Assistance Listing: 84.351 C.A.R.E. Condition: Cleveland Play House does not have adequate documentation to support all charges to the federal program. Of the 40 payroll charges tested, 2 did not have adequate documentation. Criteria: 2 CFR 200.430(i) states that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. 2 CFR 200.403(g) states that for costs to be allowed under Federal awards, they must be adequately documented. Cause: Due to significant organizational turnover in fiscal years 2022, 2023, and 2024, certain individuals did not have expense reimbursements requested based on actual hours worked on grant related activities. Although management maintained authorized time cards during each pay period, expense reimbursements were requested in a greater amount than hours actually worked on the grant. Effect: Cleveland Play House did not have adequate documentation to support all costs charged to the federal program. In addition, an ineffective financial management system could lead to incorrect identification of costs charged to a federal program and an inability to substantiate that doublecharging did not occur. Repeat finding: This is a repeat finding, refer to 2022-002 and 2023-002. Questioned costs: Payroll: $3,846 Recommendation: We continue to recommend that Cleveland Play House develop a policy and procedure to ensure that all hours submitted for federal reimbursement are supported with timesheets that are approved by a supervisor. Views of responsible officials: Management concurs with this recommendation. See also corrective action plan.
Finding 2024-007 - Material Weakness: Allowable Costs and Activities – Compliance and Control Finding ALN 84.116 – Fund for the Improvement of Postsecondary Education Federal Agency: U.S. Department of Education Federal Award Numbers: P116Z230322 and P116Z220015 Pass-Through Entity: None Criteria Or Specific Requirement: 2 CFR section 200.403 requires adequate documentation for allowable activities and costs and 2 CFR section 200.403(e) requires charges to the grant to be in accordance with generally accepted accounting principles (GAAP). Uniform Guidance requires that controls over compliance be properly designed, in place and operating effectively to ensure compliance with the requirements of the federal programs. Condition: We noted through procedures performed that costs were not supported by adequate documentation and costs were not charged to the grant in accordance with GAAP. Internal controls designed for this federal program did not detect these errors. Cause: Controls over compliance put in place by management were not operating effectively as it relates to these compliance requirements. Effect: The possibility exists that noncompliance with federal requirements could go undetected without proper controls over compliance. Questioned Costs: $34,890 of known questioned costs were identified in our testing sample Likely questioned costs exceed $25,000. Context: In a sample of 40 individual costs charged to the grant, the following occurred: • A charge of $3,000 was recorded against the grant but was supported by documentation totaling only $621. • A charge of $32,511 was recorded as an expense to the grant, although the amount related to prepaid costs for future services or benefits that had not yet been incurred. • In addition, 31 individual costs in the sample lacked appropriate review and approval for the charges applied to the grant. Identification As A Repeat Finding: Not applicable Recommendation: We recommend that management review the internal controls over allowable costs and activities to ensure the control is designed to ensure the correct amount of salaries are charged to the grant based on the approved time and effort certifications. Views Of Responsible Officials: All expenses must be supported by documentation and comply with Generally Accepted Accounting Principles (GAAP) standards. A pre-review checklist will be required for all charges against FIPSE grants. Prepaid items must be recorded in the prepaid ledger and amortized appropriately. Documentation will be retained in alignment with the University Record Retention policy. Management will implement a formal review and approval process to ensure that all allowable costs are verified for compliance with applicable regulations and approved by designated personnel prior to reimbursement or payment.
Finding 2024-007 - Material Weakness: Allowable Costs and Activities – Compliance and Control Finding ALN 84.116 – Fund for the Improvement of Postsecondary Education Federal Agency: U.S. Department of Education Federal Award Numbers: P116Z230322 and P116Z220015 Pass-Through Entity: None Criteria Or Specific Requirement: 2 CFR section 200.403 requires adequate documentation for allowable activities and costs and 2 CFR section 200.403(e) requires charges to the grant to be in accordance with generally accepted accounting principles (GAAP). Uniform Guidance requires that controls over compliance be properly designed, in place and operating effectively to ensure compliance with the requirements of the federal programs. Condition: We noted through procedures performed that costs were not supported by adequate documentation and costs were not charged to the grant in accordance with GAAP. Internal controls designed for this federal program did not detect these errors. Cause: Controls over compliance put in place by management were not operating effectively as it relates to these compliance requirements. Effect: The possibility exists that noncompliance with federal requirements could go undetected without proper controls over compliance. Questioned Costs: $34,890 of known questioned costs were identified in our testing sample Likely questioned costs exceed $25,000. Context: In a sample of 40 individual costs charged to the grant, the following occurred: • A charge of $3,000 was recorded against the grant but was supported by documentation totaling only $621. • A charge of $32,511 was recorded as an expense to the grant, although the amount related to prepaid costs for future services or benefits that had not yet been incurred. • In addition, 31 individual costs in the sample lacked appropriate review and approval for the charges applied to the grant. Identification As A Repeat Finding: Not applicable Recommendation: We recommend that management review the internal controls over allowable costs and activities to ensure the control is designed to ensure the correct amount of salaries are charged to the grant based on the approved time and effort certifications. Views Of Responsible Officials: All expenses must be supported by documentation and comply with Generally Accepted Accounting Principles (GAAP) standards. A pre-review checklist will be required for all charges against FIPSE grants. Prepaid items must be recorded in the prepaid ledger and amortized appropriately. Documentation will be retained in alignment with the University Record Retention policy. Management will implement a formal review and approval process to ensure that all allowable costs are verified for compliance with applicable regulations and approved by designated personnel prior to reimbursement or payment.
Finding No. 2024-034 Federal Awarding Agency: U.S. Department of Defense (USDOD) Impact: Significant Deficiency, Noncompliance AL Number and Title: 12.401 National Guard Military Operations and Maintenance Projects (NGMOMP) Federal Award Number: W91ZRU-20-2-1001, W91ZRU-21-2-1001, W91ZRU-22-2-1001, W91ZRU-23-2-1001, W91ZRU-24-2-1001 Applicable Compliance Requirement: Matching, Level of Effort, Earmarking Condition: The State’s accounting system was not updated for changes to the FFY 24 federally certified Facilities Inventory and Support Plan (FISP), which is used to allocate costs to the NGMOMP program. Context: The FISP is USDOD’s federal registry of real property inventory and includes detailed information of all federal/state owned and state operated Army National Guard (ARNG) facilities within the state. All ARNG facilities are owned by, leased for, or licensed to the State. As a result, the State operates and maintains all ARNG facilities. The FISP identifies the level of federal reimbursement authorized for each real property facility through support codes. National Guard Regulations (NGR) Pamphlet 420-10, Chapter 7, provides the support codes with the corresponding federal funding level percentage (i.e. 100 percent, 75 percent, 50 percent, or no support provided). The FISP is annually updated and certified to identify new facilities, changes in funding support, or facilities no longer supported by USDOD. The certified FISP is provided to DMVA management for tracking of ARNG facilities and determining the appropriate funding levels. DMVA management tracks the facilities using location codes in the State’s accounting system. The appropriate federal and State funding level is assigned to each location code. In FY 24 there were expenditures for 139 facility location codes. The audit reviewed all 139 facilities and found 11 (eight percent) had expenditures allocated at a higher federal rate than authorized in the FISP and one of the 11 locations was not listed on the FISP. Cause: DMVA’s procedures were insufficient to ensure the FISP was reviewed annually to identify changes in the facility support codes that require coding changes in the State’s accounting system. DMVA management also applied a higher reimbursement rate based on misinterpretation of multi-use facilities. Criteria: Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Title 2 CFR 200.403 requires costs to be necessary, reasonable, and allocable to the federal award, and to conform to any limitations or exclusions in the federal awards as to types or amount of cost items. NGR 5-1 Section 5-4, dated May 28, 2010, states that when there is an identified cost share in an agreement, the grantor shall reimburse the grantee only for the grantor’s percentage share of the total allowable costs. NGR 420-10, Policy and Guidance for ARNG Facilities Program, dated September 2019, states the rate of reimbursement to the State for all authorized charges shall be based on the FISP support codes for the facility generating the expenditure. Effect: Failing to update the State’s accounting system resulted in DMVA management overcharging expenditures to the federal program. Noncompliance with federal regulations may result in the federal awarding agency imposing additional conditions or taking corrective action, including withholding/terminating funding. Questioned Costs: AL 12.401: $88,984 Recommendation: DMVA’s Division of Administrative Services (DAS) director and the Army Guard Facilities Maintenance director should strengthen procedures to ensure the State’s accounting system is updated annually based on revisions to the certified FISP and ensure the proper codes are used for multi-use facilities. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-036 Federal Awarding Agency: U.S. Department of Homeland Security (USDHS) Impact: Significant Deficiency, Noncompliance AL Number and Title: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) – COVID-19 Federal Award Number: 4413DRAKP00000001, 4533DRAKP00000001, 4585DRAKP00000001, 4646DRAKP00000001, 4667DRAKP00000001 Applicable Compliance Requirement: Allowable Costs/Cost Principles Condition: A review of 25 FY 24 Disaster Grants payments found that 14 payments (56 percent) lacked required supporting documentation. Specifically, six payments lacked pay policy and/or fringe benefit calculations and eight payments lacked procurement contracts that included all federal requirements. Additionally, two of the eight payments lacked a complete or signed contract on file. Context: The Federal Emergency Management Agency (FEMA) reimburses force account labor based on actual hourly rates plus the cost of the employee’s actual fringe benefits. The applicant is required to submit the following documentation to support labor costs claimed: summary of actual costs for completed work, individual information (such as name, job title, type of employee, days and hours worked, pay rate and fringe benefit rate, and a description of work performed), fringe benefit calculation, and pay policy. FEMA determines the eligibility of overtime, premium pay, and compensatory time costs based on the applicant’s pre-disaster written pay policy. Six of the 25 transactions included force account labor that was not supported by a pay policy or benefit calculation. FEMA provides public assistance funding for contract costs based on the terms of the contract if the applicant meets federal procurement and contracting requirements. The applicant must include required provisions detailed in Title 2 CFR 200.327 in all contracts awarded and maintain oversight to ensure that contractors perform according to the conditions and specifications of the contract. FEMA reimburses funding for contract costs based on the terms of the contract if the applicant meets federal procurement and contract requirements. Eight of the 25 transactions included contractor payments and, based on review of the contract, not all federally required provisions were included. Two of the eight were not supported by a signed contract. According to DMVA management, contractors were utilized to provide project management of the federal disasters due to an increased workload and a lack of available DMVA staff. Contractors were tasked with gathering the required documents to ensure projects were administered in accordance with FEMA requirements. Cause: Division of Homeland Security and Emergency Management (DHSEM) lacked written procedures for monitoring contractors. Also, due to staff turnover and an increase in workload, DHSEM management did not adequately monitor contractor’s work. Specifically, to ensure the contractor verified the contracts awarded by subrecipients included federal requirements, final signed contracts were provided to the state, and required documentation was received for the reimbursement of subrecipient force account labor costs. Criteria: Title 2 CFR 200.403(g) requires costs to be adequately documented. FEMA’s guidance for administering the program is detailed in the Public Assistance Program and Policy Guide (PAPPG), 2018, which requires labor costs to be supported by specific documentation: summary of actual costs for completed work; for each individual: name, job title and function, type of employee, days and hours worked, pay rates and fringe benefit rate, and description of work performed; fringe benefit calculations; and pay policy. The PAPPG also requires contracts to include the required provisions in Title 2 CFR 200.327 and Homeland Security Acquisition Regulation Class Deviation 15-01 clauses in all contracts awarded. Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Effect: Lack of fringe benefit calculations and pay policy may result in FEMA limiting public assistance funding to the applicant non-discretionary, uniformly applied pay rates. Inadequate documentation may result in unallowable costs. Noncompliance with federal regulations may result in the federal awarding agency imposing additional conditions or taking corrective action, including additional reporting requirements or withholding/terminating funding. Questioned Costs: AL - 97.036: $96,758 AL - 97.036 COVID-19: $2,159 Recommendation: DHSEM’s director should develop written procedures for adequately monitoring DMVA contractors to ensure all federally required documentation is obtained to support reimbursements to subrecipients. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-036 Federal Awarding Agency: U.S. Department of Homeland Security (USDHS) Impact: Significant Deficiency, Noncompliance AL Number and Title: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) – COVID-19 Federal Award Number: 4413DRAKP00000001, 4533DRAKP00000001, 4585DRAKP00000001, 4646DRAKP00000001, 4667DRAKP00000001 Applicable Compliance Requirement: Allowable Costs/Cost Principles Condition: A review of 25 FY 24 Disaster Grants payments found that 14 payments (56 percent) lacked required supporting documentation. Specifically, six payments lacked pay policy and/or fringe benefit calculations and eight payments lacked procurement contracts that included all federal requirements. Additionally, two of the eight payments lacked a complete or signed contract on file. Context: The Federal Emergency Management Agency (FEMA) reimburses force account labor based on actual hourly rates plus the cost of the employee’s actual fringe benefits. The applicant is required to submit the following documentation to support labor costs claimed: summary of actual costs for completed work, individual information (such as name, job title, type of employee, days and hours worked, pay rate and fringe benefit rate, and a description of work performed), fringe benefit calculation, and pay policy. FEMA determines the eligibility of overtime, premium pay, and compensatory time costs based on the applicant’s pre-disaster written pay policy. Six of the 25 transactions included force account labor that was not supported by a pay policy or benefit calculation. FEMA provides public assistance funding for contract costs based on the terms of the contract if the applicant meets federal procurement and contracting requirements. The applicant must include required provisions detailed in Title 2 CFR 200.327 in all contracts awarded and maintain oversight to ensure that contractors perform according to the conditions and specifications of the contract. FEMA reimburses funding for contract costs based on the terms of the contract if the applicant meets federal procurement and contract requirements. Eight of the 25 transactions included contractor payments and, based on review of the contract, not all federally required provisions were included. Two of the eight were not supported by a signed contract. According to DMVA management, contractors were utilized to provide project management of the federal disasters due to an increased workload and a lack of available DMVA staff. Contractors were tasked with gathering the required documents to ensure projects were administered in accordance with FEMA requirements. Cause: Division of Homeland Security and Emergency Management (DHSEM) lacked written procedures for monitoring contractors. Also, due to staff turnover and an increase in workload, DHSEM management did not adequately monitor contractor’s work. Specifically, to ensure the contractor verified the contracts awarded by subrecipients included federal requirements, final signed contracts were provided to the state, and required documentation was received for the reimbursement of subrecipient force account labor costs. Criteria: Title 2 CFR 200.403(g) requires costs to be adequately documented. FEMA’s guidance for administering the program is detailed in the Public Assistance Program and Policy Guide (PAPPG), 2018, which requires labor costs to be supported by specific documentation: summary of actual costs for completed work; for each individual: name, job title and function, type of employee, days and hours worked, pay rates and fringe benefit rate, and description of work performed; fringe benefit calculations; and pay policy. The PAPPG also requires contracts to include the required provisions in Title 2 CFR 200.327 and Homeland Security Acquisition Regulation Class Deviation 15-01 clauses in all contracts awarded. Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Effect: Lack of fringe benefit calculations and pay policy may result in FEMA limiting public assistance funding to the applicant non-discretionary, uniformly applied pay rates. Inadequate documentation may result in unallowable costs. Noncompliance with federal regulations may result in the federal awarding agency imposing additional conditions or taking corrective action, including additional reporting requirements or withholding/terminating funding. Questioned Costs: AL - 97.036: $96,758 AL - 97.036 COVID-19: $2,159 Recommendation: DHSEM’s director should develop written procedures for adequately monitoring DMVA contractors to ensure all federally required documentation is obtained to support reimbursements to subrecipients. Views of Responsible Officials: Management agrees with this finding.
