and approved and reconciled to the amounts of reimbursement requested from the State. The finding is recurring from the prior year as the corrective action plan developed by the Authority from the prior year finding was not implemented until December 2024, which is subsequent to when these expenditures were incurred by the Authority between fiscal years 2020 and 2022. Cause The Authority did not maintain and make readily available certain timesheets used as the official record for the time and effort charged to the federal program in accordance with the Uniform Guidance. Effect The Authority did not comply with 2 CFR Section 200.430 related to incorporating the physical timesheets into the official records of the Authority. Questioned Costs None as the time and effort amounts charged were determined to be allowable. Recommendation We recommend that the Authority strengthen its processes to ensure that all timesheets for disaster related events that are federally funded are maintained and are made readily available if subject to audit or other inspection in accordance with the Uniform Guidance. Views of Responsible Officials Management agrees with the finding. Beginning in December 2024, as a commitment to strengthen our processes and ensure that all physical timesheets related to FEMA-declared disaster events are properly maintained and readily accessible, management put a process in place to enhance procedures and controls for timesheets going forward to ensure full compliance with the Uniform Guidance requirements. This process was successfully implemented as of this date and for prospective periods. However, this process does not remedy the issue noted in the finding which relates to time worked from 2020-2022, which is before the process was in place. Therefore, the finding is repeated from the prior year.
Criteria: Per 2 CFR § 200.303(a), the non-Federal entity must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the entity is managing the award in compliance with Federal statutes, regulations, and the terms and conditions of the awards. Additionally, per 2 CFR §200.403 and §200.302, costs charged to federal awards must be allowable, allocable, and properly documented, and financial reporting must be accurate, complete, and supported by the accounting system. Condition: Although the Parish has implemented internal controls related to the allowability of costs and the preparation of required reports for the Coronavirus State and Local Fiscal Recovery funds, they were not operating effectively during fiscal year 2024. Tests of controls indicated that transactions were not tracked appropriately to ensure they were charged to the correct funding source. In addition, quarterly project and expenditure reports submitted to the U.S. Treasury included inaccurate or unsupported information due to a lack of tracking and reconciliation procedures. Cause: As discussed in item 2024-001, the Parish encountered several challenges during the transition of administration and key personnel. Parish administration and management were immediately tasked with enhancing operations related to procedural concerns from the prior administration and performing the accounting function without sufficient documentation on several balances and transactions. The documented controls were not in practice because of this. Effect: While no instances of noncompliance were noted, the lack of documented controls in practice increases the risk that future required reports could be incomplete, inaccurate, or untimely, as well as, federal costs being unallowed per the cost principles which could potentially result in program noncompliance. Recommendation: We recommend that the Parish enhance and document internal controls over financial reporting, as described in our recommendations described under item 2024-001, to prevent noncompliance of the Uniform Guidance as required.
Federal Agency: Department of the Treasury Pass Through Entity: Child Care Aware of Kansas Program Name: Coronavirus State and Local Recovery Funds (COVID-19) Assistance Listing Number: 21.027 Award Period: March 12, 2020 – June 30, 2023 Criteria: According to 2 CFR 200.403, costs must be necessary and reasonable for the performance of the Federal award in order to be allowable. 2 CFR 200.317 states that procurement procedures must avoid the acquisition of unnecessary items. Condition: The Organization acquired a noncancelable software license for a term of ten years with federal funds in 2023. The software was utilized briefly in 2023 then abandoned and subsequently written off in 2024. Cause: As discussed at Finding 2024-001, the Organization’s policies and procedures do not ensure expenditures related to significant long-term commitments are reasonable and necessary and therefore allowable. Effect: Software was purchased without proper due diligence to determine whether it was necessary for the Organization leading to waste of federal funds. Questioned Costs: The cost of the 10-year license was $158,751, all of which was expended in 2023.Perspective: The expenditure occurred in 2023. The write-off of the software license occurred in 2024 and we became aware of it during the 2024 audit although this program was not currently audited as a major program. We do not consider the condition to be pervasive. Recommendation: Policies and procedures should be implemented for expenditures related to significant long-term commitments to undergo proper vetting to ensure the expense is necessary prior to purchase. Views of Responsible Officials: Management believes the expenditure was reasonable and necessary at the time the license was acquired. Subsequent staffing changes resulted in the software no longer benefitting the Organization to the extent originally intended without significant further investment for customization. Management notes that the questioned cost represents 3% of the federal award.
