FA 2024-002 Improve Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425W – American Rescue Plan Elementary and Secondary School Emergency Relief Fund – Homeless Children and Youth Federal Award Numbers: S425D210012 (Year: 2021), S425U210012 (Year: 2021), S425W210011 (Year: 2021) Questioned Costs: $8,763.69 Repeat of Prior Year Findings: FA 2023-002, FA 2022-002 Description: A review of expenditures charged to the Elementary and Secondary School Emergency Relief Fund program revealed that the School District’s internal control procedures were not operating to ensure that expenditures were appropriately documented to support allowability. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to the coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $1,581,012 were expended and reported on the Talbot County School District’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…” Furthermore, provisions included in the Uniform Guidance, Section 200.430 – Compensation-Personal Services prescribe standards for documentation of personnel expenses and state, in part, that “(a) …Costs for compensation are allowable to the extent that they satisfy… specific requirements…, and that the total compensation for individual employees: (1) is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i)…, [as follows:] (i) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity…” Condition: A sample of 16 nonpersonal services expenditures was randomly selected for testing using a nonstatistical sampling approach. The expenditures were reviewed to determine if internal controls were implemented and applicable compliance requirements met. The following deficiencies were noted: • For three expenditures, evidence of review and approval was not reflected within the voucher package. • For one expenditure, unallowable costs totaling $14.35 were identified. All journal entries and general ledger adjustments impacting program expenditures were selected for testing. The following deficiencies were noted: • For five of the 13 items tested, appropriate evidence of review and approval was not maintained. • Sufficient supporting documentation was not provided for four journal entries posted to reverse expenditure activity. • For two journal entries used to record expenditures totaling $4,263.19 in the ESSER fund, it was determined that the charges recorded were not allowable and were not approved on the GaDOE consolidated application. Additionally, a sample of 23 employees was randomly selected for testing using a non-statistical sampling approach. Personal services expenditures for these employees were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements met. The following deficiencies were noted: • For four employees, supporting documentation was not maintained for additional payments totaling $3,560.05. • For one employee, supporting documentation was not maintained for a pay adjustment resulting in a decrease of $500.00. • For three employees, the amount paid did not agree to board-approved salary scales and resulted in underpayments totaling $1,450.81 for two employees and an overpayment of $926.10 for one employee. Questioned Costs: Upon testing $64,812.64 of nonpersonal services expenditures, known questioned costs of $14.35 were identified for expenditures not supported by adequate documentation. Using the total nonpersonal services expenditures population of $560,743.52, we project the likely questioned costs to be approximately $124.15. In addition, upon testing a sample of $176,911.22 in personal services expenditures, known questioned costs of $4,486.15 were identified for overpayments and expenditures not supported by adequate documentation. Using the total personal services expenditures population of $873,826.11 (excluding benefits payments), we project the likely questioned costs to be approximately $22,158.66. Further, known questioned costs of $4,263.19 were identified for expenditures not supported by adequate journal entry documentation and were not tested as part of a sample; therefore, the known and likely questioned costs identified for unallowable payments throughout the expenditure testing totaled $8,763.69 and $26,546.00, respectively. Cause: In discussing these deficiencies with the School District, they believe these issues are due to improper documentation retention and the need for updated policies and procedures. Effect: The School District is not in compliance with the Uniform Guidance or ED guidance related to the ESSER program. Failure to ensure that documentation exists to support the allowability of payments from the ESSER fund may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures are supported by appropriate documentation. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District’s purchasing and employee compensation policies and procedures. Views of Responsible Officials: We concur with this finding.