FA 2024-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program 10.555 – National School Lunch Program Federal Award Numbers: 225GA324N1099 (Year: 2024), 245GA324N1199 (Year 2024) Questioned Costs: $77,285 Repeat of Prior Year Finding: FA 2023-001 Description: A review of expenditures charged to the Child Nutrition Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that expenditures were reviewed and approved and that the School District’s procurement and suspension and debarment procedures were followed. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $2,251,765 were expended and reported on the Berrien County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024. Criteria: As a recipient of federal awards, the School District 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…” Additionally, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state in part that “(a) the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations and… (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Methods of Procurement to Be Followed provide guidance for procurement through small purchase procedures and state “If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.” Condition: A sample of 60 expenditures was randomly selected for testing using a non-statistical sampling approach. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were noted: • For three expenditures, evidence of review and approval was not reflected within the voucher package. • For seven expenditures, there was no verification of receipt of goods documented in the voucher package. Additionally, auditor reviewed 40 of these same expenditures and a sample of 20 additional expenditures, which was randomly selected for testing using a non-statistical sampling approach, to determine if procurement transactions complied with the School District’s procurement procedures and proper oversight was maintained to ensure that contractors were performing according to their contracts. The following deficiencies were noted: • Evidence of review and approval was not reflected within the voucher package for five additional expenditures. • For 19 expenditures paid to four different vendors, documentation could not be provided to support the entity’s verification that the vendors were not suspended or debarred or otherwise excluded from participating in the transactions. • One vendor contract expired mid-year and no renewal or extension was initiated. Questioned Costs: Known questioned costs of $77,285 were identified for procurement transactions that did not follow the School District’s procurement procedures and were incurred under an expired contract for which no renewal or extension was initiated. These known questioned costs related to all expenditures occurring after contract expiration, and therefore, should not be projected to a population to determine likely questioned costs. Cause: When discussing the issues noted with management, they said the program director was new and was unaware of the compliance requirements. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance related to CNC. Failure to ensure that expenditures are appropriately approved and procedures to address procurement and suspension and debarment compliance requirements are implemented exposes the School District to unnecessary risk of error and misuse of federal funds and could result in the expenditure of federal funds for unallowable purposes and/or with unqualified vendors. In addition, this deficiency could lead to the return of funding associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to CNC. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures reflect evidence of review and approval, required procurement methods are properly identified and followed, and required procurement and suspension and debarment documentation is properly identified, safeguarded, and retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding.
FA 2024-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program 10.555 – National School Lunch Program Federal Award Numbers: 225GA324N1099 (Year: 2024), 245GA324N1199 (Year 2024) Questioned Costs: $77,285 Repeat of Prior Year Finding: FA 2023-001 Description: A review of expenditures charged to the Child Nutrition Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that expenditures were reviewed and approved and that the School District’s procurement and suspension and debarment procedures were followed. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $2,251,765 were expended and reported on the Berrien County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024. Criteria: As a recipient of federal awards, the School District 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…” Additionally, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state in part that “(a) the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations and… (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Methods of Procurement to Be Followed provide guidance for procurement through small purchase procedures and state “If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.” Condition: A sample of 60 expenditures was randomly selected for testing using a non-statistical sampling approach. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were noted: • For three expenditures, evidence of review and approval was not reflected within the voucher package. • For seven expenditures, there was no verification of receipt of goods documented in the voucher package. Additionally, auditor reviewed 40 of these same expenditures and a sample of 20 additional expenditures, which was randomly selected for testing using a non-statistical sampling approach, to determine if procurement transactions complied with the School District’s procurement procedures and proper oversight was maintained to ensure that contractors were performing according to their contracts. The following deficiencies were noted: • Evidence of review and approval was not reflected within the voucher package for five additional expenditures. • For 19 expenditures paid to four different vendors, documentation could not be provided to support the entity’s verification that the vendors were not suspended or debarred or otherwise excluded from participating in the transactions. • One vendor contract expired mid-year and no renewal or extension was initiated. Questioned Costs: Known questioned costs of $77,285 were identified for procurement transactions that did not follow the School District’s procurement procedures and were incurred under an expired contract for which no renewal or extension was initiated. These known questioned costs related to all expenditures occurring after contract expiration, and therefore, should not be projected to a population to determine likely questioned costs. Cause: When discussing the issues noted with management, they said the program director was new and was unaware of the compliance requirements. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance related to CNC. Failure to ensure that expenditures are appropriately approved and procedures to address procurement and suspension and debarment compliance requirements are implemented exposes the School District to unnecessary risk of error and misuse of federal funds and could result in the expenditure of federal funds for unallowable purposes and/or with unqualified vendors. In addition, this deficiency could lead to the return of funding associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to CNC. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures reflect evidence of review and approval, required procurement methods are properly identified and followed, and required procurement and suspension and debarment documentation is properly identified, safeguarded, and retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding.
Federal Agency: U.S. Department of Veterans Affairs Federal Program Name: Supportive Services for Veteran Families Assistance Listing Number: 64.033 Federal Award Identification Number and Year: 12-NC-050 Award Period: September 30, 2022 through September 30, 2024 - Type of Finding: Material Weakness in Internal Control over Compliance and Other Matters Criteria or specific requirement: Per 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), §200.403 Factors affecting allowability of costs, costs must be necessary, reasonable, and adequately documented. Condition: During testing of the underlying expenditure details, we noted that the payroll reports provided by the Corporation did not agree with the underlying grant expenditure records. Specifically, the underlying payroll reports were less than what was charged to the grant. Questioned costs: $6,004 Context: During our testing we reviewed the underlying expenditure details. We compared the payroll reports provided by the Corporation to the underlying grant expenditure records. Our review identified a discrepancy where the payroll detail was $6,004 less than the amount charged to the grant. This discrepancy indicates a potential issue with internal controls over the reconciliation process for payroll costs. Cause: The discrepancy was due to inadequate internal controls over the reconciliation of payroll reports to the grant expenditures. The client did not have a process in place to ensure that payroll costs charged to the grant were supported by detailed payroll records. Effect: As a result, there is a risk that unallowable costs were charged to the grant, which could lead to noncompliance with federal requirements and potential disallowance of costs. Recommendation: We recommend that the Corporation implement internal controls over the reconciliation of payroll reports to grant expenditures. This should include regular reconciliations and reviews to ensure that all payroll costs charged to the grant are adequately supported by detailed payroll records. Views of responsible officials: Management agrees with the above finding. A payroll salary reconciliation report will be completed after each payroll issued and will be verified against the grant reports, accounting system class coding and employee-specific payroll file(s). Printed reports will be maintained on file in the Finance Department for historical reference.
Federal Agency: U.S. Department of Veterans Affairs Federal Program Name: Supportive Services for Veteran Families Assistance Listing Number: 64.033 Federal Award Identification Number and Year: 12-NC-050 Award Period: September 30, 2022 through September 30, 2024 - Type of Finding: Material Weakness in Internal Control over Compliance and Other Matters Criteria or specific requirement: Per 2 CFR 200.302(b)(3), non-Federal entities must maintain records that adequately identify the source and application of funds for federally-funded activities. Additionally, 2 CFR 200.403(g) requires that costs must be adequately documented to be allowable under Federal awards. Condition: During testing of allowable costs, we identified cash disbursements that lacked adequate supporting documentation. Specifically, these disbursements were made without proof of payment and corresponding invoice support. Questioned costs: $16,576 Context: As part of our audit procedures, we selected a sample of cash disbursements to ensure compliance with federal regulations. The sample included transactions from various periods within the award year. During the review, it was noted that disbursements totaling $15,754 did not have the required supporting documentation, such as proof of payment and corresponding invoices. This finding indicates potential systemic issues within the accounts payable process that could affect the overall compliance with federal awards. Cause: The lack of supporting documentation appears to be due to weaknesses in the internal controls over the accounts payable process. The Corporation did not have a process in place to ensure that expenditures charged to the grant were supported by proof of payment and corresponding invoice support. Effect: There is a risk that unallowable costs were charged to the grant, which could lead to noncompliance with federal requirements and potential disallowance of costs. Recommendation: We recommend that the Corporation strengthen its internal controls over cash disbursements. This should include retention of payments supported by valid invoices and proof of payment documentation as well as periodic internal audits to ensure compliance with the documentation requirements. Views of responsible officials: Management agrees with the above finding. All purchase-related supporting documentation will be transitioned to paper files to eliminate confusion created by the electronic record-keeping system, and to ensure that all staff requiring access to such documentation can immediately and easily retrieve them. Records will be maintained in the Finance Department office for seven years.