Federal Award Findings and Questioned Costs: Finding Number: 2024-001 Federal Assistance Listing Number: 97.036 Program: COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Federal Agency Name: Federal Emergency Management Agency Federal Award Number: D20-528 Federal Award Year: 2024 Criteria Per Title 2, U.S. Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, (Subpart E, Section 200.303), the nonfederal entity must establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Further, Subpart E Section 200.403 states that administrative closeout costs may be incurred until the due date of the final reports. If incurred, these costs must be liquidated prior to the due date of the final reports and charged to the final budget period of the award unless otherwise specified by the Federal agency. All other costs must be incurred during the approved budget period. Conditions Found In one of 25 selections for testwork over period of performance, expenditures related to contract labor were submitted for reimbursement to the Federal Emergency Management Agency (FEMA) that were outside of the project period. Further, the review performed over expenditures was not completed appropriately to identify this error, representing an instance of the District’s internal control not operating as designed. Cause The District does not have adequate controls in place to ensure that contract labor expenditures submitted for reimbursement by FEMA under the COVID 19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) program represent service dates within the project period. Effect Without effective controls in place, expenditures could be reimbursed by the program that were incurred outside of the project period, resulting in non compliance with program requirements. Questioned Costs $1,316, representing the known amount of expenditures incurred outside of the project period for the COVID 19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) program. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding This finding is not a repeat finding in the immediate prior audit. Recommendation We recommend that management strengthen processes and controls in place to ensure contract labor expenditures submitted to FEMA for reimbursement under the COVID 19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) program are appropriately reviewed prior to submission to ensure they represent service dates within the project period. Views of Responsible Officials The District agrees with the finding and accepts the recommendation.
2024-001 – Fiscal Policies and Procedures Not Fully Aligned with Uniform Guidance Federal Program: Temporary Assistance for Needy Families, Family Violence Prevention Services Act, ARP Supplemental and ARP Covid-19 Federal Assistance Listing Number: 93.558 and 93.671 Pass-Through Agency: Texas Health and Human Services Commission Pass-Through Grantor Number: HHS000380000040 Criteria: Non-federal entities are required under 2 CFR §200.303 to establish and maintain effective internal controls over federal awards that provide reasonable assurance of compliance with federal statutes, regulations, and terms and conditions of the award. Adequate written policies and procedures are a critical component of an effective internal control system. Condition: During our review of the Center’s fiscal policies and procedures, we noted that several key elements required for compliance with 2 CFR Part 200 were either missing or lacked sufficient detail. Specifically, the following areas were underdeveloped: Conflict of interest policies were not clearly defined or aligned with 2 CFR § 200.112. Procedures for determining allowable costs under 2 CFR §200.403–§200.405 were not well documented. Subrecipient monitoring procedures required by 2 CFR §200.331 were not adequately addressed. Record retention and access policies under 2 CFR §200.333–§200.338 were not clearly outlined. While some general policies were in place, they do not currently meet the level of specificity and comprehensiveness required under the Uniform Guidance. Cause: The Center is in the process of updating its financial policies and procedures to comply with Uniform Guidance requirements. A consultant has been engaged to assist with this process, and updates are expected to be finalized and approved by the Board of Directors in August 2025. Effect: The lack of complete and detailed policies increases the risk of noncompliance with federal requirements, especially in areas such as cost allowability, subrecipient oversight, and recordkeeping. It also creates challenges in ensuring consistent and compliant financial practices across the Center. Questioned Costs: $0 – No noncompliant expenditures were identified; however, the absence of sufficient policies represents a control deficiency. Recommendation: We recommend for the Center to prioritize the completion and formal adoption of revised fiscal policies and procedures, ensuring they fully align with the requirements of 2 CFR Part 200. These should include detailed written policies on conflict of interest, allowable costs, subrecipient monitoring, and record retention. Finalizing and implementing these policies ahead of the new fiscal year, as planned, will strengthen internal controls and help ensure compliance moving forward. Management’s Views and Corrective Action Plan: Management agrees with the finding. The Center is currently in the process of updating its fiscal policies and procedures to align with the requirements of 2 CFR Part 200. The Finance Committee is leading this effort and is reviewing each policy area identified, including conflict of interest, allowable costs, subrecipient monitoring, and record retention. Updated policies and procedures will be finalized and presented for Board approval by August 30, 2025. Once approved, the Center will ensure implementation across all departments and provide internal guidance to promote consistent application. Anticipated Completion Date: August 30, 2025 Responsible Party: Finance Committee, with support from Executive Director, Nichole Henry.
2024-001 – Fiscal Policies and Procedures Not Fully Aligned with Uniform Guidance Federal Program: Temporary Assistance for Needy Families, Family Violence Prevention Services Act, ARP Supplemental and ARP Covid-19 Federal Assistance Listing Number: 93.558 and 93.671 Pass-Through Agency: Texas Health and Human Services Commission Pass-Through Grantor Number: HHS000380000040 Criteria: Non-federal entities are required under 2 CFR §200.303 to establish and maintain effective internal controls over federal awards that provide reasonable assurance of compliance with federal statutes, regulations, and terms and conditions of the award. Adequate written policies and procedures are a critical component of an effective internal control system. Condition: During our review of the Center’s fiscal policies and procedures, we noted that several key elements required for compliance with 2 CFR Part 200 were either missing or lacked sufficient detail. Specifically, the following areas were underdeveloped: Conflict of interest policies were not clearly defined or aligned with 2 CFR § 200.112. Procedures for determining allowable costs under 2 CFR §200.403–§200.405 were not well documented. Subrecipient monitoring procedures required by 2 CFR §200.331 were not adequately addressed. Record retention and access policies under 2 CFR §200.333–§200.338 were not clearly outlined. While some general policies were in place, they do not currently meet the level of specificity and comprehensiveness required under the Uniform Guidance. Cause: The Center is in the process of updating its financial policies and procedures to comply with Uniform Guidance requirements. A consultant has been engaged to assist with this process, and updates are expected to be finalized and approved by the Board of Directors in August 2025. Effect: The lack of complete and detailed policies increases the risk of noncompliance with federal requirements, especially in areas such as cost allowability, subrecipient oversight, and recordkeeping. It also creates challenges in ensuring consistent and compliant financial practices across the Center. Questioned Costs: $0 – No noncompliant expenditures were identified; however, the absence of sufficient policies represents a control deficiency. Recommendation: We recommend for the Center to prioritize the completion and formal adoption of revised fiscal policies and procedures, ensuring they fully align with the requirements of 2 CFR Part 200. These should include detailed written policies on conflict of interest, allowable costs, subrecipient monitoring, and record retention. Finalizing and implementing these policies ahead of the new fiscal year, as planned, will strengthen internal controls and help ensure compliance moving forward. Management’s Views and Corrective Action Plan: Management agrees with the finding. The Center is currently in the process of updating its fiscal policies and procedures to align with the requirements of 2 CFR Part 200. The Finance Committee is leading this effort and is reviewing each policy area identified, including conflict of interest, allowable costs, subrecipient monitoring, and record retention. Updated policies and procedures will be finalized and presented for Board approval by August 30, 2025. Once approved, the Center will ensure implementation across all departments and provide internal guidance to promote consistent application. Anticipated Completion Date: August 30, 2025 Responsible Party: Finance Committee, with support from Executive Director, Nichole Henry.