FINDING 2024-003 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): SY 22-23, SY 23-24 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-003. Condition and Context The School Corporation had not designed nor implemented a system of internal controls to ensure that program costs were supported by proper documentation, were allowable, and were only for the operation of the food service program. INDIANA STATE BOARD OF ACCOUNTS 21 NORTH LAWRENCE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Vendor Transactions A sample of 61 vendor transactions from the Food Service fund was selected for testing to verify the transactions were for allowable activities and costs under the Child Nutrition programs. There were 3 of the 61 transactions, totaling $3,698, that were paid to vendors for which the School Corporation could not provide documentation to support the costs. As such, the 3 transactions could not be verified as an allowable activity or cost for the food service program. In addition, 12 of the 61 vendor transactions, totaling $427, were refunds of student meal accounts that should have been paid out of the Prepaid Food fund. Of the 61 vendor transactions, there was 1 in the amount of $536 that was not related to food service. Payroll Transactions During testing, stipends totaling $1,142 were paid to 4 employees with no documentation to show support or approval of the stipend amount. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . INDIANA STATE BOARD OF ACCOUNTS 22 NORTH LAWRENCE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (g) Be adequately documented. . . ." Cause Due to turnover of staffing in both the food service personnel and the School Corporation's administrative office, an effective system of internal controls was not established that would have ensured compliance, or that would have ensured supporting documentation would have been maintained and made available for audit, with the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Effect Without a proper system in place, noncompliance remained undetected, resulting in grant expenditures being spent for unallowable costs and without the proper supporting documentation. Noncompliance with grant agreement and the Activities Allowed or Unallowed and the Allowable Cost/Costs Principles compliance requirements could result in the loss of future federal funds to the School Corporation. Questioned Costs We identified $5,803 in known questioned costs as noted above in the Condition and Context. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls to ensure that expenditures made from federal awards are allowable per the terms and conditions of the federal award as well as the Allowable Costs/Cost Principles compliance requirement and that adequate supporting documentation is retained. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-006 Subject: Special Education Cluster (IDEA) - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 21611-045-PN01, 22611-045-PN01, 22611-045-ARP, 21619-045-PN01, 22619-045-PN01, 22619-045-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 26 NORTH LAWRENCE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-006. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls to ensure that proper documentation was retained for audit. A sample of 60 expenditures made from the School Corporation's Special Education funds during the audit period was selected for testing. Of the sample of 60, there were 47 transactions that were fringe benefit claims for which there was no detail to identify the employees included in the payment amount. In addition, documentation and contracts were not provided for another 6 transactions. As a result, 53 expenditures, totaling $32,097, could not be verified as allowable activities or costs for the Special Education program. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for the Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 34 CFR 300.202(a) states: "General. Amounts provided to the LEA under Part B of the Act— (1) Must be expended in accordance with the applicable provisions of this part; (2) Must be used only to pay the excess costs of providing special education and related services to children with disabilities, consistent with paragraph (b) of this section; and (3) Must be used to supplement State, local, and other Federal funds and not to supplant those funds." INDIANA STATE BOARD OF ACCOUNTS 27 NORTH LAWRENCE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 34 CFR 300.208 states: "(a) Uses. Notwithstanding §§ 300.202, 300.203(b), and 300.162(b), funds provided to an LEA under Part B of the Act may be used for the following activities: (1) Services and aids that also benefit nondisabled children. For the costs of special education and related services, and supplementary aids and services, provided in a regular class or other education-related setting to a child with a disability in accordance with the IEP of the child, even if one or more nondisabled children benefit from these services. (2) Early intervening services. To develop and implement coordinated, early intervening educational services in accordance with § 300.226. (3) High cost special education and related services. To establish and implement cost or risk sharing funds, consortia, or cooperatives for the LEA itself, or for LEAs working in a consortium of which the LEA is a part, to pay for high cost special education and related services. (b) Administrative case management. An LEA may use funds received under Part B of the Act to purchase appropriate technology for recordkeeping, data collection, and related case management activities of teachers and related services personnel providing services described in the IEP of children with disabilities, that is needed for the implementation of those case management activities." 34 CFR 300.800 states: "The Secretary provides grants under section 619 of the Act to assist States to provide special education and related services in accordance with Part B of the Act— (a) To children with disabilities aged three through five years; and (b) At a State's discretion, to two-year-old children with disabilities who will turn three during the school year." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." INDIANA STATE BOARD OF ACCOUNTS 28 NORTH LAWRENCE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Due to turnover of staffing in both the Special Education personnel and the School Corporation's administrative office, an effective system of internal controls was not established that would have ensured compliance, or that supporting documentation would have been maintained and made available for audit, with the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Effect Without a proper system of internal controls in place that operated effectively, the School Corporation did not retain and provide appropriate supporting documentation. This prevented the determination of the School Corporation's compliance with the compliance requirements listed above. Questioned Costs We identified $32,097 in known questioned costs as noted above in the Condition and Context. Recommendation We recommended that the School Corporation's management establish an effective system of internal controls to ensure documentation to support all grant expenditures will be maintained and made available for audit as related to the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-008 Subject: Special Education Cluster (IDEA) - Earmarking and Level of Effort Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-045-PN01, 22611-045-PN01, 22611-045-ARP, 22619-045-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-008. Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 31 NORTH LAWRENCE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Earmarking The nonpublic proportionate share of expenditures for the 21611-045-PN01, 22611-045-PN01, 22611-045-ARP, and 22619-045-PN01 grant awards could not be verified for proper classification and do not meet the proportionate share requirement. In addition, 22611-045-PN01, 22611-045-ARP, and 22619-045-PN01 could not be verified as having any nonpublic expenses. The funds associated with these grants were, in some cases, comingled and/or overspent with multiple grant years and not adjusted properly. These errors were not corrected during the audit period. The nonpublic proportionate share of expenditures was determined by applying a percentage to the nonpublic school budgeted expenditures. These were the amounts reported to the Indiana Department of Education (IDOE). As such, we were unable to identify if the minimum amount per grant award was expended and properly reported to the IDOE as required. Level of Effort - Maintenance of Effort Maintenance of effort is a district-level test that determines whether the School Corporation is providing a consistent level of financial support to public schools from year-to-year. This rule ensures that the School Corporation does not use Special Education funds to shore up reductions in state and local support for public education. The IDOE performs the maintenance of effort calculation utilizing Form 9 information provided by the School Corporation from the prior year. As such, the amounts submitted to the IDOE in the prior year to be used in the computation are tested to ensure they were recorded properly in the School Corporation's records as to the account and object code. In fiscal years 2021-2022 and 2022-2023, 60 transactions were tested each year to ensure the disbursements were posted to the proper account and object code. For 30 of the 60 transactions selected in 2021-2022, as well as 47 of the 60 transactions selected in 2022-2023, appropriate supporting documentation was not provided for audit. As a result, 77 disbursements could not be verified as to whether they were posted to the proper account or object code. In addition, 60 disbursement line items were sampled from the IDOE Form 9 for both 2021-2022 and 2022-2023, to ensure the amounts agreed to the ledger. A total of 21 of the 60 disbursement line items in 2021-2022 and 2 of the 60 disbursement line items in 2022-2023 could not be traced to the ledger. Therefore, we were unable to determine if the disbursements for 23 disbursement line items were posted to the proper account or object code. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 32 NORTH LAWRENCE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of the nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause Due to turnover of staffing in both the Special Education personnel and the School Corporation's administrative office and recordkeeping issues, the School Corporation's management had not developed a system of internal controls that would have ensured compliance, or that supporting documentation would have been maintained and made available for audit, as related to the Matching, Level of Effort, Earmarking compliance requirement. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure compliance with the level of effort - maintenance of effort and earmarking requirements. As a result, amounts reported to the oversight agency were not accurately reported. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are appropriately allocated to the individual school based on expenses charged directly on behalf of that school. Supporting documentation for these expenses should be retained for audit. In addition, proper recordkeeping should be maintained to ensure compliance with the level of effort - maintenance of effort and earmarking requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-011 Subject: Title I Grants to Local Educational Agencies - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-010. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls to ensure that proper documentation was retained for audit. A sample of 60 transactions charged to the Title I grant during the audit period was selected for testing. The following errors were noted: • A total of 29 transactions, totaling $13,621, were fringe benefit claims; however, the supporting documentation provided did not include details to identify the employees for which the benefit was paid. As a result, we were unable to determine if the payments were on behalf of allowable staff related to the Title I program. • The School Corporation was unable to provide supporting documentation for 2 transactions totaling $551. As such, these transactions were unable to be verified as allowable activities or costs for the Title I program. The errors noted above were considered questioned costs. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 39 NORTH LAWRENCE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for the Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE's definition of IBS); . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." Cause Due to turnover of staffing in the School Corporation's administrative office, the School Corporation's management had not established an effective system of internal controls that would have ensured compliance, or that supporting documentation would have been maintained and made available for audit, related to the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. INDIANA STATE BOARD OF ACCOUNTS 40 NORTH LAWRENCE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without a proper system of internal controls in place that operated effectively, the School Corporation did not retain and provide appropriate supporting documentation. This prevented the determination of the School Corporation's compliance with the compliance requirements listed above. Questioned Costs We identified $14,172 in known questioned costs as noted above in the Condition and Context. Recommendation We recommended that the School Corporation's management establish an effective system of internal controls to ensure documentation will be maintained and made available for audit as related to the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-012 Subject: Title I Grants to Local Educational Agencies - Level of Effort - Maintenance of Effort, Earmarking Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-011. Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. Level of Effort - Maintenance of Effort Maintenance of effort is a district-level test that determines whether the School Corporation is providing a consistent level of financial support to public schools from year-to-year. This rule ensures that the School Corporation does not use Title I funds to shore up reductions in state and local support for public education. The Indiana Department of Education (IDOE) performs the maintenance of effort calculation utilizing Form 9 information provided by the School Corporation. As such, the amounts submitted to the IDOE to be used in the computation are tested to ensure they were recorded properly in the School Corporation's records as to the account and object code. INDIANA STATE BOARD OF ACCOUNTS 41 NORTH LAWRENCE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) In fiscal years 2022-2023 and 2023-2024, 60 transactions were tested each year to ensure the disbursements were posted to the proper account and object code. For 10 of the 60 transactions selected in 2022-2023, as well as 11 of the 60 transactions selected in 2023-2024, appropriate supporting documentation was not provided for audit. As a result, 21 disbursements could not be verified as to whether they were posted to the proper account or object codes. In addition, 60 disbursement line items were sampled from the IDOE Form 9 for both 2022-2023 and 2023-2024 to ensure the amounts agreed to the ledger. A total of 2 of the 60 disbursement line items in 2022-2023 and 6 of the 60 disbursement line items in 2023-2024 could not be traced to the ledger. Therefore, we were unable to determine if the disbursements for 8 disbursement line items were posted to the proper account or object code. Earmarking The School Corporation did not expend the required minimum amount from grant S010A210014 for parent and family engagement. In addition, the Homelessness Reservation for grants S010A210014 and S010A220014 did not expend the required minimum amounts. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.400 states in part: "(a) The non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices. (b) The non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." INDIANA STATE BOARD OF ACCOUNTS 42 NORTH LAWRENCE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 20 USC 6313(c)3 states: "(A) In general A local educational agency shall reserve such funds as are necessary under this part, determined in accordance with subparagraphs (B) and (C), to provide services comparable to those provided to children in schools funded under this part to serve— (i) homeless children and youths, including providing educationally related support services to children in shelters and other locations where children may live; (ii) children in local institutions for neglected children; and (iii) if appropriate, children in local institutions for delinquent children, and neglected or delinquent children in community day programs. (B) Method of determination The share of funds determined under subparagraph (A) shall be determined— (i) based on the total allocation received by the local educational agency; and (ii) prior to any allowable expenditures or transfers by the local educational agency. (C) Homeless children and youths Funds reserved under subparagraph (A)(i) may be— (i) determined based on a needs assessment of homeless children and youths in the local educational agency, taking into consideration the number and needs of homeless children and youths in the local educational agency, and which needs assessment may be the same needs assessment as conducted under section 11433(b)(1) of title 42; and (ii) used to provide homeless children and youths with services not ordinarily provided to other students under this part, including providing— (I) funding for the liaison designated pursuant to section 11432(g)(1)(J)(ii) of title 42; and (II) transportation pursuant to section 11432(g)(1)(J)(iii) of such title." 34 CFR 200.77 states in part: "Before allocating funds in accordance with § 200.78, an LEA must reserve funds as are reasonable and necessary to— (a) Provide services comparable to those provided to children in participating school attendance areas and schools to serve— (1) INDIANA STATE BOARD OF ACCOUNTS 43 NORTH LAWRENCE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (i) Homeless children and youths, including providing educationally related support services to children in shelters and other locations where homeless children may live. (ii) Funds reserved under paragraph (a)(1)(i) of this section may be— (A) Determined based on a needs assessment of homeless children and youths in the LEA, taking into consideration the number and needs of those children, which may be the same needs assessment as conducted under section 723(b)(1) of the McKinney-Vento Homeless Assistance Act; and (B) Used to provide homeless children and youths with services not ordinarily provided to other students under this subpart, including providing— (1) Funding for the liaison designated