Criteria or Specific Requirement: In accordance with 2 CFR 200.403(h), costs must be incurred during the approved budget period or period of performance, unless specifically authorized otherwise by the federal awarding agency. Charging costs incurred outside the period of performance is unallowable and does not comply with federal cost principles. Condition: During our testing of payroll expenditures charged to the federal award, it was determined that Solvista Health claimed reimbursement for payroll costs incurred outside the approved period of performance. Specifically, for one grant, payroll expenditures were claimed for time worked between June 26, 2023 and June 30, 2023, although the awards period of performance began on July 1, 2023. Additionally, for another grant tested, payroll expenditures were claimed for time worked between October 30, 2023 and October 31, 2023, despite the award’s period of performance not beginning until November 1, 2023. Context: Actual payroll expenditures submitted included payroll expenditures that were outside the period of performance, which overstated the payroll expenditures applied to the grant. Questioned Costs: $7,522 consisting of payroll expenditures submitted for reimbursement for expenditures incurred outside of the approved period of performance. Cause: Solvista Health did not have adequate controls to ensure that expenditures charged to the federal program were incurred within the period of performance. Effect: Solvista Health claimed reimbursement for payroll costs incurred outside of the approved period of performance, resulting in unallowable costs being charged to this award. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend Solvista Health design and implement controls to ensure that expenditures submitted for reimbursement under federal awards are properly reviewed for compliance with regard to the period of performance requirements.
Criteria or Specific Requirement: In accordance with 2 CFR 200.403(h), costs must be incurred during the approved budget period or period of performance, unless specifically authorized otherwise by the federal awarding agency. Charging costs incurred outside the period of performance is unallowable and does not comply with federal cost principles. Condition: During our testing of payroll expenditures charged to the federal award, it was determined that Solvista Health claimed reimbursement for payroll costs incurred outside the approved period of performance. Specifically, for one grant, payroll expenditures were claimed for time worked between June 26, 2023 and June 30, 2023, although the awards period of performance began on July 1, 2023. Additionally, for another grant tested, payroll expenditures were claimed for time worked between October 30, 2023 and October 31, 2023, despite the award’s period of performance not beginning until November 1, 2023. Context: Actual payroll expenditures submitted included payroll expenditures that were outside the period of performance, which overstated the payroll expenditures applied to the grant. Questioned Costs: $7,522 consisting of payroll expenditures submitted for reimbursement for expenditures incurred outside of the approved period of performance. Cause: Solvista Health did not have adequate controls to ensure that expenditures charged to the federal program were incurred within the period of performance. Effect: Solvista Health claimed reimbursement for payroll costs incurred outside of the approved period of performance, resulting in unallowable costs being charged to this award. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend Solvista Health design and implement controls to ensure that expenditures submitted for reimbursement under federal awards are properly reviewed for compliance with regard to the period of performance requirements.
Criteria or Specific Requirement: In accordance with 2 CFR 200.403(a), costs charged to a federal award must be allowable under the provisions of the cost principles, the terms and conditions of the award, and the approved budget. Additionally, earmarking requirements in the grant agreement and associated budget restrict specific categories of expenditures, including a cap on allowable software costs. Condition: During our testing of expenditures claimed for reimbursement, we noted that Solvista Health incurred and claimed software-related costs in excess of the grant agreement, which explicitly limits allowable software expenditures. Context: The software expenditures submitted exceeded the software costs allowed per the grant agreement. Questioned Costs: $2,814 consisting of exceeded software expenditures submitted for reimbursement. Cause: Solvista Health did not have adequately designed and implemented internal controls related to monitoring of compliance with earmarking requirements specific to software expenditures under the terms of the grant. Effect: Solvista Health exceeded the allowable software cost limit established by the grant. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that Solvista Health design and implement grant monitoring internal controls to ensure expenditures comply with all earmarking limitations specified in grant agreements and approved budgets. In particular, Solvista Health should implement procedures to track expenditures by budget category and verify compliance prior to submitting reimbursement requests.
Criteria or Specific Requirement: In accordance with 2 CFR 200.403 and 200.405, costs charged to federal awards must be necessary, reasonable, allocable to the program, and adequately documented. Only allowable costs as defined by the terms and conditions of the award and the Uniform Guidance may be charged to the grant. Condition: During our testing of expenditures submitted by Solvista Health for reimbursement, we identified instances where costs were charged to the grant that were not allowable under the Uniform Guidance or the terms of the grant agreement. Specifically, unallowable employee meals were included in travel reimbursement costs. Context: Employees’ meal expenditures were submitted as allowable costs and as travel costs; however employee meals are not an allowable expenditure per the grant agreement. Questioned Costs: $842 consisting of unallowable meal expenditures. Cause: Solvista Health did not have sufficient internal controls implemented to identify unallowed expenditures, which were submitted for reimbursement. Effect: Failure to submit unallowable expenditures for reimbursement may result in noncompliance with the federal awarding agency and may result in the repayment of any unallowable expenditures to the grantor. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that Solvista Health implement internal controls to ensure review and approval of grant-related expenditures. Additionally, we recommend regular training of staff on allowable cost principles under Uniform Guidance.
Criteria or Specific Requirement: In accordance with 2 CFR 200.403 and 200.405, costs charged to federal awards must be necessary, reasonable, allocable to the program, and adequately documented. Only allowable costs as defined by the terms and conditions of the award and the Uniform Guidance may be charged to the grant. Condition: During our testing of expenditures submitted by Solvista Health for reimbursement, we identified instances where costs were charged to the grant that were not allowable under the Uniform Guidance or the terms of the grant agreement. Specifically, unallowable employee meals were included in travel reimbursement costs. Context: Employees’ meal expenditures were submitted as allowable costs and as travel costs; however employee meals are not an allowable expenditure per the grant agreement. Questioned Costs: $842 consisting of unallowable meal expenditures. Cause: Solvista Health did not have sufficient internal controls implemented to identify unallowed expenditures, which were submitted for reimbursement. Effect: Failure to submit unallowable expenditures for reimbursement may result in noncompliance with the federal awarding agency and may result in the repayment of any unallowable expenditures to the grantor. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that Solvista Health implement internal controls to ensure review and approval of grant-related expenditures. Additionally, we recommend regular training of staff on allowable cost principles under Uniform Guidance.
Block Grants for Prevention and Treatment of Substance Abuse ALN No. 93.959 U.S. Department of Health and Human Services Opioid STR ALN No. 93.788 U.S. Department of Health and Human Services Criteria or Specific Requirement – Activities Allowed and Unallowed and Cost Principles – 2 CFR Part 200, Subpart E, and Period of Performance – 2 CFR sections 200.308, 200.309, and 200.403(h) Condition – A sample of 80 expenditures were selected from each of the following populations: • ALN No. 93.959 – 1,152 items totaling $1,077,416 • ALN No. 93.788 – 1,222 items totaling $2,537,080 The samples were not, and are not intended to be, statistically valid. Of the 80 expenditures tested from each grant program, the following were determined to lack appropriate supporting documentation to support being charged to grant program: • ALN No. 93.959 - 41 items totaling $25,810, including projected errors over the total population totaling $191,145 • ALN No. 93.788 - 10 items totaling $72,347, including projected errors over the total population totaling $207,012 The Organization did not have adequate supporting documentation demonstrating actual time and effort reporting and lacked evidence of supporting invoices. Cause – The Organization charged budgeted percentages to the grant programs without a system in place to monitor and track that actual time and effort was consistent with budgeted percentages. In addition, the Organization charged expenditures to the grant programs without evidence of supporting invoices. Effect or potential effect – Costs charged to the grant programs could have varied from actual time and effort. In addition, costs charged to the grant could not be supported by actual invoices. Questioned costs – • ALN No. 93.959 - $25,810 • ALN No. 93.788 - $72,347 Context – The Organization did not have a reasonable methodology of allocating costs to these grant programs and did not maintain proper supporting invoices. Identification as a repeat finding, if applicable – Repeat finding (see 2023-003) Recommendation – Management should implement policies and procedures that strengthen internal control over compliance in relation to activities allowed and cost principles. The policy and procedure should be designed to ensure that a reasonable allocation methodology is implemented and followed or that time and effort is certified by the employee on a regular basis. In addition, management should implement a document retention policy consistent with 2 CFR 200.334.
Block Grants for Prevention and Treatment of Substance Abuse ALN No. 93.959 U.S. Department of Health and Human Services Opioid STR ALN No. 93.788 U.S. Department of Health and Human Services Criteria or Specific Requirement – Activities Allowed and Unallowed and Cost Principles – 2 CFR Part 200, Subpart E, and Period of Performance – 2 CFR sections 200.308, 200.309, and 200.403(h) Condition – A sample of 80 expenditures were selected from each of the following populations: • ALN No. 93.959 – 1,152 items totaling $1,077,416 • ALN No. 93.788 – 1,222 items totaling $2,537,080 The samples were not, and are not intended to be, statistically valid. Of the 80 expenditures tested from each grant program, the following were determined to lack appropriate supporting documentation to support being charged to grant program: • ALN No. 93.959 - 41 items totaling $25,810, including projected errors over the total population totaling $191,145 • ALN No. 93.788 - 10 items totaling $72,347, including projected errors over the total population totaling $207,012 The Organization did not have adequate supporting documentation demonstrating actual time and effort reporting and lacked evidence of supporting invoices. Cause – The Organization charged budgeted percentages to the grant programs without a system in place to monitor and track that actual time and effort was consistent with budgeted percentages. In addition, the Organization charged expenditures to the grant programs without evidence of supporting invoices. Effect or potential effect – Costs charged to the grant programs could have varied from actual time and effort. In addition, costs charged to the grant could not be supported by actual invoices. Questioned costs – • ALN No. 93.959 - $25,810 • ALN No. 93.788 - $72,347 Context – The Organization did not have a reasonable methodology of allocating costs to these grant programs and did not maintain proper supporting invoices. Identification as a repeat finding, if applicable – Repeat finding (see 2023-003) Recommendation – Management should implement policies and procedures that strengthen internal control over compliance in relation to activities allowed and cost principles. The policy and procedure should be designed to ensure that a reasonable allocation methodology is implemented and followed or that time and effort is certified by the employee on a regular basis. In addition, management should implement a document retention policy consistent with 2 CFR 200.334.