2024-001 – Fiscal Policies and Procedures Not Fully Aligned with Uniform Guidance Federal Program: Temporary Assistance for Needy Families, Family Violence Prevention Services Act, ARP Supplemental and ARP Covid-19 Federal Assistance Listing Number: 93.558 and 93.671 Pass-Through Agency: Texas Health and Human Services Commission Pass-Through Grantor Number: HHS000380000040 Criteria: Non-federal entities are required under 2 CFR §200.303 to establish and maintain effective internal controls over federal awards that provide reasonable assurance of compliance with federal statutes, regulations, and terms and conditions of the award. Adequate written policies and procedures are a critical component of an effective internal control system. Condition: During our review of the Center’s fiscal policies and procedures, we noted that several key elements required for compliance with 2 CFR Part 200 were either missing or lacked sufficient detail. Specifically, the following areas were underdeveloped: Conflict of interest policies were not clearly defined or aligned with 2 CFR § 200.112. Procedures for determining allowable costs under 2 CFR §200.403–§200.405 were not well documented. Subrecipient monitoring procedures required by 2 CFR §200.331 were not adequately addressed. Record retention and access policies under 2 CFR §200.333–§200.338 were not clearly outlined. While some general policies were in place, they do not currently meet the level of specificity and comprehensiveness required under the Uniform Guidance. Cause: The Center is in the process of updating its financial policies and procedures to comply with Uniform Guidance requirements. A consultant has been engaged to assist with this process, and updates are expected to be finalized and approved by the Board of Directors in August 2025. Effect: The lack of complete and detailed policies increases the risk of noncompliance with federal requirements, especially in areas such as cost allowability, subrecipient oversight, and recordkeeping. It also creates challenges in ensuring consistent and compliant financial practices across the Center. Questioned Costs: $0 – No noncompliant expenditures were identified; however, the absence of sufficient policies represents a control deficiency. Recommendation: We recommend for the Center to prioritize the completion and formal adoption of revised fiscal policies and procedures, ensuring they fully align with the requirements of 2 CFR Part 200. These should include detailed written policies on conflict of interest, allowable costs, subrecipient monitoring, and record retention. Finalizing and implementing these policies ahead of the new fiscal year, as planned, will strengthen internal controls and help ensure compliance moving forward. Management’s Views and Corrective Action Plan: Management agrees with the finding. The Center is currently in the process of updating its fiscal policies and procedures to align with the requirements of 2 CFR Part 200. The Finance Committee is leading this effort and is reviewing each policy area identified, including conflict of interest, allowable costs, subrecipient monitoring, and record retention. Updated policies and procedures will be finalized and presented for Board approval by August 30, 2025. Once approved, the Center will ensure implementation across all departments and provide internal guidance to promote consistent application. Anticipated Completion Date: August 30, 2025 Responsible Party: Finance Committee, with support from Executive Director, Nichole Henry.
