2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-029 Improve Controls over Period of Performance Compliance Requirement: Period of Performance Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Number and Title: 93.959 – Block Grants for Prevention and Treatment of Substance Abuse Federal Award Number: B08TI084637 (Year: 2022) Questioned Costs: $236,557 Repeat of Prior Year Finding: 2023-022 Description: The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls to ensure that program costs are obligated within the period of performance and liquidated within the allowed time period. Background Information: The objective of the Substance Abuse Prevention and Treatment Block Grant (SABG) program is to provide funds to states, territories, and one Indian tribe for planning, carrying out and evaluating activities to prevent and treat Substance Abuse (SA) and other related activities as authorized by the statute. Funds associated with the SABG program are administered by the Department of Behavioral Health and Developmental Disabilities (DBHDD). The DBHDD is responsible for becoming familiar with the performance period during which recipients must obligate and liquidate costs for this program. These periods typically align with the federal fiscal year of October 1 through September 30, and payments for costs incurred before a grant award’s beginning date or after the liquidation period are not allowed without the grantor’s prior approval. Criteria: As a recipient of federal awards, the DBHDD is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented, (h) Cost must be incurred during the approved budget period…” Additionally, provisions included in the Uniform Guidance, Section 200.77 state, “Period of performance means the time during which the non-Federal entity may incur new obligations to carry out the work authorized under the Federal award.” Further, the DBHDD’s policies 17-202 – Federal Fund Source and Parent Project Code Assignments and 17-203 – Federal Financial Report Preparation, Reconciliation, and Submission prescribe actions that must be taken by staff to ensure that costs are obligated, incurred, and liquidated within the appropriate period as specified in each grant award’s terms and conditions. Condition: Our audit of the SABG program included a review of expenditures with performance period ending dates during the audit period to ensure that the amounts were obligated and liquidated within the allowed time period. The entire population of nine expenditures was tested to ensure that the amounts were obligated and liquidated within the appropriate time period. It was noted that these nine transactions were not liquidated within 90 days of the end of the period of performance as required. Additionally, these expenditures were not identified by the DBHDD and reclassified to an appropriate, subsequent award number as is reflected within the DBHDD’s internal policy. Furthermore, one of these same expenditures was incurred outside of the period of performance. Questioned Costs: Known questioned costs of $236,557 related to the SABG program were identified for expenditures that were paid outside of the allowable liquidation period. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: While the DBHDD had established procedures in place to comply with the period of performance requirements for federal awards, the DBHDD policy governing period of performance does not address the correction of errors in a timely manner as the policy only recommends that corrections be completed during the close-out process for the grant award. Purchase orders associated with federal fund sources were not closed out in a timely manner and led to delays in the overall close-out and correction process for these federal fund sources. Effect: The deficiencies noted in the period of performance process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal period of performance requirements, the DBHDD is at a higher risk of making improper payments and performing inaccurate financial reporting. Recommendation: We recommend that the DBHDD: • Update policy, processes, and procedures associated with period of performance requirements to recommend corrections be made in a timely manner. • Follow currently established grant close-out processes and procedures associated with period of performance requirements. • Incorporate additional oversight, training, and/or staff to aid in the identification of the period of performance to ensure costs are associated with the correct fund source. Views of Responsible Officials: DBHDD agrees with this finding. The Provider Utilization Report was revised in December 2024. The Federal Financial Reporting Group PO closure rights was implemented in January 2025.
2024-029 Improve Controls over Period of Performance Compliance Requirement: Period of Performance Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Number and Title: 93.959 – Block Grants for Prevention and Treatment of Substance Abuse Federal Award Number: B08TI084637 (Year: 2022) Questioned Costs: $236,557 Repeat of Prior Year Finding: 2023-022 Description: The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls to ensure that program costs are obligated within the period of performance and liquidated within the allowed time period. Background Information: The objective of the Substance Abuse Prevention and Treatment Block Grant (SABG) program is to provide funds to states, territories, and one Indian tribe for planning, carrying out and evaluating activities to prevent and treat Substance Abuse (SA) and other related activities as authorized by the statute. Funds associated with the SABG program are administered by the Department of Behavioral Health and Developmental Disabilities (DBHDD). The DBHDD is responsible for becoming familiar with the performance period during which recipients must obligate and liquidate costs for this program. These periods typically align with the federal fiscal year of October 1 through September 30, and payments for costs incurred before a grant award’s beginning date or after the liquidation period are not allowed without the grantor’s prior approval. Criteria: As a recipient of federal awards, the DBHDD is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented, (h) Cost must be incurred during the approved budget period…” Additionally, provisions included in the Uniform Guidance, Section 200.77 state, “Period of performance means the time during which the non-Federal entity may incur new obligations to carry out the work authorized under the Federal award.” Further, the DBHDD’s policies 17-202 – Federal Fund Source and Parent Project Code Assignments and 17-203 – Federal Financial Report Preparation, Reconciliation, and Submission prescribe actions that must be taken by staff to ensure that costs are obligated, incurred, and liquidated within the appropriate period as specified in each grant award’s terms and conditions. Condition: Our audit of the SABG program included a review of expenditures with performance period ending dates during the audit period to ensure that the amounts were obligated and liquidated within the allowed time period. The entire population of nine expenditures was tested to ensure that the amounts were obligated and liquidated within the appropriate time period. It was noted that these nine transactions were not liquidated within 90 days of the end of the period of performance as required. Additionally, these expenditures were not identified by the DBHDD and reclassified to an appropriate, subsequent award number as is reflected within the DBHDD’s internal policy. Furthermore, one of these same expenditures was incurred outside of the period of performance. Questioned Costs: Known questioned costs of $236,557 related to the SABG program were identified for expenditures that were paid outside of the allowable liquidation period. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: While the DBHDD had established procedures in place to comply with the period of performance requirements for federal awards, the DBHDD policy governing period of performance does not address the correction of errors in a timely manner as the policy only recommends that corrections be completed during the close-out process for the grant award. Purchase orders associated with federal fund sources were not closed out in a timely manner and led to delays in the overall close-out and correction process for these federal fund sources. Effect: The deficiencies noted in the period of performance process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal period of performance requirements, the DBHDD is at a higher risk of making improper payments and performing inaccurate financial reporting. Recommendation: We recommend that the DBHDD: • Update policy, processes, and procedures associated with period of performance requirements to recommend corrections be made in a timely manner. • Follow currently established grant close-out processes and procedures associated with period of performance requirements. • Incorporate additional oversight, training, and/or staff to aid in the identification of the period of performance to ensure costs are associated with the correct fund source. Views of Responsible Officials: DBHDD agrees with this finding. The Provider Utilization Report was revised in December 2024. The Federal Financial Reporting Group PO closure rights was implemented in January 2025.