Condition - The Municipality’s staff was unable to provide officially prepared and certified reports supporting compliance with the filing and submission requirements for reports and financial information, as established by federal award and regulatory agreements. Similarly, reconciliations were not provided between the information used to prepare the required and submitted reports and the formal data recorded in the Municipality’s official accounting system. Due to these conditions, compliance with the reporting requirements established by the federal grantor and effectiveness of related internal controls could not be verified. Based on an analysis prepared by the Municipality of the bank accounts and certain records and subsidiary ledgers designated for managing Community Development Block Grant / Disaster Recovery (CDBG-DR) funds, including transactions during the fiscal year ended June 30, 2024, and subsequent disbursements, a total of $850,079 was either expended or transferred to the General Fund to cover eligible expenditures under the terms permitted by the CDBG-DR program. Criteria - Per the Compliance and Reporting Guidance – Part I: General Guidance – Section D: Uniform Administrative Requirements – Section 10: Reporting: establishes that: All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Recipients should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropriate, recipients need to establish controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403 states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. Cause - There is a lack of adequate knowledge and training among personnel assigned to the management and preparation of reports required by this federal award. Additionally, the Municipality did not demonstrate, nor did it provide evidence, that it has designed and implemented an adequate system of procedures and internal controls to monitor the activity, filing, and custody of reports, as required by the federal award and the pass-through entity. These deficiencies limit the Municipality’s ability to document and support compliance with the reporting requirements. Effect - These conditions expose the program to noncompliance with the reporting requirements established in the grant agreement. Furthermore, the Municipality may be at risk of the grantor questioning the allowability and use of federal funds. Recommendation - We recommend that the responsible personnel or department identify, compile, and retain all reports required under the grant agreement, including reconciliations with the Municipality’s official accounting records and subsidiary ledgers. Additionally, it is essential for the Municipality to develop, document, and implement a comprehensive training program, along with written guidelines and procedures, for all personnel involved, directly or indirectly, in the management of these federal funds. Questioned Costs - None
Condition - The Municipality’s staff was unable to provide officially prepared and certified reports supporting compliance with the filing and submission requirements for reports and financial information, as established by federal award and regulatory agreements. Similarly, reconciliations were not provided between the information used to prepare the required and submitted reports and the formal data recorded in the Municipality’s official accounting system. Due to these conditions, compliance with the reporting requirements established by the federal grantor and effectiveness of related internal controls could not be verified. Based on an analysis prepared by the Municipality of the bank accounts and certain records and subsidiary ledgers designated for managing Community Development Block Grant / Disaster Recovery (CDBG-DR) funds, including transactions during the fiscal year ended June 30, 2024, and subsequent disbursements, a total of $850,079 was either expended or transferred to the General Fund to cover eligible expenditures under the terms permitted by the CDBG-DR program. Criteria - Per the Compliance and Reporting Guidance – Part I: General Guidance – Section D: Uniform Administrative Requirements – Section 10: Reporting: establishes that: All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Recipients should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropriate, recipients need to establish controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403 states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. Cause - There is a lack of adequate knowledge and training among personnel assigned to the management and preparation of reports required by this federal award. Additionally, the Municipality did not demonstrate, nor did it provide evidence, that it has designed and implemented an adequate system of procedures and internal controls to monitor the activity, filing, and custody of reports, as required by the federal award and the pass-through entity. These deficiencies limit the Municipality’s ability to document and support compliance with the reporting requirements. Effect - These conditions expose the program to noncompliance with the reporting requirements established in the grant agreement. Furthermore, the Municipality may be at risk of the grantor questioning the allowability and use of federal funds. Recommendation - We recommend that the responsible personnel or department identify, compile, and retain all reports required under the grant agreement, including reconciliations with the Municipality’s official accounting records and subsidiary ledgers. Additionally, it is essential for the Municipality to develop, document, and implement a comprehensive training program, along with written guidelines and procedures, for all personnel involved, directly or indirectly, in the management of these federal funds. Questioned Costs - None
Condition - The Municipality’s staff was unable to provide officially prepared and certified reports supporting compliance with the filing and submission requirements for reports and financial information, as established by federal award and regulatory agreements. Similarly, reconciliations were not provided between the information used to prepare the required and submitted reports and the formal data recorded in the Municipality’s official accounting system. Due to these conditions, compliance with the reporting requirements established by the federal grantor and effectiveness of related internal controls could not be verified. Based on an analysis prepared by the Municipality of the bank account and certain records and subsidiary ledgers designated for managing Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) funds, including transactions during the fiscal year ended June 30, 2024, and subsequent disbursements, a total of $768,525 was either expended or transferred to the General Fund to cover eligible expenditures under the terms permitted by the CSLFRF programs. Criteria - Per the Compliance and Reporting Guidance – Part I: General Guidance – Section D: Uniform Administrative Requirements – Section 10: Reporting: establishes that: All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Recipients should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropriate, recipients need to establish controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403, states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. Cause - There is a lack of adequate knowledge and training among personnel assigned to the management and preparation of reports required by this federal award. Additionally, the Municipality did not demonstrate, nor did it provide evidence, that it has designed and implemented an adequate system of procedures and internal controls to monitor the activity, filing, and custody of reports, as required by the federal award and the pass-through entity. These deficiencies limit the Municipality’s ability to document and support compliance with the reporting requirements. Effect -These conditions expose the program to noncompliance with the reporting requirements established in the grant agreement. Furthermore, the Municipality may be at risk of the grantor questioning the allowability and use of federal funds. Recommendation - We recommend that the responsible personnel or department identify, compile, and retain all reports required under the grant agreement, including reconciliations with the Municipality’s official accounting records and subsidiary ledgers. Additionally, it is essential for the Municipality to develop, document, and implement a comprehensive training program, along with written guidelines and procedures, for all personnel involved, directly or indirectly, in the management of these federal funds. Questioned Costs – None
Condition - The Municipality’s staff was unable to provide officially prepared and certified reports supporting compliance with the filing and submission requirements for reports and financial information, as established by federal award and regulatory agreements. Similarly, reconciliations were not provided between the information used to prepare the required and submitted reports and the formal data recorded in the Municipality’s official accounting system. Due to these conditions, compliance with the reporting requirements established by the federal grantor and effectiveness of related internal controls could not be verified. Based on an analysis prepared by the Municipality of the bank account and certain records and subsidiary ledgers designated for managing Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) funds, including transactions during the fiscal year ended June 30, 2024, and subsequent disbursements, a total of $768,525 was either expended or transferred to the General Fund to cover eligible expenditures under the terms permitted by the CSLFRF programs. Criteria - Per the Compliance and Reporting Guidance – Part I: General Guidance – Section D: Uniform Administrative Requirements – Section 10: Reporting: establishes that: All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Recipients should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropriate, recipients need to establish controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403, states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. Cause - There is a lack of adequate knowledge and training among personnel assigned to the management and preparation of reports required by this federal award. Additionally, the Municipality did not demonstrate, nor did it provide evidence, that it has designed and implemented an adequate system of procedures and internal controls to monitor the activity, filing, and custody of reports, as required by the federal award and the pass-through entity. These deficiencies limit the Municipality’s ability to document and support compliance with the reporting requirements. Effect -These conditions expose the program to noncompliance with the reporting requirements established in the grant agreement. Furthermore, the Municipality may be at risk of the grantor questioning the allowability and use of federal funds. Recommendation - We recommend that the responsible personnel or department identify, compile, and retain all reports required under the grant agreement, including reconciliations with the Municipality’s official accounting records and subsidiary ledgers. Additionally, it is essential for the Municipality to develop, document, and implement a comprehensive training program, along with written guidelines and procedures, for all personnel involved, directly or indirectly, in the management of these federal funds. Questioned Costs – None
Condition - The Municipality’s staff was unable to provide officially prepared and certified reports supporting compliance with the filing and submission requirements for reports and financial information, as established by federal award and regulatory agreements. Similarly, reconciliations were not provided between the information used to prepare the required and submitted reports and the formal data recorded in the Municipality’s official accounting system. Due to these conditions, compliance with the reporting requirements established by the federal grantor and effectiveness of related internal controls could not be verified. Based on an analysis prepared by the Municipality of the bank account and certain records and subsidiary ledgers designated for managing Disaster Grants - Public Assistance (Presidentially Declared Disasters) funds, including transactions during the fiscal year ended June 30, 2024, and subsequent disbursements, a total of $4,115,693 was either expended or transferred to the General Fund to cover eligible expenditures under the terms permitted by the grants. Criteria - The state is required to make an accounting of eligible costs. Similarly, the subrecipient must make an accounting to the state. In submitting the accounting, the entity is required to certify that reported costs were incurred in performance of eligible work, that the approved work was completed, that the project in in compliance with the provisions of the State Agreement, all grants conditions were met, and the provisions for that project were made in accordance with the applicable payment provisions. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403, states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. Cause - There is a lack of adequate knowledge and training among personnel assigned to the management and preparation of reports required by this federal award. Additionally, the Municipality did not demonstrate, nor did it provide evidence, that it has designed and implemented an adequate system of procedures and internal controls to monitor the activity, filing, and custody of reports, as required by the federal award and the pass-through entity. These deficiencies limit the Municipality’s ability to document and support compliance with the reporting requirements. Effect - These conditions expose the program to noncompliance with the reporting requirements established in the grant agreement. Furthermore, the Municipality may be at risk of the grantor questioning the allowability and use of federal funds. Recommendation - We recommend that the responsible personnel or department identify, compile, and retain all reports required under the grant agreement, including reconciliations with the Municipality’s official accounting records and subsidiary ledgers. Additionally, it is essential for the Municipality to develop, document, and implement a comprehensive training program, along with written guidelines and procedures, for all personnel involved, directly or indirectly, in the management of these federal funds. Questioned Costs - None
Condition - The Municipality’s staff was unable to provide officially prepared and certified reports supporting compliance with the filing and submission requirements for reports and financial information, as established by federal award and regulatory agreements. Similarly, reconciliations were not provided between the information used to prepare the required and submitted reports and the formal data recorded in the Municipality’s official accounting system. Due to these conditions, compliance with the reporting requirements established by the federal grantor and effectiveness of related internal controls could not be verified. Based on an analysis prepared by the Municipality of the bank account and certain records and subsidiary ledgers designated for managing Disaster Grants - Public Assistance (Presidentially Declared Disasters) funds, including transactions during the fiscal year ended June 30, 2024, and subsequent disbursements, a total of $4,115,693 was either expended or transferred to the General Fund to cover eligible expenditures under the terms permitted by the grants. Criteria - The state is required to make an accounting of eligible costs. Similarly, the subrecipient must make an accounting to the state. In submitting the accounting, the entity is required to certify that reported costs were incurred in performance of eligible work, that the approved work was completed, that the project in in compliance with the provisions of the State Agreement, all grants conditions were met, and the provisions for that project were made in accordance with the applicable payment provisions. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403, states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. Cause - There is a lack of adequate knowledge and training among personnel assigned to the management and preparation of reports required by this federal award. Additionally, the Municipality did not demonstrate, nor did it provide evidence, that it has designed and implemented an adequate system of procedures and internal controls to monitor the activity, filing, and custody of reports, as required by the federal award and the pass-through entity. These deficiencies limit the Municipality’s ability to document and support compliance with the reporting requirements. Effect - These conditions expose the program to noncompliance with the reporting requirements established in the grant agreement. Furthermore, the Municipality may be at risk of the grantor questioning the allowability and use of federal funds. Recommendation - We recommend that the responsible personnel or department identify, compile, and retain all reports required under the grant agreement, including reconciliations with the Municipality’s official accounting records and subsidiary ledgers. Additionally, it is essential for the Municipality to develop, document, and implement a comprehensive training program, along with written guidelines and procedures, for all personnel involved, directly or indirectly, in the management of these federal funds. Questioned Costs - None
Federal Agency: Department of Health and Human Services Federal program title: Block Grants for Community Mental Health Services Assistance Listing Number: 93.958 Pass-Through Agency: Illinois Department of Human Services Pass-Through Number: 45CCB03514; 45CCB04278; 45CCB00648 Award Period: 07/01/2023 – 06/30/2024 Type of Finding: Material Weakness in Internal Control over Compliance and Immaterial Noncompliance Criteria or specific requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award's period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Condition: Costs outside of the period of performance were charged to the grant. Questioned Costs: $7,311 Context: Four (4) of the twenty (20) transactions selected for testing. Cause: Oversight. Effect: The Organization may allocate unallowable costs to the federal grant. Repeat Finding: Yes, prior year finding number was 2023-004 Recommendation: Management should review and revise its process for allocating costs to federal grants to include additional layers of review and so that costs for which some or all are from outside of the period of performance, may be appropriately excluded from the federal grant. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: Department of Health and Human Services Federal program title: Block Grants for Community Mental Health Services Assistance Listing Number: 93.958 Pass-Through Agency: Illinois Department of Human Services Pass-Through Number: 45CCB03514; 45CCB04278; 45CCB00648 Award Period: 07/01/2023 – 06/30/2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Immaterial Noncompliance Criteria or specific requirement: As described in § 200.403, costs must be consistently charged as either indirect or direct costs, but may not be double charged or inconsistently charged as both. If chosen, this methodology once elected must be used consistently for all Federal awards until such time as a non-Federal entity chooses to negotiate for a rate, which the non-Federal entity may apply to do at any time. Condition: The Organization incorrectly calculated indirect costs for one of thirteen transactions selected for testing. Questioned Costs: $41 Context: The Organization calculates the indirect costs to be reimbursed based on total direct expenses less contractual services. For one of the thirteen transactions selected for testing, the indirect cost was not calculated correctly. Cause: Oversight. Effect: The Organization requested reimbursement for indirect costs in excess of their provisional rate of 28.28%. Repeat Finding: No Recommendation: We recommend management recalculate the indirect cost rate based on the monthly grant invoice submitted to the funder for reimbursement to ensure indirect costs are appropriate. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Treasury Federal Program: COVID 19 Coronavirus State and Local Fiscal Relief Fund Assistance Listing: 21.027 Pass-Through Entity: Maryland Department of Housing and Community Development Pass-Through Award Number and Period: (7/1/2023 - 6/30/2024) Compliance Requirement: Allowable Activities/Costs Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance (Modified Opinion) Criteria or Specific Requirement: Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in "Standards for Internal Control in the Federal GovernmenT" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework", issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance: The 2 CFR Part 200, Subpart E is applicable to expenditures under SLFRF unless stated otherwise. Given the purpose and very broad scope of eligible uses of the revenue replacement funds, only a subset of the requirements in 2 CFR Part 200, Subpart E apply to recipients use of such funds, as follows: 2 CFR 200.400(a) - (c), and (e) Policy guide; 200.403(a), (c), (d), (g), and (h) Factors affecting allowability of costs; and 200.404(e) Reasonable costs. Condition: The Town didnt maintain adequate documentation (i.e. invoices) to support the existence, allowability and approval of CSLFRF funds used to support programmatic costs. Context: The Town failed to provide supporting documentation to auditors for 16 out of 60 expenditures tested. Therefore, we could not determine if costs were allowable under the program. In addition, the town failed to provide supporting documentation for the review and approval of 24 out of 60 expenditures tested. Questioned Costs: $102,612. Cause: The Town transferred the funds to the grant in the accounting system but failed to maintain an audit trail to document the allowability and approval for the use of federal funds. Effect: Auditors were unable to verify the Towns compliance with program requirements. Recommendation: The Town should evaluate its current policies, implement proper controls, and perform additional training to ensure that, prior to charging costs to the program adequate documentation exists and maintained to support those costs, they are reviewed by a supervisor who is knowledgeable of the regulations regarding allowable program costs and that documentation of review is maintained. Views of Responsible Officials: Management agrees with the finding.