2024-001 – Fiscal Policies and Procedures Not Fully Aligned with Uniform Guidance Federal Program: Temporary Assistance for Needy Families, Family Violence Prevention Services Act, ARP Supplemental and ARP Covid-19 Federal Assistance Listing Number: 93.558 and 93.671 Pass-Through Agency: Texas Health and Human Services Commission Pass-Through Grantor Number: HHS000380000040 Criteria: Non-federal entities are required under 2 CFR §200.303 to establish and maintain effective internal controls over federal awards that provide reasonable assurance of compliance with federal statutes, regulations, and terms and conditions of the award. Adequate written policies and procedures are a critical component of an effective internal control system. Condition: During our review of the Center’s fiscal policies and procedures, we noted that several key elements required for compliance with 2 CFR Part 200 were either missing or lacked sufficient detail. Specifically, the following areas were underdeveloped: Conflict of interest policies were not clearly defined or aligned with 2 CFR § 200.112. Procedures for determining allowable costs under 2 CFR §200.403–§200.405 were not well documented. Subrecipient monitoring procedures required by 2 CFR §200.331 were not adequately addressed. Record retention and access policies under 2 CFR §200.333–§200.338 were not clearly outlined. While some general policies were in place, they do not currently meet the level of specificity and comprehensiveness required under the Uniform Guidance. Cause: The Center is in the process of updating its financial policies and procedures to comply with Uniform Guidance requirements. A consultant has been engaged to assist with this process, and updates are expected to be finalized and approved by the Board of Directors in August 2025. Effect: The lack of complete and detailed policies increases the risk of noncompliance with federal requirements, especially in areas such as cost allowability, subrecipient oversight, and recordkeeping. It also creates challenges in ensuring consistent and compliant financial practices across the Center. Questioned Costs: $0 – No noncompliant expenditures were identified; however, the absence of sufficient policies represents a control deficiency. Recommendation: We recommend for the Center to prioritize the completion and formal adoption of revised fiscal policies and procedures, ensuring they fully align with the requirements of 2 CFR Part 200. These should include detailed written policies on conflict of interest, allowable costs, subrecipient monitoring, and record retention. Finalizing and implementing these policies ahead of the new fiscal year, as planned, will strengthen internal controls and help ensure compliance moving forward. Management’s Views and Corrective Action Plan: Management agrees with the finding. The Center is currently in the process of updating its fiscal policies and procedures to align with the requirements of 2 CFR Part 200. The Finance Committee is leading this effort and is reviewing each policy area identified, including conflict of interest, allowable costs, subrecipient monitoring, and record retention. Updated policies and procedures will be finalized and presented for Board approval by August 30, 2025. Once approved, the Center will ensure implementation across all departments and provide internal guidance to promote consistent application. Anticipated Completion Date: August 30, 2025 Responsible Party: Finance Committee, with support from Executive Director, Nichole Henry.
2025-002 – Questioned or Unsupported Costs Information on Federal Program United States Department of Homeland Security - Federal Emergency Management Agency (FEMA). Federal Assistance Listing Number 97.036 – Disaster Grants – Public Assistance. Compliance Requirements Activities Allowed or Unallowed / Allowable Costs and Cost Principles Criteria In accordance with 2 CFR §200.403, costs charged to a federal award must be necessary, reasonable, and allocable to the award. Additionally, costs must be adequately documented to be allowable under federal awards. Condition During our testing of activities and allowable costs for the year ended December 31, 2024, we identified seven (7) instances where the amounts requested for reimbursement were not allowed. Cause No cause could be determined. Effect The City received FEMA grant reimbursements for unallowable or unsupported costs, potentially reducing available federal funds for future emergencies. The City may also be at risk of noncompliance with FEMA cost-sharing (matching) requirements. Questioned Costs $54,366 (Federal share $40,775). Context Forty-two (42) disbursements totaling $410,854 were randomly selected for testing. We identified seven (7) exceptions. These exceptions included unsupported equipment and labor charges, duplicate payroll, duplicate material costs, and unsupported payroll. Recommendation We recommend the City review the identified transactions and consult with FEMA regarding resolution of the questioned costs. The City should also take steps to ensure that only allowable, adequately documented costs are submitted for reimbursement in the future. Management’s Response Responsible Official’s Response and Corrective Action Planned: We have reached out to FEMA and was provided this summarized