under section 722(g)(1)(J)(ii) of the McKinney-Vento Homeless Assistance Act; and (2) Transportation pursuant to section 722(g)(1)(J)(iii) of that Act; (2) Children in local institutions for neglected children; and (2) Children in local institutions for neglected children; and (3) If appropriate (i) Children in local institutions for delinquent children; and (ii) Neglected and delinquent children in community-day school programs; (4) An LEA must determine the amount of funds reserved under paragraphs (a)(1)(i) and (a)(2) and (3) of this section based on the total allocation received by the LEA under subpart 2 of part A of title I of the ESEA prior to any allowable expenditures or transfers by the LEA; . . ." Cause Due to turnover of staffing in the School Corporation's administrative office and recordkeeping issues, the School Corporation's management had not developed a system of internal controls that would have ensured compliance, or that supporting documentation would have been maintained and made available for audit, related to the Matching, Level of Effort, Earmarking compliance requirement. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure compliance with level of effort - maintenance of effort and earmarking requirements. As a result, amounts reported to the oversight agency were not accurately reported. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 44 NORTH LAWRENCE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation's management establish internal controls to ensure Homelessness Reservation and Parental set-aside expenditures are monitored throughout the period of performance to ensure earmarking compliance requirements are met before expiration of the grant. Supporting documentation for these expenditures should be maintained. In addition, proper recordkeeping should be maintained to ensure compliance and comply with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-015 Subject: COVID-19 - Education Stabilization Fund - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425D Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-018. Condition and Context The School Corporation had not properly implemented a system of internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance. Vendor Disbursements Per inquiry with the School Corporation, one employee prepares the reimbursement requests, and another employee reviews the requests to ensure all costs are correct and allowable before giving their approval. A total of 60 claims were sampled for audit. Of the 30 vendor claims tested, there were 3 claims, totaling $2,563, that had no supporting documentation provided to determine if they were an allowable cost nor did they provide support of review and approval of the expenditure. Payroll Disbursements The School Corporation had established internal controls that all payroll is approved by the Treasurer and the School Board. However, during the audit, the School Corporation was unable to provide supporting documentation to show where the governing board approved the rate or pay or stipend amount for 2 of the payrolls selected for testing of $341 in order to determine if the costs were allowable. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 49 NORTH LAWRENCE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for the Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause Due to turnover in staff, supporting documentation could not be located to support for some expenditures paid from the COVID-19 - Education Stabilization Fund during the audit period. Effect The failure to establish an effective system of internal controls could have enabled noncompliance with the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Questioned Costs We identified $2,904 in known questioned costs as noted above in the Condition and Context. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure supporting documentation is maintained and available for audit to ensure compliance with the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FA 2024-002 Strengthen Controls over Journal Entries Compliance Requirements: Activities Allowed or Unallowed Internal Control Impact: Material Weakness Compliance Impact: Material 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 COVID-19 – 10.555 – National School Lunch Program Federal Award Numbers: 245GA32N1199 (Year: 2024), 225GA324N1099 (Year: 2024) Questioned Costs: Unknown Description: The policies and procedures of the School District were insufficient to ensure that journal entries made for the Child Nutrition Cluster were properly documented. 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 $2,692,854.62 were expended and reported on the Monroe 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…” In addition, provisions included in the Uniform Guidance, Section 200.404 – Reasonable Costs state that “a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm’s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award… (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award’s cost.” Furthermore, provisions included in the Uniform Guidance, Section 200.1 state “Improper payment means: (1) Any payment that should not have been made or that was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements. (v) The term ‘‘payment’’ in this definition means any disbursement or transfer of Federal funds (including a commitment for future payment, such as cash, securities, loans, loan guarantees, and insurance subsidies) to any non-Federal person, non-Federal entity, or Federal employee, that is made by a Federal agency, a Federal contractor, a Federal grantee, or a governmental or other organization administering a Federal program or activity.” Lastly, provisions included in Title 34 CFR Section 210.14(a) state that “school food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved… FNS, or to construct buildings.” Condition: Auditors performed a review of transfer activity associated with CNC to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed that journal entries utilized to transfer cash totaling $6,000,000 from the School Nutrition Fund to the General Fund were not properly supported by adequate documentation. Questioned Costs: Though questioned costs may exist, these amounts are unknown as adequate documentation to support the transfer of $6,000,000 in cash was not maintained. Cause: The School District transferred funds from the School Nutrition Fund to the General Fund in an attempt to reimburse the General Fund for several years’ worth of salary payments made on behalf of the School Food Service program; however, adequate documentation was not maintained due to oversight. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the CNC programs. Failure to ensure that appropriate policies and procedures are followed when managing federal funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable transfers. Recommendation: The School District should review current internal control procedures related to School Nutrition Fund journal entries. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all journal entries, including transfers, are supported by adequate documentation. In addition, the transfer of cash associated with salary reimbursements should be made on a more timely basis and supported by payroll data. Furthermore, the School District should implement a monitoring process to ensure that all journal entry activity is compliant with the School District’s policies and procedures. Views of Responsible Officials: We concur with this finding.
FA 2024-003 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles 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 COVID-19 – 10.555 – National School Lunch Program Federal Award Numbers: 245GA32N1199 (Year: 2024), 225GA324N1099 (Year: 2024) Questioned Costs: $2,641.33 Description: A review of expenditures charged to the Child Nutrition Cluster revealed that the School District’s internal control procedures were not operating to ensure that expenditures were appropriately reviewed, approved, and documented. 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 $2,692,854.62 were expended and reported on the Monroe 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. Additionally, 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…” 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. Three voucher packages could not be located by the entity for review. Questioned Costs: Upon testing a sample of $70,823.01 in nonpersonal services expenditures, known questioned costs of $2,641.33 were identified. Using the total population amount of $1,574,361.98, we project the likely questioned costs to be approximately $58,715.52. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553 and 10.555. Cause: Due to staffing shortages during the fiscal year under review, documentation was not properly maintained by entity personnel. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance or ED guidance related to the CNC programs. Failure to ensure that appropriate documentation exists to support the allowability of payments from the CNC fund may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with improperly documented expenditures. Recommendation: The School District should review current internal control procedures related to CNC expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditure voucher packages are maintained on-file according to the School District’s record retention policy and contain all required components. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately. Views of Responsible Officials: We concur with this finding.
Criteria: Workforce Innovation and Opportunity Act (WIOA) Adult and Dislocated Worker funds must be used at the local level to pay for career and training services through the AJC system for program participants. Other activities allowed include basic career services, individualized career services, and training services. Activities allowed under Youth Activities include tutoring, alternative secondary school services, paid and unpaid work experiences, occupational skill training, leadership development, adult mentoring, follow-up services, financial literacy education, and entrepreneurial skills training. 2 CFR 200.403 Factors affecting allowability of costs. Except where otherwise authorized by statute, costs must meet the following criteria 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. (g) Be adequately documented. See §§ 200.300 through 200.309. 2 CFR 200.303 Internal Controls (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control- Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Workforce Innovation and Opportunity Act (WIOA) Funds were expended for costs that are not explicitly allowable under the compliance requirements for activities allowed or unallowed including charges for conferences and travel. • Travel and conference expense reimbursements did not establish a clear business purpose or provide other evidence of attendance. Receipts lacked a detailed breakdown of costs charged to the federal award. • Employee reimbursements did not include itemized breakdowns and were not reported on the entity’s Expense Form. • The entity’s policy does not outline the approval requirements for Executive Director expense reimbursements. Cause: Employee expenditures were not reviewed and approved prior to being charged to the federal award program. • The necessary approvals were not obtained prior to incurring costs charged to the federal award program. • The entity’s policy does not explicitly state approvals required for Executive Director expense reimbursements. • Expense Forms were not utilized for employee reimbursements per the entity’s written policy. Effect: Lack of proper approvals and documentation could result in unallowable costs being charged to the federal award, possibly resulting in the entity having to return funds to the federal agency or pass-through entity. This may also lead to reduction of future federal funding due to noncompliance. This also creates an opportunity for fraud to occur. • Unnecessary or unreasonable costs charged to the federal award program. • Possible reduction of future funding or requirement to return funding used for unallowable costs to awarding agency. Questioned Costs: $14,548 Repeat Finding: No Recommendation: We recommend that management review policies over employee travel expenses, conferences, and reimbursements to ensure they align with federal award requirements, are communicated to all employees, and provide necessary training. In addition, we recommend the WIB ensure that all employee reimbursement expenses are reviewed and approved prior to being incurred, approvals are obtained by an appropriate level of management or those charged with governance and are sufficiently documented.