Inadequate Documentation for Expenses (Assistance Listing 21.019 ARPA) Criteria: 2 CFR §200.403–405 requires that costs charged to federal awards be adequately documented, allowable, and allocable. Condition: During our walk through of the expenditure cycle, we discovered the following issues: • Some vouchers were not prepared or lacked proper authorization and supporting source documents. • Multiple transactions were missing receipts or had incomplete vouchers. • Instances of the same check number being used twice in the general ledger. • Certain check numbers were not entered into the software program. Cause: Inadequate internal controls over documentation and expenditure tracking. Effect: Risk of unallowable costs being charged to federal programs and potential disallowance of expenses. Questioned Costs: Unable to determine exact amount due to lack of documentation. Recommendation: RTMC should enforce strict policies for maintaining proper documentation to verify and support costs. This ensures all expenses are allowable, reasonable, and allocable.
Inadequate Documentation for Expenses (Assistance Listing 21.019 ARPA) Criteria: 2 CFR §200.403–405 requires that costs charged to federal awards be adequately documented, allowable, and allocable. Condition: During our walk through of the expenditure cycle, we discovered the following issues: • Some vouchers were not prepared or lacked proper authorization and supporting source documents. • Multiple transactions were missing receipts or had incomplete vouchers. • Instances of the same check number being used twice in the general ledger. • Certain check numbers were not entered into the software program. Cause: Inadequate internal controls over documentation and expenditure tracking. Effect: Risk of unallowable costs being charged to federal programs and potential disallowance of expenses. Questioned Costs: Unable to determine exact amount due to lack of documentation. Recommendation: RTMC should enforce strict policies for maintaining proper documentation to verify and support costs. This ensures all expenses are allowable, reasonable, and allocable.
FA 2024-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program 10.555 – National School Lunch Program Federal Award Numbers: 245GA324N1199 (Year: 2024), 235GA32N1099 (Year: 2023) Questioned Costs: $7,388 Description: A review of expenditures charged to the Child Nutrition Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that expenditures were reviewed and approved and that the School District’s procurement and suspension and debarment procedures were followed. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential childcare institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $1,087,437.24 were expended and reported on the Wilkinson County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024. Criteria: As a recipient of federal awards, the School District 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…” Additionally, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state in part that “(a) the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations and… (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Methods of Procurement to Be Followed provide guidance for procurement through small purchase procedures and state “If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.” Condition: A sample of 39 expenditures was randomly selected for testing using a non-statistical sampling approach. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. For eight of the 10 sample expenditures that were incurred outside of the School District’s Co-Op process, evidence of review and approval was not reflected within the voucher package. Additionally, auditor reviewed five of these same expenditures and a sample of 29 additional expenditures, which was randomly selected for testing using a non-statistical sampling approach, to determine if procurement transactions complied with the School District’s procurement procedures and proper oversight was maintained to ensure that contractors were performing according to their contracts. The following deficiencies were noted with expenditures incurred outside of the School District’s Co-Op process: • Evidence of review and approval was not reflected within the voucher package and/or purchase files for 17 additional expenditures. • The School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources for eight small purchase expenditures reviewed. Questioned Costs: Upon testing a sample of $14,237 in procurement transactions that were incurred outside of the School District’s Co-Op process, known questioned costs of $7,388 were identified for expenditures that did not follow the School District’s procurement procedures. Using the population of procurements that were incurred outside of the School District’s Co-Op process of $56,274, we project the likely questioned costs to be approximately $29,200. Cause: The School District did not follow its policies and procedures that govern the nonpersonal services expenditure process for federal programs. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance related to CNC. Failure to ensure that expenditures are appropriately approved and procedures to address procurement and suspension and debarment compliance requirements are implemented exposes the School District to unnecessary risk of error and misuse of federal funds and could result in the expenditure of federal funds for unallowable purposes and/or with unqualified vendors. In addition, this deficiency could lead to the return of funding associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to CNC. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures reflect evidence of review and approval, required procurement methods are properly identified and followed and required procurement and suspension and debarment documentation is properly identified, safeguarded, and retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding.
FA 2024-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program 10.555 – National School Lunch Program Federal Award Numbers: 245GA324N1199 (Year: 2024), 235GA32N1099 (Year: 2023) Questioned Costs: $7,388 Description: A review of expenditures charged to the Child Nutrition Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that expenditures were reviewed and approved and that the School District’s procurement and suspension and debarment procedures were followed. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential childcare institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $1,087,437.24 were expended and reported on the Wilkinson County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024. Criteria: As a recipient of federal awards, the School District 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…” Additionally, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state in part that “(a) the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations and… (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Methods of Procurement to Be Followed provide guidance for procurement through small purchase procedures and state “If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.” Condition: A sample of 39 expenditures was randomly selected for testing using a non-statistical sampling approach. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. For eight of the 10 sample expenditures that were incurred outside of the School District’s Co-Op process, evidence of review and approval was not reflected within the voucher package. Additionally, auditor reviewed five of these same expenditures and a sample of 29 additional expenditures, which was randomly selected for testing using a non-statistical sampling approach, to determine if procurement transactions complied with the School District’s procurement procedures and proper oversight was maintained to ensure that contractors were performing according to their contracts. The following deficiencies were noted with expenditures incurred outside of the School District’s Co-Op process: • Evidence of review and approval was not reflected within the voucher package and/or purchase files for 17 additional expenditures. • The School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources for eight small purchase expenditures reviewed. Questioned Costs: Upon testing a sample of $14,237 in procurement transactions that were incurred outside of the School District’s Co-Op process, known questioned costs of $7,388 were identified for expenditures that did not follow the School District’s procurement procedures. Using the population of procurements that were incurred outside of the School District’s Co-Op process of $56,274, we project the likely questioned costs to be approximately $29,200. Cause: The School District did not follow its policies and procedures that govern the nonpersonal services expenditure process for federal programs. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance related to CNC. Failure to ensure that expenditures are appropriately approved and procedures to address procurement and suspension and debarment compliance requirements are implemented exposes the School District to unnecessary risk of error and misuse of federal funds and could result in the expenditure of federal funds for unallowable purposes and/or with unqualified vendors. In addition, this deficiency could lead to the return of funding associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to CNC. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures reflect evidence of review and approval, required procurement methods are properly identified and followed and required procurement and suspension and debarment documentation is properly identified, safeguarded, and retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding.
Finding 2024-010 - Material Weakness - Allowable Costs/Cost Principles Federal Assistance Listing Number: 84.010, 93.600 Federal Program Name: Title I Grants to Local Educational Agencies and Head Start Cluster Federal Agency Name: U.S. Department of Education and U.S. Department of Health and Human Services Pass-Through Entity Name: Wisconsin Department of Public Instruction Pass-Through Entity Identification Number: 2024-403619-DPI-TIA-141, 2024-403619-DPI-CSI-148 Criteria: In accordance with 2 CFR 200.303(a), the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In accordance with 2 CFR 200.430(i), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Additionally, 2 CFR 200.403(g) requires that costs are adequately documented to be allowable under Federal awards. Condition/Context: The District supports time charged to federal awards via semi-annual certifications which are approved by the grant administrator or the building principal. In order for a cost to be supported at the time of final reimbursement, the semi-annual certifications should be approved by the grant administrator or the building principal. Title I Grants to Local Educational Agencies (ALN 84.010) The final reimbursement claim for the Title I Grants to Local Educational Agencies (Title I) program were due to Wisconsin Department of Public Instruction (DPI) on September 30, 2024; however, the final reimbursement claim for the Part A award was not submitted to DPI until November 18, 2024, and the CSI award was not submitted to DPI until October 1, 2024, due to an extension. Five of the 40 individuals sampled had their semi-annual certifications not approved timely and were approved after the due date of the final reimbursement claim, but before the date of the actual submission of the final reimbursement claim. An additional two individuals of the 40 sampled had their semi-annual certifications approved after the final reimbursement claims were submitted. Upon further review of all the spring semi-annual certifications for the Title I awards, there were an additional 50 individuals that had their semi-annual certifications approved by the principal after the due date of the final reimbursement claim but before the submission of the final reimbursement. Additionally, nine individuals had their semi-annual certifications approved after the final reimbursement date of the Part A award and another 59 individuals from Part A did not have their semi-annual certifications approved at all. Head Start Cluster (ALN 93.600) The final reimbursement claim for the program was submitted to the Federal agency on November 22, 2024. Four of the 40 individuals sampled had their semi-annual certifications approved by the Head Start administrator after the submission date of the final reimbursement claims. Upon further review of the all the spring semi-annual certifications, there was an additional individual that had their semi-annual certifications approved by the principal after the due date of the final reimbursement claim and another four individuals that did not have their semi-annual certifications approved at all. The samples were not statistically valid. Cause: There was a lack of internal control over the timely approval of the semi-annual certifications. Effect or Potential Effect: By not having an approved semi-annual certification before the date of the final reimbursement claims, unallowable costs may be submitted for reimbursement. Questioned Costs: The payroll costs and related fringe benefits charged at a rate of 52.48% are unallowable. Title I Grants to Local Educational Agencies (ALN 84.010) • 2024-403619-DPI-CSI-148: The two sampled individuals’ payroll and fringe benefits for the particular transaction totaled $507. • 2024-403619-DPI-TIA-141: The additional individuals' payroll and fringe benefits for the spring semi-annual certifications reviewed that were approved after the final reimbursement submission date and those that were not approved at all totaled $2,077,880. Head Start Cluster (ALN 93.600) • 05CH010537: After the additional testing, the total payroll and related fringe benefits for the spring semi-annual certifications that were approved after the final reimbursement request submission date or not approved at all totaled $241,794. Recommendations: We recommend that controls be implemented that will allow costs to be reviewed and fully supported prior to the date the final reimbursement claims are due to DPI. Views of Responsible Official: Management concurs with the finding.
Finding 2024-010 - Material Weakness - Allowable Costs/Cost Principles Federal Assistance Listing Number: 84.010, 93.600 Federal Program Name: Title I Grants to Local Educational Agencies and Head Start Cluster Federal Agency Name: U.S. Department of Education and U.S. Department of Health and Human Services Pass-Through Entity Name: Wisconsin Department of Public Instruction Pass-Through Entity Identification Number: 2024-403619-DPI-TIA-141, 2024-403619-DPI-CSI-148 Criteria: In accordance with 2 CFR 200.303(a), the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In accordance with 2 CFR 200.430(i), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Additionally, 2 CFR 200.403(g) requires that costs are adequately documented to be allowable under Federal awards. Condition/Context: The District supports time charged to federal awards via semi-annual certifications which are approved by the grant administrator or the building principal. In order for a cost to be supported at the time of final reimbursement, the semi-annual certifications should be approved by the grant administrator or the building principal. Title I Grants to Local Educational Agencies (ALN 84.010) The final reimbursement claim for the Title I Grants to Local Educational Agencies (Title I) program were due to Wisconsin Department of Public Instruction (DPI) on September 30, 2024; however, the final reimbursement claim for the Part A award was not submitted to DPI until November 18, 2024, and the CSI award was not submitted to DPI until October 1, 2024, due to an extension. Five of the 40 individuals sampled had their semi-annual certifications not approved timely and were approved after the due date of the final reimbursement claim, but before the date of the actual submission of the final reimbursement claim. An additional two individuals of the 40 sampled had their semi-annual certifications approved after the final reimbursement claims were submitted. Upon further review of all the spring semi-annual certifications for the Title I awards, there were an additional 50 individuals that had their semi-annual certifications approved by the principal after the due date of the final reimbursement claim but before the submission of the final reimbursement. Additionally, nine individuals had their semi-annual certifications approved after the final reimbursement date of the Part A award and another 59 individuals from Part A did not have their semi-annual certifications approved at all. Head Start Cluster (ALN 93.600) The final reimbursement claim for the program was submitted to the Federal agency on November 22, 2024. Four of the 40 individuals sampled had their semi-annual certifications approved by the Head Start administrator after the submission date of the final reimbursement claims. Upon further review of the all the spring semi-annual certifications, there was an additional individual that had their semi-annual certifications approved by the principal after the due date of the final reimbursement claim and another four individuals that did not have their semi-annual certifications approved at all. The samples were not statistically valid. Cause: There was a lack of internal control over the timely approval of the semi-annual certifications. Effect or Potential Effect: By not having an approved semi-annual certification before the date of the final reimbursement claims, unallowable costs may be submitted for reimbursement. Questioned Costs: The payroll costs and related fringe benefits charged at a rate of 52.48% are unallowable. Title I Grants to Local Educational Agencies (ALN 84.010) • 2024-403619-DPI-CSI-148: The two sampled individuals’ payroll and fringe benefits for the particular transaction totaled $507. • 2024-403619-DPI-TIA-141: The additional individuals' payroll and fringe benefits for the spring semi-annual certifications reviewed that were approved after the final reimbursement submission date and those that were not approved at all totaled $2,077,880. Head Start Cluster (ALN 93.600) • 05CH010537: After the additional testing, the total payroll and related fringe benefits for the spring semi-annual certifications that were approved after the final reimbursement request submission date or not approved at all totaled $241,794. Recommendations: We recommend that controls be implemented that will allow costs to be reviewed and fully supported prior to the date the final reimbursement claims are due to DPI. Views of Responsible Official: Management concurs with the finding.