2024-029 Improve Controls over Period of Performance Compliance Requirement: Period of Performance Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Number and Title: 93.959 – Block Grants for Prevention and Treatment of Substance Abuse Federal Award Number: B08TI084637 (Year: 2022) Questioned Costs: $236,557 Repeat of Prior Year Finding: 2023-022 Description: The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls to ensure that program costs are obligated within the period of performance and liquidated within the allowed time period. Background Information: The objective of the Substance Abuse Prevention and Treatment Block Grant (SABG) program is to provide funds to states, territories, and one Indian tribe for planning, carrying out and evaluating activities to prevent and treat Substance Abuse (SA) and other related activities as authorized by the statute. Funds associated with the SABG program are administered by the Department of Behavioral Health and Developmental Disabilities (DBHDD). The DBHDD is responsible for becoming familiar with the performance period during which recipients must obligate and liquidate costs for this program. These periods typically align with the federal fiscal year of October 1 through September 30, and payments for costs incurred before a grant award’s beginning date or after the liquidation period are not allowed without the grantor’s prior approval. Criteria: As a recipient of federal awards, the DBHDD is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented, (h) Cost must be incurred during the approved budget period…” Additionally, provisions included in the Uniform Guidance, Section 200.77 state, “Period of performance means the time during which the non-Federal entity may incur new obligations to carry out the work authorized under the Federal award.” Further, the DBHDD’s policies 17-202 – Federal Fund Source and Parent Project Code Assignments and 17-203 – Federal Financial Report Preparation, Reconciliation, and Submission prescribe actions that must be taken by staff to ensure that costs are obligated, incurred, and liquidated within the appropriate period as specified in each grant award’s terms and conditions. Condition: Our audit of the SABG program included a review of expenditures with performance period ending dates during the audit period to ensure that the amounts were obligated and liquidated within the allowed time period. The entire population of nine expenditures was tested to ensure that the amounts were obligated and liquidated within the appropriate time period. It was noted that these nine transactions were not liquidated within 90 days of the end of the period of performance as required. Additionally, these expenditures were not identified by the DBHDD and reclassified to an appropriate, subsequent award number as is reflected within the DBHDD’s internal policy. Furthermore, one of these same expenditures was incurred outside of the period of performance. Questioned Costs: Known questioned costs of $236,557 related to the SABG program were identified for expenditures that were paid outside of the allowable liquidation period. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: While the DBHDD had established procedures in place to comply with the period of performance requirements for federal awards, the DBHDD policy governing period of performance does not address the correction of errors in a timely manner as the policy only recommends that corrections be completed during the close-out process for the grant award. Purchase orders associated with federal fund sources were not closed out in a timely manner and led to delays in the overall close-out and correction process for these federal fund sources. Effect: The deficiencies noted in the period of performance process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal period of performance requirements, the DBHDD is at a higher risk of making improper payments and performing inaccurate financial reporting. Recommendation: We recommend that the DBHDD: • Update policy, processes, and procedures associated with period of performance requirements to recommend corrections be made in a timely manner. • Follow currently established grant close-out processes and procedures associated with period of performance requirements. • Incorporate additional oversight, training, and/or staff to aid in the identification of the period of performance to ensure costs are associated with the correct fund source. Views of Responsible Officials: DBHDD agrees with this finding. The Provider Utilization Report was revised in December 2024. The Federal Financial Reporting Group PO closure rights was implemented in January 2025.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS – 21.027 Federal Awarding Agency: U.S. Department of Treasury (TREAS) Federal Award Fiscal Years: 2021 to 2025 Federal Award Number: SLFRP0136 Administered by: Rhode Island Department of Administration (DOA), Pandemic Recovery Office (PRO) Compliance Requirement: Subrecipient Monitoring; Allowable Costs/Cost Principles SUBRECIPIENT PAYMENTS AND MONITORING Subrecipient monitoring procedures were insufficient to identify and remedy a finding reported by the subrecipient auditor that affected the State Fiscal Recovery Fund. Monitoring procedures were not in place to ensure adequate documentation was obtained regarding the use of payment advances. Background: The Pandemic Recovery Office, as the administering agency of the State Fiscal Recovery Fund, executes memoranda of understanding with the various departments and agencies to conduct projects under the allowable uses of the program. The departments and agencies then often execute subawards within the scope of the specific project. Criteria: 2 CFR §200.332(d) “Requirements for pass-through entities” requires that all pass-through entities must “monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved.” That monitoring must include (1) reviewing financial and performance reports, (2) following up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means, (3) issuing a management decision for audit findings pertaining to the Federal award. Uniform Guidance cost principles dictate that, in order to be allowable under Federal awards, costs must be adequately documented (2 CFR §200.403(g)). Condition: As part of our testing, we performed an independent review of Single Audit Reports submitted to the Federal Audit Clearinghouse (FAC) for each sampled subrecipient. We noted a reported finding linked to the State Fiscal Recovery Fund for the subrecipient audit year ended September 30, 2024; the report was filed with the Clearinghouse on June 24, 2024. The report was not reviewed by the pass-through department, and subsequently, no management decision was issued. In regard to the review of subrecipient reports in the Clearinghouse overall, of the 26 sampled subrecipient entities, 18 had filed Single Audit Reports with the FAC. Of those 18 reports, only 3 were reviewed, documented, and management decisions issued as necessary (15 not reviewed; 83% error rate). Additionally, many of these subrecipients receive funding on a periodic basis. Of 31 subrecipient payments reviewed, 3 were payment advances to subrecipients for which no additional documentation or reconciliation was available to support subrecipient expenditures related to those prepayments. We noted several other subrecipient reimbursement payments that were lacking adequate support for the expenditures being reimbursed. Other documentation maintained by the agency to support monitoring procedures was unable to be provided. Cause: Subrecipient monitoring procedures are not in place to ensure audit reports are reviewed and management decisions are issued, as required by Uniform Guidance. Other monitoring procedures were inadequate to ensure that subrecipients appropriately utilized the funds provided to support program objectives. Effect: Noncompliance with program guidelines and/or federal regulations at the subrecipient level could go undetected and unresolved. Questioned Costs: Undetermined Valid Statistical Sample: Not Applicable RECOMMENDATIONS 2024-044a Enhance internal control procedures to ensure timely review of audit reports and issuance of management decisions in accordance with Uniform Guidance. 2024-044b Strengthen subrecipient compliance by requiring submission of Single Audit Reports to the pass-through department/agency as part of the subaward terms and conditions, prompting the review upon receipt of the reports. 2024-044c Enhance controls to ensure adequate documentation of monitoring procedures performed and support for subrecipient expenditures is obtained. Document any meetings and/or conversations with the subrecipients and discussion had therein.
TEMPORARY ASSISTANCE FOR NEEDY FAMILIES – 93.558 Federal Awarding Agency: U.S. Department of Health and Human Services (HHS), Administration for Children and Families Federal Award Fiscal Years: 2023; 2024 Federal Award Number: 2301RITANF; 2401RITANF Administered by: Rhode Island Department of Human Services (DHS) CCDF CLUSTER – 93.575, 93.596 Federal Awarding Agency: U.S. Department of Health and Human Services (HHS), Administration for Children and Families Federal Award Fiscal Years: 2023; 2024 Federal Award Number: 2301RICCDF; 2401RICCDF Administered by: Rhode Island Department of Human Services (DHS) Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles CONTROLS OVER PAYMENTS TO SUBRECIPIENTS Invoices provided by subrecipients for both TANF and Childcare did not include all underlying documentation to support the amount requested. Background: TANF: A State may contract with charitable, religious, and private organizations to provide administrative and programmatic services and may provide beneficiaries of assistance with certificates, vouchers, or other forms of disbursement that are redeemable with such organization (42 USC 604a(b), 42 USC 604a(k), and 45 CFR §260.34). CCDF: Funds may be used for activities that improve the quality or availability of child care services, consumer education and parental choice (42 USC 9858e). Subrecipients are required to submit periodic reports (FM-1) and supporting documentation to DHS to receive payment. Criteria: Uniform guidance, 2 CFR §200.403, Factors affecting allowability of costs, include that those costs: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the recipient or subrecipient. (d) Be accorded consistent treatment. For example, a cost must not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP). (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. Condition: Subrecipients submit monthly invoices requesting reimbursement for cost categories such as Payroll, Overhead, Consulting, Supplies, and Travel. Eighteen out of 25 TANF contract payments tested were lacking supporting documentation for at least one cost category reported on the FM-1. We also noted 19 out of 25 CCDF contract payments were lacking supporting documentation for payroll costs reported on the FM-1. While DHS had obtained documentation supporting the contractor reimbursement request, the documentation was not adequate to fully evaluate compliance with allowability requirements defined in 2 CFR §200.403. Cause: Lack of adequate review of contractor provided documentation prior to reimbursement. Documentation submitted by subrecipients deemed insufficient to evaluate compliance with 2 CFR §200.403. Effect: Reimbursements for unallowable activities could be made by these federal programs and not be detected. Questioned Costs: Undetermined Valid Statistical Sample: Yes RECOMMENDATIONS 2024-052a Adopt specific policy requirements regarding documentation required from subrecipients in support of reimbursement requests. 2024-052b Obtain adequate and complete documentation to support the allowability of costs claimed under contracts before authorization of payment.
TEMPORARY ASSISTANCE FOR NEEDY FAMILIES – 93.558 Federal Awarding Agency: U.S. Department of Health and Human Services (HHS), Administration for Children and Families Federal Award Fiscal Years: 2023; 2024 Federal Award Number: 2301RITANF; 2401RITANF Administered by: Rhode Island Department of Human Services (DHS) CCDF CLUSTER – 93.575, 93.596 Federal Awarding Agency: U.S. Department of Health and Human Services (HHS), Administration for Children and Families Federal Award Fiscal Years: 2023; 2024 Federal Award Number: 2301RICCDF; 2401RICCDF Administered by: Rhode Island Department of Human Services (DHS) Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles CONTROLS OVER PAYMENTS TO SUBRECIPIENTS Invoices provided by subrecipients for both TANF and Childcare did not include all underlying documentation to support the amount requested. Background: TANF: A State may contract with charitable, religious, and private organizations to provide administrative and programmatic services and may provide beneficiaries of assistance with certificates, vouchers, or other forms of disbursement that are redeemable with such organization (42 USC 604a(b), 42 USC 604a(k), and 45 CFR §260.34). CCDF: Funds may be used for activities that improve the quality or availability of child care services, consumer education and parental choice (42 USC 9858e). Subrecipients are required to submit periodic reports (FM-1) and supporting documentation to DHS to receive payment. Criteria: Uniform guidance, 2 CFR §200.403, Factors affecting allowability of costs, include that those costs: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the recipient or subrecipient. (d) Be accorded consistent treatment. For example, a cost must not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP). (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. Condition: Subrecipients submit monthly invoices requesting reimbursement for cost categories such as Payroll, Overhead, Consulting, Supplies, and Travel. Eighteen out of 25 TANF contract payments tested were lacking supporting documentation for at least one cost category reported on the FM-1. We also noted 19 out of 25 CCDF contract payments were lacking supporting documentation for payroll costs reported on the FM-1. While DHS had obtained documentation supporting the contractor reimbursement request, the documentation was not adequate to fully evaluate compliance with allowability requirements defined in 2 CFR §200.403. Cause: Lack of adequate review of contractor provided documentation prior to reimbursement. Documentation submitted by subrecipients deemed insufficient to evaluate compliance with 2 CFR §200.403. Effect: Reimbursements for unallowable activities could be made by these federal programs and not be detected. Questioned Costs: Undetermined Valid Statistical Sample: Yes RECOMMENDATIONS 2024-052a Adopt specific policy requirements regarding documentation required from subrecipients in support of reimbursement requests. 2024-052b Obtain adequate and complete documentation to support the allowability of costs claimed under contracts before authorization of payment.