Reference Number: 2024-011 Prior Year Finding: No Federal Agency: U.S. Department of Defense State Agency: Military Department Federal Program: National Guard Military Operations and Maintenance (O&M) Projects Assistance Listing Number: 12.401 Award Number and Year: W912K6-24-2 (10/1/2023 – 9/30/2024) Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: 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. Internal Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should 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). Condition: The Military Department (Department) charged costs to the federal grant prior to the allowable start of the period of performance. The expenditures were incurred from six to twenty-three days prior to the start of the award period. Context: Two of forty transactions selected for testing were incurred prior to the allowable start of the period of performance. Cause: The Department’s procedures were not operating sufficiently to ensure that expenditures charged to the program were incurred within the awards’ period of performance. Internal controls did not prevent or detect the errors. Effect: Costs could be deemed unallowable by the awarding agency if funds are expended outside of the allowable period of performance. Questioned costs: $ 4,699, which represents the total of the expenditures incurred prior to the awards’ period of performance. Recommendation: The Department should review and enhance its procedures and internal controls to ensure that it charges expenditures to the program that are incurred within an award’s allowable period of performance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2024-020 Prior Year Finding: 2023-012 Federal Agency: U.S. Department of Education State Agency Name: Bowie State University (BSU) Federal Program: Higher Education Institutional Aid Assistance Listing Number: 84.031B, 84.031E, 84.031K Award Number and Year: P031B220039(10/1/2022-9/30/2024), P031E200007 (10/1/2022-9/30/2024), P031K190021 (10/1/2022-9/30/2024) Compliance Requirement: Allowable Activities/Costs Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Compliance: Per 2 CFR § 200.403, except where otherwise authorized by statute, costs must meet the following general criteria to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award to be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award regarding 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. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. See also §200.306 Cost sharing or matching paragraph (b). (g) Be adequately documented. See also §200.300 Statutory and national policy requirements through 200.309 Period of performance of this part. Internal Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Time and Effort documentation was not documented and reviewed timely. Questioned costs: None. Context: For all seventeen samples selected for testing, Time and Effort was not documented in a timely manner or reviewed appropriately. Cause: The Institution’s internal controls were not operating effectively to ensure that time and effort reporting was performed and documented in a timely manner in accordance with federal requirements. Effect: Expenditures may be incorrectly charged to the program. Recommendation: We recommend that the Institution strengthen its internal controls to ensure that Time and Effort is documented, and expenditures are reviewed and adjusted for, if necessary, in a timely manner. Views of responsible officials: There is no disagreement with the audit finding.