Finding 2024-010 - Material Weakness - Allowable Costs/Cost Principles Federal Assistance Listing Number: 84.010, 93.600 Federal Program Name: Title I Grants to Local Educational Agencies and Head Start Cluster Federal Agency Name: U.S. Department of Education and U.S. Department of Health and Human Services Pass-Through Entity Name: Wisconsin Department of Public Instruction Pass-Through Entity Identification Number: 2024-403619-DPI-TIA-141, 2024-403619-DPI-CSI-148 Criteria: In accordance with 2 CFR 200.303(a), the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In accordance with 2 CFR 200.430(i), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Additionally, 2 CFR 200.403(g) requires that costs are adequately documented to be allowable under Federal awards. Condition/Context: The District supports time charged to federal awards via semi-annual certifications which are approved by the grant administrator or the building principal. In order for a cost to be supported at the time of final reimbursement, the semi-annual certifications should be approved by the grant administrator or the building principal. Title I Grants to Local Educational Agencies (ALN 84.010) The final reimbursement claim for the Title I Grants to Local Educational Agencies (Title I) program were due to Wisconsin Department of Public Instruction (DPI) on September 30, 2024; however, the final reimbursement claim for the Part A award was not submitted to DPI until November 18, 2024, and the CSI award was not submitted to DPI until October 1, 2024, due to an extension. Five of the 40 individuals sampled had their semi-annual certifications not approved timely and were approved after the due date of the final reimbursement claim, but before the date of the actual submission of the final reimbursement claim. An additional two individuals of the 40 sampled had their semi-annual certifications approved after the final reimbursement claims were submitted. Upon further review of all the spring semi-annual certifications for the Title I awards, there were an additional 50 individuals that had their semi-annual certifications approved by the principal after the due date of the final reimbursement claim but before the submission of the final reimbursement. Additionally, nine individuals had their semi-annual certifications approved after the final reimbursement date of the Part A award and another 59 individuals from Part A did not have their semi-annual certifications approved at all. Head Start Cluster (ALN 93.600) The final reimbursement claim for the program was submitted to the Federal agency on November 22, 2024. Four of the 40 individuals sampled had their semi-annual certifications approved by the Head Start administrator after the submission date of the final reimbursement claims. Upon further review of the all the spring semi-annual certifications, there was an additional individual that had their semi-annual certifications approved by the principal after the due date of the final reimbursement claim and another four individuals that did not have their semi-annual certifications approved at all. The samples were not statistically valid. Cause: There was a lack of internal control over the timely approval of the semi-annual certifications. Effect or Potential Effect: By not having an approved semi-annual certification before the date of the final reimbursement claims, unallowable costs may be submitted for reimbursement. Questioned Costs: The payroll costs and related fringe benefits charged at a rate of 52.48% are unallowable. Title I Grants to Local Educational Agencies (ALN 84.010) • 2024-403619-DPI-CSI-148: The two sampled individuals’ payroll and fringe benefits for the particular transaction totaled $507. • 2024-403619-DPI-TIA-141: The additional individuals' payroll and fringe benefits for the spring semi-annual certifications reviewed that were approved after the final reimbursement submission date and those that were not approved at all totaled $2,077,880. Head Start Cluster (ALN 93.600) • 05CH010537: After the additional testing, the total payroll and related fringe benefits for the spring semi-annual certifications that were approved after the final reimbursement request submission date or not approved at all totaled $241,794. Recommendations: We recommend that controls be implemented that will allow costs to be reviewed and fully supported prior to the date the final reimbursement claims are due to DPI. Views of Responsible Official: Management concurs with the finding.
Finding 2024-010 - Material Weakness - Allowable Costs/Cost Principles Federal Assistance Listing Number: 84.010, 93.600 Federal Program Name: Title I Grants to Local Educational Agencies and Head Start Cluster Federal Agency Name: U.S. Department of Education and U.S. Department of Health and Human Services Pass-Through Entity Name: Wisconsin Department of Public Instruction Pass-Through Entity Identification Number: 2024-403619-DPI-TIA-141, 2024-403619-DPI-CSI-148 Criteria: In accordance with 2 CFR 200.303(a), the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In accordance with 2 CFR 200.430(i), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Additionally, 2 CFR 200.403(g) requires that costs are adequately documented to be allowable under Federal awards. Condition/Context: The District supports time charged to federal awards via semi-annual certifications which are approved by the grant administrator or the building principal. In order for a cost to be supported at the time of final reimbursement, the semi-annual certifications should be approved by the grant administrator or the building principal. Title I Grants to Local Educational Agencies (ALN 84.010) The final reimbursement claim for the Title I Grants to Local Educational Agencies (Title I) program were due to Wisconsin Department of Public Instruction (DPI) on September 30, 2024; however, the final reimbursement claim for the Part A award was not submitted to DPI until November 18, 2024, and the CSI award was not submitted to DPI until October 1, 2024, due to an extension. Five of the 40 individuals sampled had their semi-annual certifications not approved timely and were approved after the due date of the final reimbursement claim, but before the date of the actual submission of the final reimbursement claim. An additional two individuals of the 40 sampled had their semi-annual certifications approved after the final reimbursement claims were submitted. Upon further review of all the spring semi-annual certifications for the Title I awards, there were an additional 50 individuals that had their semi-annual certifications approved by the principal after the due date of the final reimbursement claim but before the submission of the final reimbursement. Additionally, nine individuals had their semi-annual certifications approved after the final reimbursement date of the Part A award and another 59 individuals from Part A did not have their semi-annual certifications approved at all. Head Start Cluster (ALN 93.600) The final reimbursement claim for the program was submitted to the Federal agency on November 22, 2024. Four of the 40 individuals sampled had their semi-annual certifications approved by the Head Start administrator after the submission date of the final reimbursement claims. Upon further review of the all the spring semi-annual certifications, there was an additional individual that had their semi-annual certifications approved by the principal after the due date of the final reimbursement claim and another four individuals that did not have their semi-annual certifications approved at all. The samples were not statistically valid. Cause: There was a lack of internal control over the timely approval of the semi-annual certifications. Effect or Potential Effect: By not having an approved semi-annual certification before the date of the final reimbursement claims, unallowable costs may be submitted for reimbursement. Questioned Costs: The payroll costs and related fringe benefits charged at a rate of 52.48% are unallowable. Title I Grants to Local Educational Agencies (ALN 84.010) • 2024-403619-DPI-CSI-148: The two sampled individuals’ payroll and fringe benefits for the particular transaction totaled $507. • 2024-403619-DPI-TIA-141: The additional individuals' payroll and fringe benefits for the spring semi-annual certifications reviewed that were approved after the final reimbursement submission date and those that were not approved at all totaled $2,077,880. Head Start Cluster (ALN 93.600) • 05CH010537: After the additional testing, the total payroll and related fringe benefits for the spring semi-annual certifications that were approved after the final reimbursement request submission date or not approved at all totaled $241,794. Recommendations: We recommend that controls be implemented that will allow costs to be reviewed and fully supported prior to the date the final reimbursement claims are due to DPI. Views of Responsible Official: Management concurs with the finding.
Criteria: Per 2 CFR §200.309 and §200.403(g), only costs incurred during the period of performance specified in the federal award are allowable. Costs incurred outside this period are unallowable unless specifically authorized by the awarding agency. Condition: The County lacked sufficient documentation to demonstrate that all payroll costs charged to the grant were incurred within the grant’s period of performance. Questioned costs: Known questioned costs of $33,314. Context: Grant 20-CDBG-CV1-00122 had a period of performance ending February 28, 2024. The County charged $31,314 in payroll costs to this grant using the same allocation method described in Finding 2024-013. However, the allocation was based on hours worked throughout FY24, and the County could not provide a detailed transaction listing to isolate costs incurred within the grant’s performance period. While $25,755 in nonpayroll costs were confirmed to be within the allowable period, the payroll costs could not be verified. Cause: The County did not maintain detailed records of expenditures by grant and relied on an allocation method that did not align with the grant’s performance period. Effect: Payroll costs totaling $33,314 may have been charged outside the allowable period, resulting in questioned costs and a material weakness in internal controls. Repeat Finding: This is not a repeat finding. Recommendation: The County should implement procedures to ensure that all expenditures are tracked by grant and incurred within the specified period of performance. Detailed transaction listings should be maintained to support compliance testing. Views of responsible officials: There is no disagreement with the audit finding.
Criteria: Per 2 CFR §200.309 and §200.403(g), only costs incurred during the period of performance specified in the federal award are allowable. Costs incurred outside this period are unallowable unless specifically authorized by the awarding agency. Condition: The County lacked sufficient documentation to demonstrate that all payroll costs charged to the grant were incurred within the grant’s period of performance. Questioned costs: Known questioned costs of $33,314. Context: Grant 20-CDBG-CV1-00122 had a period of performance ending February 28, 2024. The County charged $31,314 in payroll costs to this grant using the same allocation method described in Finding 2024-013. However, the allocation was based on hours worked throughout FY24, and the County could not provide a detailed transaction listing to isolate costs incurred within the grant’s performance period. While $25,755 in nonpayroll costs were confirmed to be within the allowable period, the payroll costs could not be verified. Cause: The County did not maintain detailed records of expenditures by grant and relied on an allocation method that did not align with the grant’s performance period. Effect: Payroll costs totaling $33,314 may have been charged outside the allowable period, resulting in questioned costs and a material weakness in internal controls. Repeat Finding: This is not a repeat finding. Recommendation: The County should implement procedures to ensure that all expenditures are tracked by grant and incurred within the specified period of performance. Detailed transaction listings should be maintained to support compliance testing. Views of responsible officials: There is no disagreement with the audit finding.
Criteria: Per 2 CFR §200.309 and §200.403(g), only costs incurred during the period of performance specified in the federal award are allowable. Costs incurred outside this period are unallowable unless specifically authorized by the awarding agency. Condition: The County lacked sufficient documentation to demonstrate that all payroll costs charged to the grant were incurred within the grant’s period of performance. Questioned costs: Known questioned costs of $33,314. Context: Grant 20-CDBG-CV1-00122 had a period of performance ending February 28, 2024. The County charged $31,314 in payroll costs to this grant using the same allocation method described in Finding 2024-013. However, the allocation was based on hours worked throughout FY24, and the County could not provide a detailed transaction listing to isolate costs incurred within the grant’s performance period. While $25,755 in nonpayroll costs were confirmed to be within the allowable period, the payroll costs could not be verified. Cause: The County did not maintain detailed records of expenditures by grant and relied on an allocation method that did not align with the grant’s performance period. Effect: Payroll costs totaling $33,314 may have been charged outside the allowable period, resulting in questioned costs and a material weakness in internal controls. Repeat Finding: This is not a repeat finding. Recommendation: The County should implement procedures to ensure that all expenditures are tracked by grant and incurred within the specified period of performance. Detailed transaction listings should be maintained to support compliance testing. Views of responsible officials: There is no disagreement with the audit finding.