TEMPORARY ASSISTANCE FOR NEEDY FAMILIES – 93.558 Federal Awarding Agency: U.S. Department of Health and Human Services (HHS), Administration for Children and Families Federal Award Fiscal Years: 2023; 2024 Federal Award Number: 2301RITANF; 2401RITANF Administered by: Rhode Island Department of Human Services (DHS) CCDF CLUSTER – 93.575, 93.596 Federal Awarding Agency: U.S. Department of Health and Human Services (HHS), Administration for Children and Families Federal Award Fiscal Years: 2023; 2024 Federal Award Number: 2301RICCDF; 2401RICCDF Administered by: Rhode Island Department of Human Services (DHS) Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles CONTROLS OVER PAYMENTS TO SUBRECIPIENTS Invoices provided by subrecipients for both TANF and Childcare did not include all underlying documentation to support the amount requested. Background: TANF: A State may contract with charitable, religious, and private organizations to provide administrative and programmatic services and may provide beneficiaries of assistance with certificates, vouchers, or other forms of disbursement that are redeemable with such organization (42 USC 604a(b), 42 USC 604a(k), and 45 CFR §260.34). CCDF: Funds may be used for activities that improve the quality or availability of child care services, consumer education and parental choice (42 USC 9858e). Subrecipients are required to submit periodic reports (FM-1) and supporting documentation to DHS to receive payment. Criteria: Uniform guidance, 2 CFR §200.403, Factors affecting allowability of costs, include that those costs: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the recipient or subrecipient. (d) Be accorded consistent treatment. For example, a cost must not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP). (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. Condition: Subrecipients submit monthly invoices requesting reimbursement for cost categories such as Payroll, Overhead, Consulting, Supplies, and Travel. Eighteen out of 25 TANF contract payments tested were lacking supporting documentation for at least one cost category reported on the FM-1. We also noted 19 out of 25 CCDF contract payments were lacking supporting documentation for payroll costs reported on the FM-1. While DHS had obtained documentation supporting the contractor reimbursement request, the documentation was not adequate to fully evaluate compliance with allowability requirements defined in 2 CFR §200.403. Cause: Lack of adequate review of contractor provided documentation prior to reimbursement. Documentation submitted by subrecipients deemed insufficient to evaluate compliance with 2 CFR §200.403. Effect: Reimbursements for unallowable activities could be made by these federal programs and not be detected. Questioned Costs: Undetermined Valid Statistical Sample: Yes RECOMMENDATIONS 2024-052a Adopt specific policy requirements regarding documentation required from subrecipients in support of reimbursement requests. 2024-052b Obtain adequate and complete documentation to support the allowability of costs claimed under contracts before authorization of payment.
TEMPORARY ASSISTANCE FOR NEEDY FAMILIES – 93.558 Federal Awarding Agency: U.S. Department of Health and Human Services (HHS), Administration for Children and Families Federal Award Fiscal Years: 2023; 2024 Federal Award Number: 2301RITANF; 2401RITANF Administered by: Rhode Island Department of Human Services (DHS) CCDF CLUSTER – 93.575, 93.596 Federal Awarding Agency: U.S. Department of Health and Human Services (HHS), Administration for Children and Families Federal Award Fiscal Years: 2023; 2024 Federal Award Number: 2301RICCDF; 2401RICCDF Administered by: Rhode Island Department of Human Services (DHS) Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles CONTROLS OVER PAYMENTS TO SUBRECIPIENTS Invoices provided by subrecipients for both TANF and Childcare did not include all underlying documentation to support the amount requested. Background: TANF: A State may contract with charitable, religious, and private organizations to provide administrative and programmatic services and may provide beneficiaries of assistance with certificates, vouchers, or other forms of disbursement that are redeemable with such organization (42 USC 604a(b), 42 USC 604a(k), and 45 CFR §260.34). CCDF: Funds may be used for activities that improve the quality or availability of child care services, consumer education and parental choice (42 USC 9858e). Subrecipients are required to submit periodic reports (FM-1) and supporting documentation to DHS to receive payment. Criteria: Uniform guidance, 2 CFR §200.403, Factors affecting allowability of costs, include that those costs: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the recipient or subrecipient. (d) Be accorded consistent treatment. For example, a cost must not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP). (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. Condition: Subrecipients submit monthly invoices requesting reimbursement for cost categories such as Payroll, Overhead, Consulting, Supplies, and Travel. Eighteen out of 25 TANF contract payments tested were lacking supporting documentation for at least one cost category reported on the FM-1. We also noted 19 out of 25 CCDF contract payments were lacking supporting documentation for payroll costs reported on the FM-1. While DHS had obtained documentation supporting the contractor reimbursement request, the documentation was not adequate to fully evaluate compliance with allowability requirements defined in 2 CFR §200.403. Cause: Lack of adequate review of contractor provided documentation prior to reimbursement. Documentation submitted by subrecipients deemed insufficient to evaluate compliance with 2 CFR §200.403. Effect: Reimbursements for unallowable activities could be made by these federal programs and not be detected. Questioned Costs: Undetermined Valid Statistical Sample: Yes RECOMMENDATIONS 2024-052a Adopt specific policy requirements regarding documentation required from subrecipients in support of reimbursement requests. 2024-052b Obtain adequate and complete documentation to support the allowability of costs claimed under contracts before authorization of payment.
TEMPORARY ASSISTANCE FOR NEEDY FAMILIES – 93.558 Federal Awarding Agency: U.S. Department of Health and Human Services (HHS), Administration for Children and Families Federal Award Fiscal Years: 2023; 2024 Federal Award Number: 2301RITANF; 2401RITANF Administered by: Rhode Island Department of Human Services (DHS) CCDF CLUSTER – 93.575, 93.596 Federal Awarding Agency: U.S. Department of Health and Human Services (HHS), Administration for Children and Families Federal Award Fiscal Years: 2023; 2024 Federal Award Number: 2301RICCDF; 2401RICCDF Administered by: Rhode Island Department of Human Services (DHS) Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles CONTROLS OVER PAYMENTS TO SUBRECIPIENTS Invoices provided by subrecipients for both TANF and Childcare did not include all underlying documentation to support the amount requested. Background: TANF: A State may contract with charitable, religious, and private organizations to provide administrative and programmatic services and may provide beneficiaries of assistance with certificates, vouchers, or other forms of disbursement that are redeemable with such organization (42 USC 604a(b), 42 USC 604a(k), and 45 CFR §260.34). CCDF: Funds may be used for activities that improve the quality or availability of child care services, consumer education and parental choice (42 USC 9858e). Subrecipients are required to submit periodic reports (FM-1) and supporting documentation to DHS to receive payment. Criteria: Uniform guidance, 2 CFR §200.403, Factors affecting allowability of costs, include that those costs: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the recipient or subrecipient. (d) Be accorded consistent treatment. For example, a cost must not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP). (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. Condition: Subrecipients submit monthly invoices requesting reimbursement for cost categories such as Payroll, Overhead, Consulting, Supplies, and Travel. Eighteen out of 25 TANF contract payments tested were lacking supporting documentation for at least one cost category reported on the FM-1. We also noted 19 out of 25 CCDF contract payments were lacking supporting documentation for payroll costs reported on the FM-1. While DHS had obtained documentation supporting the contractor reimbursement request, the documentation was not adequate to fully evaluate compliance with allowability requirements defined in 2 CFR §200.403. Cause: Lack of adequate review of contractor provided documentation prior to reimbursement. Documentation submitted by subrecipients deemed insufficient to evaluate compliance with 2 CFR §200.403. Effect: Reimbursements for unallowable activities could be made by these federal programs and not be detected. Questioned Costs: Undetermined Valid Statistical Sample: Yes RECOMMENDATIONS 2024-052a Adopt specific policy requirements regarding documentation required from subrecipients in support of reimbursement requests. 2024-052b Obtain adequate and complete documentation to support the allowability of costs claimed under contracts before authorization of payment.