response: “The project was obligated as a small project. FEMA does not adjust the funding amount unless specific conditions are met. If the applicant was stating that the actual cost for the small project was more than FEMA obligated, we would have to request what is called a New Small Project Overrun Appeal Request. But in this case, the actual cost resulted in an underrun based on the small project obligated amount. FEMA only asks for the applicants to apply the underrun amount back into the community." Management has also implemented a process to include financial oversight and review of all documents prior to submission to FEMA for reimbursement going forward. We will meet with all leadership staff to discuss documentation requirements necessary for FEMA reimbursements. Lastly, Management will only sign off on reimbursed costs after all changes to FEMA requests have been adequately documented. Implementation Date: Immediate Person Responsible for Corrective Action Plan: Chief Financial Officer, Ashley Cason
Federal Agency: United States Department of Commerce Federal Program Name: Office for Coastal Management Assistance Listing Number: 11.473 Federal Award Identification Year: 2020 Pass-Through Agency: National Fish and Wildlife Grant Agreement Award Period: 9/1/20-08/02/24 Compliance Requirement Affected: Subrecipient Suspension & Debarment Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance (Modified Opinion) Criteria: 2 CFR 200.403(a) - When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: For two subrecipient samples that were selected, verification of subrecipient's suspension or debarment status was not verified. Context: A nonstatistical sample of 2 of 4 subrecipients were selected for testing for the Office for Coastal Management program. Condition noted above was identified during our procedures over subrecipients. Effect: CFSC did not verify suspension or debarment status, which could result in naming a subrecipient as an award recipient, which is potentially suspended or debarred. Cause: CFSC did not consistently ensure that Suspension or Debarment status was verified before naming the subrecipients tested as award recipients. Repeat Finding: The finding is a repeat finding. Recommendation: We recommend that CFSC strengthen its current policies and procedures to ensure that Suspension and Debarment Status is verified for each subrecipient applicant during its pre-award subrecipient screening process. Management’s Views: See separate corrective action plan.
Federal Agency: United States Department of Agriculture, Forest Service Federal Program Name: Cooperative Forestry Assistance Assistance Listing Number: 10.664 Federal Award Identification Year: 2021 Pass-Through Agency: N/A Award Period: 09/01/21-08/31/26 Compliance Requirement Affected: Subrecipient Suspension & Debarment Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.403(a) - When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: For one subrecipient samples that was selected, verification of subrecipient's suspension or debarment status was not verified. Context: A nonstatistical sample of 5 out of 13 subrecipients were selected for testing for the Office for Coastal Management program. The condition noted above was identified during our procedures over CFSC’s subrecipients. Effect: CFSC did not verify suspension or debarment status, which could result in naming a subrecipient as an award recipient, which is potentially suspended or debarred. Cause: CFSC did not consistently ensure that Suspension or Debarment status was verified before naming the subrecipients tested as award recipients. Repeat Finding: The finding is not a repeat finding. Recommendation: We recommend that CFSC strengthen its current policies and procedures to ensure that Suspension and Debarment Status is verified for each subrecipient applicant during its pre-award subrecipient screening process. Management’s Views: See separate corrective action plan.
Federal Agency: United States Department of Agriculture, Forest Service Federal Program Name: Cooperative Forestry Assistance Assistance Listing Number: 10.664 Federal Award Identification Year: 2021 Pass-Through Agency: N/A Award Period: 09/01/21-08/31/26 Compliance Requirement Affected: Allowable Costs & Activities (Payroll) Type of Finding: Significant Deficiency in Internal Control over Compliance and Nonmaterial Noncompliance Criteria: 2 CFR 200.403(a) - Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Condition: For five hourly employees, CFSC performed a review of payroll discrepancies occurring between 2020- 2024, due to differences when comparing time recorded on time sheets to time recorded to payroll, which resulted in a non-significant payment made to back to the employees. Questioned Costs: The known questioned costs are $8,600. Context: A nonstatistical sample of 60 out of >250 employee pay periods were selected for testing for the Cooperative Forestry Assistance program. The condition noted above was identified during our procedures over CFSC’s payroll disbursements. Effect: CFSC's internal controls did not include thorough review of time entry when processing payroll, which can result in understatement of payroll expense. Cause: CFSC's internal controls did not include thorough review of time entry when processing payroll.