Criteria: Per 2 CFR §200.309 and §200.403(g), only costs incurred during the period of performance specified in the federal award are allowable. Costs incurred outside this period are unallowable unless specifically authorized by the awarding agency. Condition: The County lacked sufficient documentation to demonstrate that all payroll costs charged to the grant were incurred within the grant’s period of performance. Questioned costs: Known questioned costs of $33,314. Context: Grant 20-CDBG-CV1-00122 had a period of performance ending February 28, 2024. The County charged $31,314 in payroll costs to this grant using the same allocation method described in Finding 2024-013. However, the allocation was based on hours worked throughout FY24, and the County could not provide a detailed transaction listing to isolate costs incurred within the grant’s performance period. While $25,755 in nonpayroll costs were confirmed to be within the allowable period, the payroll costs could not be verified. Cause: The County did not maintain detailed records of expenditures by grant and relied on an allocation method that did not align with the grant’s performance period. Effect: Payroll costs totaling $33,314 may have been charged outside the allowable period, resulting in questioned costs and a material weakness in internal controls. Repeat Finding: This is not a repeat finding. Recommendation: The County should implement procedures to ensure that all expenditures are tracked by grant and incurred within the specified period of performance. Detailed transaction listings should be maintained to support compliance testing. Views of responsible officials: There is no disagreement with the audit finding.
Criteria: Per 2 CFR §200.309 and §200.403(g), only costs incurred during the period of performance specified in the federal award are allowable. Costs incurred outside this period are unallowable unless specifically authorized by the awarding agency. Condition: The County lacked sufficient documentation to demonstrate that all payroll costs charged to the grant were incurred within the grant’s period of performance. Questioned costs: Known questioned costs of $33,314. Context: Grant 20-CDBG-CV1-00122 had a period of performance ending February 28, 2024. The County charged $31,314 in payroll costs to this grant using the same allocation method described in Finding 2024-013. However, the allocation was based on hours worked throughout FY24, and the County could not provide a detailed transaction listing to isolate costs incurred within the grant’s performance period. While $25,755 in nonpayroll costs were confirmed to be within the allowable period, the payroll costs could not be verified. Cause: The County did not maintain detailed records of expenditures by grant and relied on an allocation method that did not align with the grant’s performance period. Effect: Payroll costs totaling $33,314 may have been charged outside the allowable period, resulting in questioned costs and a material weakness in internal controls. Repeat Finding: This is not a repeat finding. Recommendation: The County should implement procedures to ensure that all expenditures are tracked by grant and incurred within the specified period of performance. Detailed transaction listings should be maintained to support compliance testing. Views of responsible officials: There is no disagreement with the audit finding.
Criteria: Per 2 CFR §200.309 and §200.403(g), only costs incurred during the period of performance specified in the federal award are allowable. Costs incurred outside this period are unallowable unless specifically authorized by the awarding agency. Condition: The County lacked sufficient documentation to demonstrate that all payroll costs charged to the grant were incurred within the grant’s period of performance. Questioned costs: Known questioned costs of $33,314. Context: Grant 20-CDBG-CV1-00122 had a period of performance ending February 28, 2024. The County charged $31,314 in payroll costs to this grant using the same allocation method described in Finding 2024-013. However, the allocation was based on hours worked throughout FY24, and the County could not provide a detailed transaction listing to isolate costs incurred within the grant’s performance period. While $25,755 in nonpayroll costs were confirmed to be within the allowable period, the payroll costs could not be verified. Cause: The County did not maintain detailed records of expenditures by grant and relied on an allocation method that did not align with the grant’s performance period. Effect: Payroll costs totaling $33,314 may have been charged outside the allowable period, resulting in questioned costs and a material weakness in internal controls. Repeat Finding: This is not a repeat finding. Recommendation: The County should implement procedures to ensure that all expenditures are tracked by grant and incurred within the specified period of performance. Detailed transaction listings should be maintained to support compliance testing. Views of responsible officials: There is no disagreement with the audit finding.
Criteria: Per 2 CFR §200.309 and §200.403(g), only costs incurred during the period of performance specified in the federal award are allowable. Costs incurred outside this period are unallowable unless specifically authorized by the awarding agency. Condition: The County lacked sufficient documentation to demonstrate that all payroll costs charged to the grant were incurred within the grant’s period of performance. Questioned costs: Known questioned costs of $33,314. Context: Grant 20-CDBG-CV1-00122 had a period of performance ending February 28, 2024. The County charged $31,314 in payroll costs to this grant using the same allocation method described in Finding 2024-013. However, the allocation was based on hours worked throughout FY24, and the County could not provide a detailed transaction listing to isolate costs incurred within the grant’s performance period. While $25,755 in nonpayroll costs were confirmed to be within the allowable period, the payroll costs could not be verified. Cause: The County did not maintain detailed records of expenditures by grant and relied on an allocation method that did not align with the grant’s performance period. Effect: Payroll costs totaling $33,314 may have been charged outside the allowable period, resulting in questioned costs and a material weakness in internal controls. Repeat Finding: This is not a repeat finding. Recommendation: The County should implement procedures to ensure that all expenditures are tracked by grant and incurred within the specified period of performance. Detailed transaction listings should be maintained to support compliance testing. Views of responsible officials: There is no disagreement with the audit finding.
Criteria: Per 2 CFR §200.403 and §200.405, costs charged to federal awards must be allowable, allocable, and supported by adequate documentation. Indirect costs must be charged in accordance with an approved cost allocation plan under 2 CFR §200.412–§200.415. Condition: The County charged payroll costs using an internal allocation method that included salaries, benefits, and supplies, rather than actual expenditures. This method was not supported by an approved cost allocation plan. Additionally, the hours charged were based on total grant administration time, not specific to the CDBG program. Questioned costs: Known questioned costs of $21,643. Context: As part of the audit of the County’s FY24 expenditures under the CDBG program, CLA requested a reconciliation of payroll and nonpayroll costs. The County reported $67,219 in payroll expenses, but only $45,576 could be reconciled to supporting documentation. The remaining $21,643 could not be substantiated due to the preparer being on medical leave. Additionally, payroll costs were calculated using an internal allocation method that included indirect components (e.g., supplies) and were not supported by an approved cost allocation plan. The hours charged were based on general grant administration rather than specific CDBG activities. Cause: The County relied on an internally developed allocation method without formal approval or alignment with federal cost principles. Effect: The use of an unapproved allocation basis and insufficient documentation resulted in questioned costs totaling $21,643. The methodology overstated actual costs and did not ensure that charges were specific to the CDBG program. Repeat Finding: This is not a repeat finding. Recommendation: The County should ensure that all costs charged to federal programs are based on actual expenditures or an approved cost allocation plan. Documentation should be maintained to support all reported costs, and internal controls should be strengthened to prevent reliance on unsupported methodologies. Views of responsible officials: There is no disagreement with the audit finding.
Criteria: Per 2 CFR §200.403 and §200.405, costs charged to federal awards must be allowable, allocable, and supported by adequate documentation. Indirect costs must be charged in accordance with an approved cost allocation plan under 2 CFR §200.412–§200.415. Condition: The County charged payroll costs using an internal allocation method that included salaries, benefits, and supplies, rather than actual expenditures. This method was not supported by an approved cost allocation plan. Additionally, the hours charged were based on total grant administration time, not specific to the CDBG program. Questioned costs: Known questioned costs of $21,643. Context: As part of the audit of the County’s FY24 expenditures under the CDBG program, CLA requested a reconciliation of payroll and nonpayroll costs. The County reported $67,219 in payroll expenses, but only $45,576 could be reconciled to supporting documentation. The remaining $21,643 could not be substantiated due to the preparer being on medical leave. Additionally, payroll costs were calculated using an internal allocation method that included indirect components (e.g., supplies) and were not supported by an approved cost allocation plan. The hours charged were based on general grant administration rather than specific CDBG activities. Cause: The County relied on an internally developed allocation method without formal approval or alignment with federal cost principles. Effect: The use of an unapproved allocation basis and insufficient documentation resulted in questioned costs totaling $21,643. The methodology overstated actual costs and did not ensure that charges were specific to the CDBG program. Repeat Finding: This is not a repeat finding. Recommendation: The County should ensure that all costs charged to federal programs are based on actual expenditures or an approved cost allocation plan. Documentation should be maintained to support all reported costs, and internal controls should be strengthened to prevent reliance on unsupported methodologies. Views of responsible officials: There is no disagreement with the audit finding.
Criteria: Per 2 CFR §200.403 and §200.405, costs charged to federal awards must be allowable, allocable, and supported by adequate documentation. Indirect costs must be charged in accordance with an approved cost allocation plan under 2 CFR §200.412–§200.415. Condition: The County charged payroll costs using an internal allocation method that included salaries, benefits, and supplies, rather than actual expenditures. This method was not supported by an approved cost allocation plan. Additionally, the hours charged were based on total grant administration time, not specific to the CDBG program. Questioned costs: Known questioned costs of $21,643. Context: As part of the audit of the County’s FY24 expenditures under the CDBG program, CLA requested a reconciliation of payroll and nonpayroll costs. The County reported $67,219 in payroll expenses, but only $45,576 could be reconciled to supporting documentation. The remaining $21,643 could not be substantiated due to the preparer being on medical leave. Additionally, payroll costs were calculated using an internal allocation method that included indirect components (e.g., supplies) and were not supported by an approved cost allocation plan. The hours charged were based on general grant administration rather than specific CDBG activities. Cause: The County relied on an internally developed allocation method without formal approval or alignment with federal cost principles. Effect: The use of an unapproved allocation basis and insufficient documentation resulted in questioned costs totaling $21,643. The methodology overstated actual costs and did not ensure that charges were specific to the CDBG program. Repeat Finding: This is not a repeat finding. Recommendation: The County should ensure that all costs charged to federal programs are based on actual expenditures or an approved cost allocation plan. Documentation should be maintained to support all reported costs, and internal controls should be strengthened to prevent reliance on unsupported methodologies. Views of responsible officials: There is no disagreement with the audit finding.
Criteria: Per 2 CFR §200.403 and §200.405, costs charged to federal awards must be allowable, allocable, and supported by adequate documentation. Indirect costs must be charged in accordance with an approved cost allocation plan under 2 CFR §200.412–§200.415. Condition: The County charged payroll costs using an internal allocation method that included salaries, benefits, and supplies, rather than actual expenditures. This method was not supported by an approved cost allocation plan. Additionally, the hours charged were based on total grant administration time, not specific to the CDBG program. Questioned costs: Known questioned costs of $21,643. Context: As part of the audit of the County’s FY24 expenditures under the CDBG program, CLA requested a reconciliation of payroll and nonpayroll costs. The County reported $67,219 in payroll expenses, but only $45,576 could be reconciled to supporting documentation. The remaining $21,643 could not be substantiated due to the preparer being on medical leave. Additionally, payroll costs were calculated using an internal allocation method that included indirect components (e.g., supplies) and were not supported by an approved cost allocation plan. The hours charged were based on general grant administration rather than specific CDBG activities. Cause: The County relied on an internally developed allocation method without formal approval or alignment with federal cost principles. Effect: The use of an unapproved allocation basis and insufficient documentation resulted in questioned costs totaling $21,643. The methodology overstated actual costs and did not ensure that charges were specific to the CDBG program. Repeat Finding: This is not a repeat finding. Recommendation: The County should ensure that all costs charged to federal programs are based on actual expenditures or an approved cost allocation plan. Documentation should be maintained to support all reported costs, and internal controls should be strengthened to prevent reliance on unsupported methodologies. Views of responsible officials: There is no disagreement with the audit finding.