DISASTER GRANTS – PUBLIC ASSISTANCE (PRESIDENTIALLY DECLARED DISASTERS) – 97.036 Federal Awarding Agency: U.S. Department of Homeland Security (DHS), Federal Emergency Management Agency (FEMA) Federal Award Fiscal Year: 2020 - 2023 Federal Award Number: 4505DRRIP00000001 Administered by: Rhode Island Emergency Management Agency (RIEMA) Compliance Requirement: Allowable Costs/Cost Principles CONTROLS OVER PROJECT WORKBOOK REIMBURSEMENT SUBMISSIONS Controls over project workbook submissions for reimbursement of eligible costs were not operating effectively to ensure all claimed costs were accurately documented, leading to reimbursement of unallowable costs. Background: RIEMA, as the direct recipient agency of Public Assistance grants provided by FEMA, assists in the facilitation of cost reimbursement claims for the various departments and agencies within the State. Comprehensive workbooks are used to account for the itemized costs being claimed for reimbursement and are included as support to the reimbursement claim made through the FEMA Grants Portal. Criteria: 2 CFR §200.403(g) requires that allowable costs under federal awards be adequately documented. Condition: We selected a sample of 23 federal award drawdowns (cost reimbursement claims) during fiscal 2024, covering 96% of the population across 11 unique projects. Our testing of project workbook submissions found two discrepancies within project 694201 between amounts claimed for reimbursement in the workbooks and amounts recorded in the State accounting system and noted in supporting documentation: • One line item for a claimed invoice appeared to have keyed an additional digit onto the claimed amount in error (questioned costs – $211,751). • Another invoice appeared to transpose the incorrect column to the workbook in three out of four claimed line items (questioned costs – $117,352). Cause: Review of project workbook submissions and supporting documentation was inadequate to identify claimed costs in excess of expenditures incurred by the State. Effect: Reimbursement of costs that were not incurred by the State. Questioned Costs: $329,103 Valid Statistical Sample: Not Applicable RECOMMENDATIONS 2024-067a Improve review procedures to ensure accuracy of workbook reimbursement submissions to FEMA. 2024-067b Credit the federal grantor for unallowable costs that were reimbursed.
DISASTER GRANTS – PUBLIC ASSISTANCE (PRESIDENTIALLY DECLARED DISASTERS) – 97.036 Federal Awarding Agency: U.S. Department of Homeland Security (DHS), Federal Emergency Management Agency (FEMA) Federal Award Fiscal Year: 2020 - 2023 Federal Award Number: 4505DRRIP00000001 Administered by: Rhode Island Emergency Management Agency (RIEMA) Compliance Requirement: Allowable Costs/Cost Principles CONTROLS OVER PROJECT WORKBOOK REIMBURSEMENT SUBMISSIONS Controls over project workbook submissions for reimbursement of eligible costs were not operating effectively to ensure all claimed costs were accurately documented, leading to reimbursement of unallowable costs. Background: RIEMA, as the direct recipient agency of Public Assistance grants provided by FEMA, assists in the facilitation of cost reimbursement claims for the various departments and agencies within the State. Comprehensive workbooks are used to account for the itemized costs being claimed for reimbursement and are included as support to the reimbursement claim made through the FEMA Grants Portal. Criteria: 2 CFR §200.403(g) requires that allowable costs under federal awards be adequately documented. Condition: We selected a sample of 23 federal award drawdowns (cost reimbursement claims) during fiscal 2024, covering 96% of the population across 11 unique projects. Our testing of project workbook submissions found two discrepancies within project 694201 between amounts claimed for reimbursement in the workbooks and amounts recorded in the State accounting system and noted in supporting documentation: • One line item for a claimed invoice appeared to have keyed an additional digit onto the claimed amount in error (questioned costs – $211,751). • Another invoice appeared to transpose the incorrect column to the workbook in three out of four claimed line items (questioned costs – $117,352). Cause: Review of project workbook submissions and supporting documentation was inadequate to identify claimed costs in excess of expenditures incurred by the State. Effect: Reimbursement of costs that were not incurred by the State. Questioned Costs: $329,103 Valid Statistical Sample: Not Applicable RECOMMENDATIONS 2024-067a Improve review procedures to ensure accuracy of workbook reimbursement submissions to FEMA. 2024-067b Credit the federal grantor for unallowable costs that were reimbursed.
2024-028 The Office of Superintendent of Public Instruction did not have adequate internal controls over and did not comply with federal activities allowed and subrecipient monitoring requirements for the Education Stabilization Fund program. Assistance Listing Number and Title: 84.425R COVID-19 Coronavirus Response and Relief Supplemental Appropriations Act, Emergency Assistance to Non-Public Schools (CRRSA EANS) 84.425V COVID-19 American Rescue Plan – Emergency Assistance to Non-Public Schools (ARP EANS) program Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: S425D210015; S425R210012; S425U210015; S425V210012; S425W210049 Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Components: Activities Allowed or Unallowed Allowable Costs/Cost Principles Subrecipient Monitoring Known Questioned Cost Amount: $47,322,280 Prior Year Audit Finding: No Background Beginning in March 2020, Congress set aside the Elementary and Secondary School Emergency Relief (ESSER) Fund to address the effect the COVID-19 pandemic has had, and continues to have, on elementary and secondary schools across the nation. Several rounds of funding were distributed to states under the Education Stabilization Fund (ESF) program with the intent to support public and nonpublic schools. The U.S. Department of Education awarded ESF grants to the Office of Financial Management, which then dispersed funds to the Office of Superintendent of Public Instruction, to pass through to Local Education Agencies (LEAs). The U.S. Department of Education awarded ESF program funds to grantees under multiple subprograms of the ESF. An alphabetic character at the end of the 84.425 Assistance Listing Number was used to delineate the specific subprogram. Each subprogram has its own funding requirements and compliance requirements. The objective of the CRRSA EANS (84.425R) and ARP EANS (84.425V) subprograms is to provide governors with a reservation of funds to provide services or assistance to eligible nonpublic schools to address the impact the COVID-19 pandemic has had, and continues to have, on nonpublic school students and teachers in the state. In fiscal year 2024, the state spent more than $600 million in ESFs federal funding. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The Office did not have adequate internal controls over and did not comply with federal activities allowed and subrecipient monitoring requirements for the ESF program. After the Office distributed EANS funds to nonpublic schools, there was $47,322,281 in ESF program funds remaining that went unobligated. Those funds reverted to the Governor’s office as CRRSA-GEER funds. After the reversion of these funds, the legislature specifically directed the Office to use the resources to fund Transition to Kindergarten programs. During this process, the Office distributed funds to 149 public LEAs but did not issue subawards as required. As a result, it failed to clearly communicate these awards’ terms and conditions to the subrecipients, including the allowable uses of the funds. We consider this internal control deficiency to be a material weakness which led to material noncompliance. This issue was not reported as a finding in the prior audit. Cause of Condition The Office believed the information that was sent out through other means would cover the required elements it needed to communicate to the LEAs. The Office did not know the amount each LEA would receive as amounts were not predetermined, and the Office used an apportionment process to allocate funds to meet the legislative intent. Effect of Condition and Questioned Costs Without issuing subawards to subrecipients to ensure proper accountability and compliance with federal requirements, the Office cannot ensure all funds were used for allowable activities and properly supported. In addition, without a subaward, the Office could not distribute funds to these subrecipients. Therefore, we are questioning the $47,322,280 that it distributed to these LEAs. We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendation We recommend the Office: • Establish effective internal controls to ensure that all federal funds it grants to subrecipients are awarded through a subaward that meets federal requirements • Consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid Office’s Response We distributed these funds through the apportionment process instead of our grants system due to the nature of how the payments were calculated. Our grants system provides a grant award notification via e-mail when the grant is awarded that contains the federal elements required in CFR 200.332. While we did not provide a formal subaward that included all of these elements in one document, we provided most of them using other formal communication, such as through a Gov Delivery e-mail and the School District Accounting Manual. If we use the apportionment process to distribute funds in the future, we will include all of the required federal elements in a separate subaward. Additionally, our communication to school districts included the use of allowable activities for these funds. Therefore, we do not agree that the funds should be questioned as not being allowable or properly supported. Auditor’s Remarks The Office asserts the costs should not be questioned for not being allowable or properly supported. However, without a subaward the Office could not distribute federal funds to these subrecipients, therefore we are questioning the costs consistent with criteria established in 2 CFR 200 (Uniform Guidance). We reaffirm our finding and will review the status of the Office’s corrective action during the next audit. Applicable Laws and Regulations Title 34 U.S. Code of Federal Regulations (CFR) Part 75, Direct grant programs, section 702, Fiscal control and fund accounting procedures, states that a grantee shall use fiscal control and fund accounting procedures that ensure proper disbursement of, and accounting for, Federal funds as required in 2 CFR part 200, subpart D—Post Federal Award Requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 332, Requirements for pass-through entities, requires that every subaward is clearly identified to the subrecipient as a subaward and includes the federal identification elements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 U.S. Code of Federal Regulations (CFR) Part 200.1, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) establishes definitions for questioned costs. Part 200.410 establishes requirements for the collection of unallowable costs. Title 2 CFR Part 200.403, Uniform Guidance, establishes the factors affecting the allowability of costs. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2024-028 The Office of Superintendent of Public Instruction did not have adequate internal controls over and did not comply with federal activities allowed and subrecipient monitoring requirements for the Education Stabilization Fund program. Assistance Listing Number and Title: 84.425R COVID-19 Coronavirus Response and Relief Supplemental Appropriations Act, Emergency Assistance to Non-Public Schools (CRRSA EANS) 84.425V COVID-19 American Rescue Plan – Emergency Assistance to Non-Public Schools (ARP EANS) program Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: S425D210015; S425R210012; S425U210015; S425V210012; S425W210049 Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Components: Activities Allowed or Unallowed Allowable Costs/Cost Principles Subrecipient Monitoring Known Questioned Cost Amount: $47,322,280 Prior Year Audit Finding: No Background Beginning in March 2020, Congress set aside the Elementary and Secondary School Emergency Relief (ESSER) Fund to address the effect the COVID-19 pandemic has had, and continues to have, on elementary and secondary schools across the nation. Several rounds of funding were distributed to states under the Education Stabilization Fund (ESF) program with the intent to support public and nonpublic schools. The U.S. Department of Education awarded ESF grants to the Office of Financial Management, which then dispersed funds to the Office of Superintendent of Public Instruction, to pass through to Local Education Agencies (LEAs). The U.S. Department of Education awarded ESF program funds to grantees under multiple subprograms of the ESF. An alphabetic character at the end of the 84.425 Assistance Listing Number was used to delineate the specific subprogram. Each subprogram has its own funding requirements and compliance requirements. The objective of the CRRSA EANS (84.425R) and ARP EANS (84.425V) subprograms is to provide governors with a reservation of funds to provide services or assistance to eligible nonpublic schools to address the impact the COVID-19 pandemic has had, and continues to have, on nonpublic school students and teachers in the state. In fiscal year 2024, the state spent more than $600 million in ESFs federal funding. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The Office did not have adequate internal controls over and did not comply with federal activities allowed and subrecipient monitoring requirements for the ESF program. After the Office distributed EANS funds to nonpublic schools, there was $47,322,281 in ESF program funds remaining that went unobligated. Those funds reverted to the Governor’s office as CRRSA-GEER funds. After the reversion of these funds, the legislature specifically directed the Office to use the resources to fund Transition to Kindergarten programs. During this process, the Office distributed funds to 149 public LEAs but did not issue subawards as required. As a result, it failed to clearly communicate these awards’ terms and conditions to the subrecipients, including the allowable uses of the funds. We consider this internal control deficiency to be a material weakness which led to material noncompliance. This issue was not reported as a finding in the prior audit. Cause of Condition The Office believed the information that was sent out through other means would cover the required elements it needed to communicate to the LEAs. The Office did not know the amount each LEA would receive as amounts were not predetermined, and the Office used an apportionment process to allocate funds to meet the legislative intent. Effect of Condition and Questioned Costs Without issuing subawards to subrecipients to ensure proper accountability and compliance with federal requirements, the Office cannot ensure all funds were used for allowable activities and properly supported. In addition, without a subaward, the Office could not distribute funds to these subrecipients. Therefore, we are questioning the $47,322,280 that it distributed to these LEAs. We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendation We recommend the Office: • Establish effective internal controls to ensure that all federal funds it grants to subrecipients are awarded through a subaward that meets federal requirements • Consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid Office’s Response We distributed these funds through the apportionment process instead of our grants system due to the nature of how the payments were calculated. Our grants system provides a grant award notification via e-mail when the grant is awarded that contains the federal elements required in CFR 200.332. While we did not provide a formal subaward that included all of these elements in one document, we provided most of them using other formal communication, such as through a Gov Delivery e-mail and the School District Accounting Manual. If we use the apportionment process to distribute funds in the future, we will include all of the required federal elements in a separate subaward. Additionally, our communication to school districts included the use of allowable activities for these funds. Therefore, we do not agree that the funds should be questioned as not being allowable or properly supported. Auditor’s Remarks The Office asserts the costs should not be questioned for not being allowable or properly supported. However, without a subaward the Office could not distribute federal funds to these subrecipients, therefore we are questioning the costs consistent with criteria established in 2 CFR 200 (Uniform Guidance). We reaffirm our finding and will review the status of the Office’s corrective action during the next audit. Applicable Laws and Regulations Title 34 U.S. Code of Federal Regulations (CFR) Part 75, Direct grant programs, section 702, Fiscal control and fund accounting procedures, states that a grantee shall use fiscal control and fund accounting procedures that ensure proper disbursement of, and accounting for, Federal funds as required in 2 CFR part 200, subpart D—Post Federal Award Requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 332, Requirements for pass-through entities, requires that every subaward is clearly identified to the subrecipient as a subaward and includes the federal identification elements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 U.S. Code of Federal Regulations (CFR) Part 200.1, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) establishes definitions for questioned costs. Part 200.410 establishes requirements for the collection of unallowable costs. Title 2 CFR Part 200.403, Uniform Guidance, establishes the factors affecting the allowability of costs. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2024-028 The Office of Superintendent of Public Instruction did not have adequate internal controls over and did not comply with federal activities allowed and subrecipient monitoring requirements for the Education Stabilization Fund program. Assistance Listing Number and Title: 84.425R COVID-19 Coronavirus Response and Relief Supplemental Appropriations Act, Emergency Assistance to Non-Public Schools (CRRSA EANS) 84.425V COVID-19 American Rescue Plan – Emergency Assistance to Non-Public Schools (ARP EANS) program Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: S425D210015; S425R210012; S425U210015; S425V210012; S425W210049 Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Components: Activities Allowed or Unallowed Allowable Costs/Cost Principles Subrecipient Monitoring Known Questioned Cost Amount: $47,322,280 Prior Year Audit Finding: No Background Beginning in March 2020, Congress set aside the Elementary and Secondary School Emergency Relief (ESSER) Fund to address the effect the COVID-19 pandemic has had, and continues to have, on elementary and secondary schools across the nation. Several rounds of funding were distributed to states under the Education Stabilization Fund (ESF) program with the intent to support public and nonpublic schools. The U.S. Department of Education awarded ESF grants to the Office of Financial Management, which then dispersed funds to the Office of Superintendent of Public Instruction, to pass through to Local Education Agencies (LEAs). The U.S. Department of Education awarded ESF program funds to grantees under multiple subprograms of the ESF. An alphabetic character at the end of the 84.425 Assistance Listing Number was used to delineate the specific subprogram. Each subprogram has its own funding requirements and compliance requirements. The objective of the CRRSA EANS (84.425R) and ARP EANS (84.425V) subprograms is to provide governors with a reservation of funds to provide services or assistance to eligible nonpublic schools to address the impact the COVID-19 pandemic has had, and continues to have, on nonpublic school students and teachers in the state. In fiscal year 2024, the state spent more than $600 million in ESFs federal funding. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The Office did not have adequate internal controls over and did not comply with federal activities allowed and subrecipient monitoring requirements for the ESF program. After the Office distributed EANS funds to nonpublic schools, there was $47,322,281 in ESF program funds remaining that went unobligated. Those funds reverted to the Governor’s office as CRRSA-GEER funds. After the reversion of these funds, the legislature specifically directed the Office to use the resources to fund Transition to Kindergarten programs. During this process, the Office distributed funds to 149 public LEAs but did not issue subawards as required. As a result, it failed to clearly communicate these awards’ terms and conditions to the subrecipients, including the allowable uses of the funds. We consider this internal control deficiency to be a material weakness which led to material noncompliance. This issue was not reported as a finding in the prior audit. Cause of Condition The Office believed the information that was sent out through other means would cover the required elements it needed to communicate to the LEAs. The Office did not know the amount each LEA would receive as amounts were not predetermined, and the Office used an apportionment process to allocate funds to meet the legislative intent. Effect of Condition and Questioned Costs Without issuing subawards to subrecipients to ensure proper accountability and compliance with federal requirements, the Office cannot ensure all funds were used for allowable activities and properly supported. In addition, without a subaward, the Office could not distribute funds to these subrecipients. Therefore, we are questioning the $47,322,280 that it distributed to these LEAs. We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendation We recommend the Office: • Establish effective internal controls to ensure that all federal funds it grants to subrecipients are awarded through a subaward that meets federal requirements • Consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid Office’s Response We distributed these funds through the apportionment process instead of our grants system due to the nature of how the payments were calculated. Our grants system provides a grant award notification via e-mail when the grant is awarded that contains the federal elements required in CFR 200.332. While we did not provide a formal subaward that included all of these elements in one document, we provided most of them using other formal communication, such as through a Gov Delivery e-mail and the School District Accounting Manual. If we use the apportionment process to distribute funds in the future, we will include all of the required federal elements in a separate subaward. Additionally, our communication to school districts included the use of allowable activities for these funds. Therefore, we do not agree that the funds should be questioned as not being allowable or properly supported. Auditor’s Remarks The Office asserts the costs should not be questioned for not being allowable or properly supported. However, without a subaward the Office could not distribute federal funds to these subrecipients, therefore we are questioning the costs consistent with criteria established in 2 CFR 200 (Uniform Guidance). We reaffirm our finding and will review the status of the Office’s corrective action during the next audit. Applicable Laws and Regulations Title 34 U.S. Code of Federal Regulations (CFR) Part 75, Direct grant programs, section 702, Fiscal control and fund accounting procedures, states that a grantee shall use fiscal control and fund accounting procedures that ensure proper disbursement of, and accounting for, Federal funds as required in 2 CFR part 200, subpart D—Post Federal Award Requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 332, Requirements for pass-through entities, requires that every subaward is clearly identified to the subrecipient as a subaward and includes the federal identification elements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 U.S. Code of Federal Regulations (CFR) Part 200.1, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) establishes definitions for questioned costs. Part 200.410 establishes requirements for the collection of unallowable costs. Title 2 CFR Part 200.403, Uniform Guidance, establishes the factors affecting the allowability of costs. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2024-028 The Office of Superintendent of Public Instruction did not have adequate internal controls over and did not comply with federal activities allowed and subrecipient monitoring requirements for the Education Stabilization Fund program. Assistance Listing Number and Title: 84.425R COVID-19 Coronavirus Response and Relief Supplemental Appropriations Act, Emergency Assistance to Non-Public Schools (CRRSA EANS) 84.425V COVID-19 American Rescue Plan – Emergency Assistance to Non-Public Schools (ARP EANS) program Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: S425D210015; S425R210012; S425U210015; S425V210012; S425W210049 Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Components: Activities Allowed or Unallowed Allowable Costs/Cost Principles Subrecipient Monitoring Known Questioned Cost Amount: $47,322,280 Prior Year Audit Finding: No Background Beginning in March 2020, Congress set aside the Elementary and Secondary School Emergency Relief (ESSER) Fund to address the effect the COVID-19 pandemic has had, and continues to have, on elementary and secondary schools across the nation. Several rounds of funding were distributed to states under the Education Stabilization Fund (ESF) program with the intent to support public and nonpublic schools. The U.S. Department of Education awarded ESF grants to the Office of Financial Management, which then dispersed funds to the Office of Superintendent of Public Instruction, to pass through to Local Education Agencies (LEAs). The U.S. Department of Education awarded ESF program funds to grantees under multiple subprograms of the ESF. An alphabetic character at the end of the 84.425 Assistance Listing Number was used to delineate the specific subprogram. Each subprogram has its own funding requirements and compliance requirements. The objective of the CRRSA EANS (84.425R) and ARP EANS (84.425V) subprograms is to provide governors with a reservation of funds to provide services or assistance to eligible nonpublic schools to address the impact the COVID-19 pandemic has had, and continues to have, on nonpublic school students and teachers in the state. In fiscal year 2024, the state spent more than $600 million in ESFs federal funding. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The Office did not have adequate internal controls over and did not comply with federal activities allowed and subrecipient monitoring requirements for the ESF program. After the Office distributed EANS funds to nonpublic schools, there was $47,322,281 in ESF program funds remaining that went unobligated. Those funds reverted to the Governor’s office as CRRSA-GEER funds. After the reversion of these funds, the legislature specifically directed the Office to use the resources to fund Transition to Kindergarten programs. During this process, the Office distributed funds to 149 public LEAs but did not issue subawards as required. As a result, it failed to clearly communicate these awards’ terms and conditions to the subrecipients, including the allowable uses of the funds. We consider this internal control deficiency to be a material weakness which led to material noncompliance. This issue was not reported as a finding in the prior audit. Cause of Condition The Office believed the information that was sent out through other means would cover the required elements it needed to communicate to the LEAs. The Office did not know the amount each LEA would receive as amounts were not predetermined, and the Office used an apportionment process to allocate funds to meet the legislative intent. Effect of Condition and Questioned Costs Without issuing subawards to subrecipients to ensure proper accountability and compliance with federal requirements, the Office cannot ensure all funds were used for allowable activities and properly supported. In addition, without a subaward, the Office could not distribute funds to these subrecipients. Therefore, we are questioning the $47,322,280 that it distributed to these LEAs. We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendation We recommend the Office: • Establish effective internal controls to ensure that all federal funds it grants to subrecipients are awarded through a subaward that meets federal requirements • Consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid Office’s Response We distributed these funds through the apportionment process instead of our grants system due to the nature of how the payments were calculated. Our grants system provides a grant award notification via e-mail when the grant is awarded that contains the federal elements required in CFR 200.332. While we did not provide a formal subaward that included all of these elements in one document, we provided most of them using other formal communication, such as through a Gov Delivery e-mail and the School District Accounting Manual. If we use the apportionment process to distribute funds in the future, we will include all of the required federal elements in a separate subaward. Additionally, our communication to school districts included the use of allowable activities for these funds. Therefore, we do not agree that the funds should be questioned as not being allowable or properly supported. Auditor’s Remarks The Office asserts the costs should not be questioned for not being allowable or properly supported. However, without a subaward the Office could not distribute federal funds to these subrecipients, therefore we are questioning the costs consistent with criteria established in 2 CFR 200 (Uniform Guidance). We reaffirm our finding and will review the status of the Office’s corrective action during the next audit. Applicable Laws and Regulations Title 34 U.S. Code of Federal Regulations (CFR) Part 75, Direct grant programs, section 702, Fiscal control and fund accounting procedures, states that a grantee shall use fiscal control and fund accounting procedures that ensure proper disbursement of, and accounting for, Federal funds as required in 2 CFR part 200, subpart D—Post Federal Award Requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 332, Requirements for pass-through entities, requires that every subaward is clearly identified to the subrecipient as a subaward and includes the federal identification elements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 U.S. Code of Federal Regulations (CFR) Part 200.1, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) establishes definitions for questioned costs. Part 200.410 establishes requirements for the collection of unallowable costs. Title 2 CFR Part 200.403, Uniform Guidance, establishes the factors affecting the allowability of costs. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2024-028 The Office of Superintendent of Public Instruction did not have adequate internal controls over and did not comply with federal activities allowed and subrecipient monitoring requirements for the Education Stabilization Fund program. Assistance Listing Number and Title: 84.425R COVID-19 Coronavirus Response and Relief Supplemental Appropriations Act, Emergency Assistance to Non-Public Schools (CRRSA EANS) 84.425V COVID-19 American Rescue Plan – Emergency Assistance to Non-Public Schools (ARP EANS) program Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: S425D210015; S425R210012; S425U210015; S425V210012; S425W210049 Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Components: Activities Allowed or Unallowed Allowable Costs/Cost Principles Subrecipient Monitoring Known Questioned Cost Amount: $47,322,280 Prior Year Audit Finding: No Background Beginning in March 2020, Congress set aside the Elementary and Secondary School Emergency Relief (ESSER) Fund to address the effect the COVID-19 pandemic has had, and continues to have, on elementary and secondary schools across the nation. Several rounds of funding were distributed to states under the Education Stabilization Fund (ESF) program with the intent to support public and nonpublic schools. The U.S. Department of Education awarded ESF grants to the Office of Financial Management, which then dispersed funds to the Office of Superintendent of Public Instruction, to pass through to Local Education Agencies (LEAs). The U.S. Department of Education awarded ESF program funds to grantees under multiple subprograms of the ESF. An alphabetic character at the end of the 84.425 Assistance Listing Number was used to delineate the specific subprogram. Each subprogram has its own funding requirements and compliance requirements. The objective of the CRRSA EANS (84.425R) and ARP EANS (84.425V) subprograms is to provide governors with a reservation of funds to provide services or assistance to eligible nonpublic schools to address the impact the COVID-19 pandemic has had, and continues to have, on nonpublic school students and teachers in the state. In fiscal year 2024, the state spent more than $600 million in ESFs federal funding. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The Office did not have adequate internal controls over and did not comply with federal activities allowed and subrecipient monitoring requirements for the ESF program. After the Office distributed EANS funds to nonpublic schools, there was $47,322,281 in ESF program funds remaining that went unobligated. Those funds reverted to the Governor’s office as CRRSA-GEER funds. After the reversion of these funds, the legislature specifically directed the Office to use the resources to fund Transition to Kindergarten programs. During this process, the Office distributed funds to 149 public LEAs but did not issue subawards as required. As a result, it failed to clearly communicate these awards’ terms and conditions to the subrecipients, including the allowable uses of the funds. We consider this internal control deficiency to be a material weakness which led to material noncompliance. This issue was not reported as a finding in the prior audit. Cause of Condition The Office believed the information that was sent out through other means would cover the required elements it needed to communicate to the LEAs. The Office did not know the amount each LEA would receive as amounts were not predetermined, and the Office used an apportionment process to allocate funds to meet the legislative intent. Effect of Condition and Questioned Costs Without issuing subawards to subrecipients to ensure proper accountability and compliance with federal requirements, the Office cannot ensure all funds were used for allowable activities and properly supported. In addition, without a subaward, the Office could not distribute funds to these subrecipients. Therefore, we are questioning the $47,322,280 that it distributed to these LEAs. We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendation We recommend the Office: • Establish effective internal controls to ensure that all federal funds it grants to subrecipients are awarded through a subaward that meets federal requirements • Consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid Office’s Response We distributed these funds through the apportionment process instead of our grants system due to the nature of how the payments were calculated. Our grants system provides a grant award notification via e-mail when the grant is awarded that contains the federal elements required in CFR 200.332. While we did not provide a formal subaward that included all of these elements in one document, we provided most of them using other formal communication, such as through a Gov Delivery e-mail and the School District Accounting Manual. If we use the apportionment process to distribute funds in the future, we will include all of the required federal elements in a separate subaward. Additionally, our communication to school districts included the use of allowable activities for these funds. Therefore, we do not agree that the funds should be questioned as not being allowable or properly supported. Auditor’s Remarks The Office asserts the costs should not be questioned for not being allowable or properly supported. However, without a subaward the Office could not distribute federal funds to these subrecipients, therefore we are questioning the costs consistent with criteria established in 2 CFR 200 (Uniform Guidance). We reaffirm our finding and will review the status of the Office’s corrective action during the next audit. Applicable Laws and Regulations Title 34 U.S. Code of Federal Regulations (CFR) Part 75, Direct grant programs, section 702, Fiscal control and fund accounting procedures, states that a grantee shall use fiscal control and fund accounting procedures that ensure proper disbursement of, and accounting for, Federal funds as required in 2 CFR part 200, subpart D—Post Federal Award Requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 332, Requirements for pass-through entities, requires that every subaward is clearly identified to the subrecipient as a subaward and includes the federal identification elements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 U.S. Code of Federal Regulations (CFR) Part 200.1, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) establishes definitions for questioned costs. Part 200.410 establishes requirements for the collection of unallowable costs. Title 2 CFR Part 200.403, Uniform Guidance, establishes the factors affecting the allowability of costs. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2024-028 The Office of Superintendent of Public Instruction did not have adequate internal controls over and did not comply with federal activities allowed and subrecipient monitoring requirements for the Education Stabilization Fund program. Assistance Listing Number and Title: 84.425R COVID-19 Coronavirus Response and Relief Supplemental Appropriations Act, Emergency Assistance to Non-Public Schools (CRRSA EANS) 84.425V COVID-19 American Rescue Plan – Emergency Assistance to Non-Public Schools (ARP EANS) program Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: S425D210015; S425R210012; S425U210015; S425V210012; S425W210049 Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Components: Activities Allowed or Unallowed Allowable Costs/Cost Principles Subrecipient Monitoring Known Questioned Cost Amount: $47,322,280 Prior Year Audit Finding: No Background Beginning in March 2020, Congress set aside the Elementary and Secondary School Emergency Relief (ESSER) Fund to address the effect the COVID-19 pandemic has had, and continues to have, on elementary and secondary schools across the nation. Several rounds of funding were distributed to states under the Education Stabilization Fund (ESF) program with the intent to support public and nonpublic schools. The U.S. Department of Education awarded ESF grants to the Office of Financial Management, which then dispersed funds to the Office of Superintendent of Public Instruction, to pass through to Local Education Agencies (LEAs). The U.S. Department of Education awarded ESF program funds to grantees under multiple subprograms of the ESF. An alphabetic character at the end of the 84.425 Assistance Listing Number was used to delineate the specific subprogram. Each subprogram has its own funding requirements and compliance requirements. The objective of the CRRSA EANS (84.425R) and ARP EANS (84.425V) subprograms is to provide governors with a reservation of funds to provide services or assistance to eligible nonpublic schools to address the impact the COVID-19 pandemic has had, and continues to have, on nonpublic school students and teachers in the state. In fiscal year 2024, the state spent more than $600 million in ESFs federal funding. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The Office did not have adequate internal controls over and did not comply with federal activities allowed and subrecipient monitoring requirements for the ESF program. After the Office distributed EANS funds to nonpublic schools, there was $47,322,281 in ESF program funds remaining that went unobligated. Those funds reverted to the Governor’s office as CRRSA-GEER funds. After the reversion of these funds, the legislature specifically directed the Office to use the resources to fund Transition to Kindergarten programs. During this process, the Office distributed funds to 149 public LEAs but did not issue subawards as required. As a result, it failed to clearly communicate these awards’ terms and conditions to the subrecipients, including the allowable uses of the funds. We consider this internal control deficiency to be a material weakness which led to material noncompliance. This issue was not reported as a finding in the prior audit. Cause of Condition The Office believed the information that was sent out through other means would cover the required elements it needed to communicate to the LEAs. The Office did not know the amount each LEA would receive as amounts were not predetermined, and the Office used an apportionment process to allocate funds to meet the legislative intent. Effect of Condition and Questioned Costs Without issuing subawards to subrecipients to ensure proper accountability and compliance with federal requirements, the Office cannot ensure all funds were used for allowable activities and properly supported. In addition, without a subaward, the Office could not distribute funds to these subrecipients. Therefore, we are questioning the $47,322,280 that it distributed to these LEAs. We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendation We recommend the Office: • Establish effective internal controls to ensure that all federal funds it grants to subrecipients are awarded through a subaward that meets federal requirements • Consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid Office’s Response We distributed these funds through the apportionment process instead of our grants system due to the nature of how the payments were calculated. Our grants system provides a grant award notification via e-mail when the grant is awarded that contains the federal elements required in CFR 200.332. While we did not provide a formal subaward that included all of these elements in one document, we provided most of them using other formal communication, such as through a Gov Delivery e-mail and the School District Accounting Manual. If we use the apportionment process to distribute funds in the future, we will include all of the required federal elements in a separate subaward. Additionally, our communication to school districts included the use of allowable activities for these funds. Therefore, we do not agree that the funds should be questioned as not being allowable or properly supported. Auditor’s Remarks The Office asserts the costs should not be questioned for not being allowable or properly supported. However, without a subaward the Office could not distribute federal funds to these subrecipients, therefore we are questioning the costs consistent with criteria established in 2 CFR 200 (Uniform Guidance). We reaffirm our finding and will review the status of the Office’s corrective action during the next audit. Applicable Laws and Regulations Title 34 U.S. Code of Federal Regulations (CFR) Part 75, Direct grant programs, section 702, Fiscal control and fund accounting procedures, states that a grantee shall use fiscal control and fund accounting procedures that ensure proper disbursement of, and accounting for, Federal funds as required in 2 CFR part 200, subpart D—Post Federal Award Requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 332, Requirements for pass-through entities, requires that every subaward is clearly identified to the subrecipient as a subaward and includes the federal identification elements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 U.S. Code of Federal Regulations (CFR) Part 200.1, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) establishes definitions for questioned costs. Part 200.410 establishes requirements for the collection of unallowable costs. Title 2 CFR Part 200.403, Uniform Guidance, establishes the factors affecting the allowability of costs. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2024-028 The Office of Superintendent of Public Instruction did not have adequate internal controls over and did not comply with federal activities allowed and subrecipient monitoring requirements for the Education Stabilization Fund program. Assistance Listing Number and Title: 84.425R COVID-19 Coronavirus Response and Relief Supplemental Appropriations Act, Emergency Assistance to Non-Public Schools (CRRSA EANS) 84.425V COVID-19 American Rescue Plan – Emergency Assistance to Non-Public Schools (ARP EANS) program Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: S425D210015; S425R210012; S425U210015; S425V210012; S425W210049 Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Components: Activities Allowed or Unallowed Allowable Costs/Cost Principles Subrecipient Monitoring Known Questioned Cost Amount: $47,322,280 Prior Year Audit Finding: No Background Beginning in March 2020, Congress set aside the Elementary and Secondary School Emergency Relief (ESSER) Fund to address the effect the COVID-19 pandemic has had, and continues to have, on elementary and secondary schools across the nation. Several rounds of funding were distributed to states under the Education Stabilization Fund (ESF) program with the intent to support public and nonpublic schools. The U.S. Department of Education awarded ESF grants to the Office of Financial Management, which then dispersed funds to the Office of Superintendent of Public Instruction, to pass through to Local Education Agencies (LEAs). The U.S. Department of Education awarded ESF program funds to grantees under multiple subprograms of the ESF. An alphabetic character at the end of the 84.425 Assistance Listing Number was used to delineate the specific subprogram. Each subprogram has its own funding requirements and compliance requirements. The objective of the CRRSA EANS (84.425R) and ARP EANS (84.425V) subprograms is to provide governors with a reservation of funds to provide services or assistance to eligible nonpublic schools to address the impact the COVID-19 pandemic has had, and continues to have, on nonpublic school students and teachers in the state. In fiscal year 2024, the state spent more than $600 million in ESFs federal funding. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The Office did not have adequate internal controls over and did not comply with federal activities allowed and subrecipient monitoring requirements for the ESF program. After the Office distributed EANS funds to nonpublic schools, there was $47,322,281 in ESF program funds remaining that went unobligated. Those funds reverted to the Governor’s office as CRRSA-GEER funds. After the reversion of these funds, the legislature specifically directed the Office to use the resources to fund Transition to Kindergarten programs. During this process, the Office distributed funds to 149 public LEAs but did not issue subawards as required. As a result, it failed to clearly communicate these awards’ terms and conditions to the subrecipients, including the allowable uses of the funds. We consider this internal control deficiency to be a material weakness which led to material noncompliance. This issue was not reported as a finding in the prior audit. Cause of Condition The Office believed the information that was sent out through other means would cover the required elements it needed to communicate to the LEAs. The Office did not know the amount each LEA would receive as amounts were not predetermined, and the Office used an apportionment process to allocate funds to meet the legislative intent. Effect of Condition and Questioned Costs Without issuing subawards to subrecipients to ensure proper accountability and compliance with federal requirements, the Office cannot ensure all funds were used for allowable activities and properly supported. In addition, without a subaward, the Office could not distribute funds to these subrecipients. Therefore, we are questioning the $47,322,280 that it distributed to these LEAs. We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendation We recommend the Office: • Establish effective internal controls to ensure that all federal funds it grants to subrecipients are awarded through a subaward that meets federal requirements • Consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid Office’s Response We distributed these funds through the apportionment process instead of our grants system due to the nature of how the payments were calculated. Our grants system provides a grant award notification via e-mail when the grant is awarded that contains the federal elements required in CFR 200.332. While we did not provide a formal subaward that included all of these elements in one document, we provided most of them using other formal communication, such as through a Gov Delivery e-mail and the School District Accounting Manual. If we use the apportionment process to distribute funds in the future, we will include all of the required federal elements in a separate subaward. Additionally, our communication to school districts included the use of allowable activities for these funds. Therefore, we do not agree that the funds should be questioned as not being allowable or properly supported. Auditor’s Remarks The Office asserts the costs should not be questioned for not being allowable or properly supported. However, without a subaward the Office could not distribute federal funds to these subrecipients, therefore we are questioning the costs consistent with criteria established in 2 CFR 200 (Uniform Guidance). We reaffirm our finding and will review the status of the Office’s corrective action during the next audit. Applicable Laws and Regulations Title 34 U.S. Code of Federal Regulations (CFR) Part 75, Direct grant programs, section 702, Fiscal control and fund accounting procedures, states that a grantee shall use fiscal control and fund accounting procedures that ensure proper disbursement of, and accounting for, Federal funds as required in 2 CFR part 200, subpart D—Post Federal Award Requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 332, Requirements for pass-through entities, requires that every subaward is clearly identified to the subrecipient as a subaward and includes the federal identification elements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 U.S. Code of Federal Regulations (CFR) Part 200.1, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) establishes definitions for questioned costs. Part 200.410 establishes requirements for the collection of unallowable costs. Title 2 CFR Part 200.403, Uniform Guidance, establishes the factors affecting the allowability of costs. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2024-028 The Office of Superintendent of Public Instruction did not have adequate internal controls over and did not comply with federal activities allowed and subrecipient monitoring requirements for the Education Stabilization Fund program. Assistance Listing Number and Title: 84.425R COVID-19 Coronavirus Response and Relief Supplemental Appropriations Act, Emergency Assistance to Non-Public Schools (CRRSA EANS) 84.425V COVID-19 American Rescue Plan – Emergency Assistance to Non-Public Schools (ARP EANS) program Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: S425D210015; S425R210012; S425U210015; S425V210012; S425W210049 Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Components: Activities Allowed or Unallowed Allowable Costs/Cost Principles Subrecipient Monitoring Known Questioned Cost Amount: $47,322,280 Prior Year Audit Finding: No Background Beginning in March 2020, Congress set aside the Elementary and Secondary School Emergency Relief (ESSER) Fund to address the effect the COVID-19 pandemic has had, and continues to have, on elementary and secondary schools across the nation. Several rounds of funding were distributed to states under the Education Stabilization Fund (ESF) program with the intent to support public and nonpublic schools. The U.S. Department of Education awarded ESF grants to the Office of Financial Management, which then dispersed funds to the Office of Superintendent of Public Instruction, to pass through to Local Education Agencies (LEAs). The U.S. Department of Education awarded ESF program funds to grantees under multiple subprograms of the ESF. An alphabetic character at the end of the 84.425 Assistance Listing Number was used to delineate the specific subprogram. Each subprogram has its own funding requirements and compliance requirements. The objective of the CRRSA EANS (84.425R) and ARP EANS (84.425V) subprograms is to provide governors with a reservation of funds to provide services or assistance to eligible nonpublic schools to address the impact the COVID-19 pandemic has had, and continues to have, on nonpublic school students and teachers in the state. In fiscal year 2024, the state spent more than $600 million in ESFs federal funding. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The Office did not have adequate internal controls over and did not comply with federal activities allowed and subrecipient monitoring requirements for the ESF program. After the Office distributed EANS funds to nonpublic schools, there was $47,322,281 in ESF program funds remaining that went unobligated. Those funds reverted to the Governor’s office as CRRSA-GEER funds. After the reversion of these funds, the legislature specifically directed the Office to use the resources to fund Transition to Kindergarten programs. During this process, the Office distributed funds to 149 public LEAs but did not issue subawards as required. As a result, it failed to clearly communicate these awards’ terms and conditions to the subrecipients, including the allowable uses of the funds. We consider this internal control deficiency to be a material weakness which led to material noncompliance. This issue was not reported as a finding in the prior audit. Cause of Condition The Office believed the information that was sent out through other means would cover the required elements it needed to communicate to the LEAs. The Office did not know the amount each LEA would receive as amounts were not predetermined, and the Office used an apportionment process to allocate funds to meet the legislative intent. Effect of Condition and Questioned Costs Without issuing subawards to subrecipients to ensure proper accountability and compliance with federal requirements, the Office cannot ensure all funds were used for allowable activities and properly supported. In addition, without a subaward, the Office could not distribute funds to these subrecipients. Therefore, we are questioning the $47,322,280 that it distributed to these LEAs. We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendation We recommend the Office: • Establish effective internal controls to ensure that all federal funds it grants to subrecipients are awarded through a subaward that meets federal requirements • Consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid Office’s Response We distributed these funds through the apportionment process instead of our grants system due to the nature of how the payments were calculated. Our grants system provides a grant award notification via e-mail when the grant is awarded that contains the federal elements required in CFR 200.332. While we did not provide a formal subaward that included all of these elements in one document, we provided most of them using other formal communication, such as through a Gov Delivery e-mail and the School District Accounting Manual. If we use the apportionment process to distribute funds in the future, we will include all of the required federal elements in a separate subaward. Additionally, our communication to school districts included the use of allowable activities for these funds. Therefore, we do not agree that the funds should be questioned as not being allowable or properly supported. Auditor’s Remarks The Office asserts the costs should not be questioned for not being allowable or properly supported. However, without a subaward the Office could not distribute federal funds to these subrecipients, therefore we are questioning the costs consistent with criteria established in 2 CFR 200 (Uniform Guidance). We reaffirm our finding and will review the status of the Office’s corrective action during the next audit. Applicable Laws and Regulations Title 34 U.S. Code of Federal Regulations (CFR) Part 75, Direct grant programs, section 702, Fiscal control and fund accounting procedures, states that a grantee shall use fiscal control and fund accounting procedures that ensure proper disbursement of, and accounting for, Federal funds as required in 2 CFR part 200, subpart D—Post Federal Award Requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 332, Requirements for pass-through entities, requires that every subaward is clearly identified to the subrecipient as a subaward and includes the federal identification elements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 U.S. Code of Federal Regulations (CFR) Part 200.1, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) establishes definitions for questioned costs. Part 200.410 establishes requirements for the collection of unallowable costs. Title 2 CFR Part 200.403, Uniform Guidance, establishes the factors affecting the allowability of costs. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.