Criteria: Per 2 CFR §200.403 and §200.405, costs charged to federal awards must be allowable, allocable, and supported by adequate documentation. Indirect costs must be charged in accordance with an approved cost allocation plan under 2 CFR §200.412–§200.415. Condition: The County charged payroll costs using an internal allocation method that included salaries, benefits, and supplies, rather than actual expenditures. This method was not supported by an approved cost allocation plan. Additionally, the hours charged were based on total grant administration time, not specific to the CDBG program. Questioned costs: Known questioned costs of $21,643. Context: As part of the audit of the County’s FY24 expenditures under the CDBG program, CLA requested a reconciliation of payroll and nonpayroll costs. The County reported $67,219 in payroll expenses, but only $45,576 could be reconciled to supporting documentation. The remaining $21,643 could not be substantiated due to the preparer being on medical leave. Additionally, payroll costs were calculated using an internal allocation method that included indirect components (e.g., supplies) and were not supported by an approved cost allocation plan. The hours charged were based on general grant administration rather than specific CDBG activities. Cause: The County relied on an internally developed allocation method without formal approval or alignment with federal cost principles. Effect: The use of an unapproved allocation basis and insufficient documentation resulted in questioned costs totaling $21,643. The methodology overstated actual costs and did not ensure that charges were specific to the CDBG program. Repeat Finding: This is not a repeat finding. Recommendation: The County should ensure that all costs charged to federal programs are based on actual expenditures or an approved cost allocation plan. Documentation should be maintained to support all reported costs, and internal controls should be strengthened to prevent reliance on unsupported methodologies. Views of responsible officials: There is no disagreement with the audit finding.
Criteria: Per 2 CFR §200.403 and §200.405, costs charged to federal awards must be allowable, allocable, and supported by adequate documentation. Indirect costs must be charged in accordance with an approved cost allocation plan under 2 CFR §200.412–§200.415. Condition: The County charged payroll costs using an internal allocation method that included salaries, benefits, and supplies, rather than actual expenditures. This method was not supported by an approved cost allocation plan. Additionally, the hours charged were based on total grant administration time, not specific to the CDBG program. Questioned costs: Known questioned costs of $21,643. Context: As part of the audit of the County’s FY24 expenditures under the CDBG program, CLA requested a reconciliation of payroll and nonpayroll costs. The County reported $67,219 in payroll expenses, but only $45,576 could be reconciled to supporting documentation. The remaining $21,643 could not be substantiated due to the preparer being on medical leave. Additionally, payroll costs were calculated using an internal allocation method that included indirect components (e.g., supplies) and were not supported by an approved cost allocation plan. The hours charged were based on general grant administration rather than specific CDBG activities. Cause: The County relied on an internally developed allocation method without formal approval or alignment with federal cost principles. Effect: The use of an unapproved allocation basis and insufficient documentation resulted in questioned costs totaling $21,643. The methodology overstated actual costs and did not ensure that charges were specific to the CDBG program. Repeat Finding: This is not a repeat finding. Recommendation: The County should ensure that all costs charged to federal programs are based on actual expenditures or an approved cost allocation plan. Documentation should be maintained to support all reported costs, and internal controls should be strengthened to prevent reliance on unsupported methodologies. Views of responsible officials: There is no disagreement with the audit finding.
Criteria: Per 2 CFR §200.403 and §200.405, costs charged to federal awards must be allowable, allocable, and supported by adequate documentation. Indirect costs must be charged in accordance with an approved cost allocation plan under 2 CFR §200.412–§200.415. Condition: The County charged payroll costs using an internal allocation method that included salaries, benefits, and supplies, rather than actual expenditures. This method was not supported by an approved cost allocation plan. Additionally, the hours charged were based on total grant administration time, not specific to the CDBG program. Questioned costs: Known questioned costs of $21,643. Context: As part of the audit of the County’s FY24 expenditures under the CDBG program, CLA requested a reconciliation of payroll and nonpayroll costs. The County reported $67,219 in payroll expenses, but only $45,576 could be reconciled to supporting documentation. The remaining $21,643 could not be substantiated due to the preparer being on medical leave. Additionally, payroll costs were calculated using an internal allocation method that included indirect components (e.g., supplies) and were not supported by an approved cost allocation plan. The hours charged were based on general grant administration rather than specific CDBG activities. Cause: The County relied on an internally developed allocation method without formal approval or alignment with federal cost principles. Effect: The use of an unapproved allocation basis and insufficient documentation resulted in questioned costs totaling $21,643. The methodology overstated actual costs and did not ensure that charges were specific to the CDBG program. Repeat Finding: This is not a repeat finding. Recommendation: The County should ensure that all costs charged to federal programs are based on actual expenditures or an approved cost allocation plan. Documentation should be maintained to support all reported costs, and internal controls should be strengthened to prevent reliance on unsupported methodologies. Views of responsible officials: There is no disagreement with the audit finding.
Federal Program Information: Assistance Listing Number: 93.959 Federal Program Title: Block Grants for Substance Use Prevention, Treatment, and Recovery Services Federal Agency: U.S. Department of Health and Human Services Passed Through Entity: County of Los Angeles Public Health Federal Award Number: PH-004383-W2, PH-004383-W1 Federal Award Year: July 1, 2023 to June 30, 2024 Compliance Requirement: Allowable Costs/Cost Principles Assistance Listing Number: 93.531 Federal Program Title: Community Transformation Grants and National Dissemination and Support for Community Transformation Grants Federal Agency: U.S. Department of Health and Human Services Passed Through Entity: County of Los Angeles Public Health Federal Award Number: PH-004921 Federal Award Year: July 1, 2023 to June 30, 2024 Compliance Requirement: Allowable Costs/Cost Principles Criteria: Per the Uniform Guidance, 2 CFR §200.430(i), charges to federal awards for salaries and wages must be based on records that accurately reflect the actual work performed. Budget estimates may be used for interim purposes, but must be supported by contemporaneous documentation, reconciled to actual time worked, and adjusted as necessary. Additionally, 2 CFR §200.403(d) requires that costs be allocated to federal awards in accordance with the relative benefits received. The OMB Compliance Supplement (Part 6 – Internal Control and Part 3 – Compliance Requirements) reinforces that payroll and nonpayroll costs must be supported by reliable records and allocated using reasonable and consistent methodologies. Condition: During the testing of payroll costs, we noted that for Federal Assistance Listings 93.959 and 93.531, payroll charges in 4 out of 40 samples and 2 out of 11 samples, respectively, were based on budgeted rates rather than actual hours worked. Supporting documentation (e.g., timesheets or equivalent records) was not used to substantiate the final charges, and adjustments to actual time and effort were not made. For nonpayroll costs, we identified that in 3 out of 40 samples (93.959) and 5 out of 18 samples (93.531), costs were not allocated using a consistent and reasonable basis across all benefiting programs. Instead, the Organization either charged costs by maximizing the allowable budget under each program or have inadvertently used an incorrect basis due to oversight. Cause: The deficiencies occurred because the Organization’s internal controls were not sufficiently designed or implemented to ensure compliance with Uniform Guidance requirements. Specifically, payroll costs were charged to federal awards based on budget estimates rather than actual time and effort supported by records such as timesheets, and nonpayroll costs were either maximized to the budget or were allocated using an incorrect basis. These control gaps in review and documentation resulted in costs being charged to federal programs in a manner inconsistent with Allowable Costs/Cost Principles. Effect: As a result of these deficiencies, federal program expenditures reported to the awarding agency were misstated. Our testing identified questioned costs across both programs, consisting of payroll and nonpayroll overallocations. These represent unallowable costs under Uniform Guidance and may be subject to disallowance. Inaccurate cost allocations increase the risk of noncompliance with federal requirements, could lead to repayment of disallowed costs, and may negatively affect future federal funding decisions. Questioned Costs: Known and extrapolated costs for payroll and nonpayroll costs for Federal Assistance Listings 93.959 and 93.531 are summarized below. These amounts represent the overallocation to the programs, representing unallowable costs under Uniform Guidance. Recommendation: We recommend that the Organization strengthen its internal controls over payroll and nonpayroll cost allocations by requiring time and effort records to support all payroll charges to federal awards, ensuring nonpayroll costs are allocated using documented and equitable methodologies, and performing regular reconciliations of budgeted amounts to actual costs. In addition, staff responsible for preparing and reviewing cost allocations should receive training on Uniform Guidance requirements to ensure accuracy, compliance, and consistency across all federal programs. Views of responsible officials and planned corrective actions: For payroll, procedures will be implemented to ensure that payroll costs allocated to federal grants are supported by actual time. For nonpayroll, procedures will be enhanced to ensure proper allocation of nonpayroll costs to federal grants. Allocations will be reviewed and monitored on a monthly and quarterly basis to prevent misallocation and ensure compliance with the Uniform Guidance. Personnel responsible for implementation: Executive Director Christy Zamani and Beaulieu Accountancy Corporation. Date of implementation: August 5, 2025
Federal Program Information: Assistance Listing Number: 93.959 Federal Program Title: Block Grants for Substance Use Prevention, Treatment, and Recovery Services Federal Agency: U.S. Department of Health and Human Services Passed Through Entity: County of Los Angeles Public Health Federal Award Number: PH-004383-W2, PH-004383-W1 Federal Award Year: July 1, 2023 to June 30, 2024 Compliance Requirement: Allowable Costs/Cost Principles Assistance Listing Number: 93.531 Federal Program Title: Community Transformation Grants and National Dissemination and Support for Community Transformation Grants Federal Agency: U.S. Department of Health and Human Services Passed Through Entity: County of Los Angeles Public Health Federal Award Number: PH-004921 Federal Award Year: July 1, 2023 to June 30, 2024 Compliance Requirement: Allowable Costs/Cost Principles Criteria: Per the Uniform Guidance, 2 CFR §200.430(i), charges to federal awards for salaries and wages must be based on records that accurately reflect the actual work performed. Budget estimates may be used for interim purposes, but must be supported by contemporaneous documentation, reconciled to actual time worked, and adjusted as necessary. Additionally, 2 CFR §200.403(d) requires that costs be allocated to federal awards in accordance with the relative benefits received. The OMB Compliance Supplement (Part 6 – Internal Control and Part 3 – Compliance Requirements) reinforces that payroll and nonpayroll costs must be supported by reliable records and allocated using reasonable and consistent methodologies. Condition: During the testing of payroll costs, we noted that for Federal Assistance Listings 93.959 and 93.531, payroll charges in 4 out of 40 samples and 2 out of 11 samples, respectively, were based on budgeted rates rather than actual hours worked. Supporting documentation (e.g., timesheets or equivalent records) was not used to substantiate the final charges, and adjustments to actual time and effort were not made. For nonpayroll costs, we identified that in 3 out of 40 samples (93.959) and 5 out of 18 samples (93.531), costs were not allocated using a consistent and reasonable basis across all benefiting programs. Instead, the Organization either charged costs by maximizing the allowable budget under each program or have inadvertently used an incorrect basis due to oversight. Cause: The deficiencies occurred because the Organization’s internal controls were not sufficiently designed or implemented to ensure compliance with Uniform Guidance requirements. Specifically, payroll costs were charged to federal awards based on budget estimates rather than actual time and effort supported by records such as timesheets, and nonpayroll costs were either maximized to the budget or were allocated using an incorrect basis. These control gaps in review and documentation resulted in costs being charged to federal programs in a manner inconsistent with Allowable Costs/Cost Principles. Effect: As a result of these deficiencies, federal program expenditures reported to the awarding agency were misstated. Our testing identified questioned costs across both programs, consisting of payroll and nonpayroll overallocations. These represent unallowable costs under Uniform Guidance and may be subject to disallowance. Inaccurate cost allocations increase the risk of noncompliance with federal requirements, could lead to repayment of disallowed costs, and may negatively affect future federal funding decisions. Questioned Costs: Known and extrapolated costs for payroll and nonpayroll costs for Federal Assistance Listings 93.959 and 93.531 are summarized below. These amounts represent the overallocation to the programs, representing unallowable costs under Uniform Guidance. Recommendation: We recommend that the Organization strengthen its internal controls over payroll and nonpayroll cost allocations by requiring time and effort records to support all payroll charges to federal awards, ensuring nonpayroll costs are allocated using documented and equitable methodologies, and performing regular reconciliations of budgeted amounts to actual costs. In addition, staff responsible for preparing and reviewing cost allocations should receive training on Uniform Guidance requirements to ensure accuracy, compliance, and consistency across all federal programs. Views of responsible officials and planned corrective actions: For payroll, procedures will be implemented to ensure that payroll costs allocated to federal grants are supported by actual time. For nonpayroll, procedures will be enhanced to ensure proper allocation of nonpayroll costs to federal grants. Allocations will be reviewed and monitored on a monthly and quarterly basis to prevent misallocation and ensure compliance with the Uniform Guidance. Personnel responsible for implementation: Executive Director Christy Zamani and Beaulieu Accountancy Corporation. Date of implementation: August 5, 2025