Reference Number: 2024-021 Prior Year Finding: 2023-013 Federal Agency: U.S. Department of Education State Agency Name: Coppin State University (CSU) Federal Program: Higher Education Institutional Aid Assistance Listing Number: 84.031B, 84.031E Award Number and Year: P031B170054(10/1/2021-9/30/2024), P031B220065(10/1/2022-9/30/2024), P031E200078 (10/1/2022-9/30/2024) Compliance Requirement: Allowable Activities/Costs Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Compliance: Per 2 CFR § 200.403, except where otherwise authorized by statute, costs must meet the following general criteria to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award to be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award regarding 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. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. See also §200.306 Cost sharing or matching paragraph (b). (g) Be adequately documented. See also §§200.300 Statutory and national policy requirements through 200.309 Period of performance of this part. Internal Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Coppin State University (Institution) did not adjust the employee’s payroll costs to reflect the reported effort. We noted that the actual time and effort charged to the grant did not agree to the time and effort report. Questioned costs: $45 Context: For one out of ten samples selected for testing, the payroll calculation did not agree to the employee's time and effort report. Cause: The Institution’s internal controls were not operating effectively to ensure that time and effort reporting was accurate and agreed with supporting documentation. Effect: Expenditures may be incorrectly charged to the program. Recommendation: We recommend that the Institution strengthen its internal controls to ensure that Time and Effort is documented, expenditures are reviewed and adjusted for, if necessary, in a timely manner. Views of responsible officials: There is no disagreement with the audit finding.
Reference Number: 2024-023 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Department of Education Federal Program: Special Education Cluster (IDEA) Assistance Listing Number: 84.027, 84.173 Award Number and Year: H027A230035 (7/1/2023 – 9/30/2024) H173A230089 (7/1/2023 – 9/30/2024) Compliance Requirement: Period of Performance Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: 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. Internal Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should 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). Condition: The Department of Education (Department) charged costs to the federal grant prior to the allowable start of the period of performance. We noted that five of the seven exceptions were incurred from 213 to 92 days prior to the beginning of the period of performance. Context: Seven of eleven transactions selected for testing were incurred prior to the allowable start of the period of performance. Cause: The Department’s procedures were not operating sufficiently to ensure that expenditures charged to the program were incurred within the awards’ period of performance. Internal controls did not prevent or detect the errors. Effect: Costs could be deemed unallowable by the awarding agency if funds are expended outside of the allowable period of performance. Questioned costs: $4,411, which represents the total of the expenditures incurred prior to the awards’ period of performance. Recommendation: The Department should review and enhance its procedures and internal controls to ensure that it charges expenditures to the program that are incurred within an award’s allowable period of performance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2024-025 Prior Year Finding: No Federal Agency: Department of Health and Human Services State Agency: Department of Human Services Federal Program: Low-Income Home Energy Assistance Program Assistance Listing Number: 93.568 Award Number and Year: 2401MDLIEA (10/1/2023-9/30/2025) Compliance Requirement: Period of Performance Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: 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. Internal Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should 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). Condition: The Department of Human Services (Department) charged costs to the federal grant prior to the allowable start of the period of performance. The expenditures were incurred from one to twenty-six days prior to the start of the award period. Context: Seventeen of forty transactions selected for testing were incurred prior to the allowable start of the period of performance. Cause: The Department’s procedures were not operating sufficiently to ensure that expenditures charged to the program were incurred within the awards’ period of performance. Internal controls did not prevent or detect the errors. Effect: Costs could be deemed unallowable by the awarding agency if funds are expended outside of the allowable period of performance. Questioned costs: $778,473, which represents the total of the expenditures incurred prior to the awards’ period of performance. Recommendation: The Department should review and enhance its procedures and internal controls to ensure that it charges expenditures to the program that are incurred within an award’s allowable period of performance. Views of responsible officials: Management agrees with the finding.
2024-001 Supporting Documentation and Approval of Disbursements Federal Program - U.S. Department of the Treasury – Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027) Federal Award Number - SLFRP0136 Compliance Requirement - Allowable Costs/Cost Principles (2 CFR § 200.403 and § 200.302) Repeat Finding - This is a repeat finding of 2023-001. Corrective action was not completed prior to or during the audit period due to the timing of audit completion and recommendations to management. Criteria - Per 2 CFR § 200.403(g), to be allowable under a federal award, costs must be adequately documented. Additionally, 2 CFR § 200.302 requires the non-Federal entity to establish and maintain effective internal controls over federal awards that provide reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of the award. Condition - During our testing of expense and disbursement transactions charged to the federal program, we identified instances where payments were made without adequate supporting documentation or evidence of appropriate review and approval. While the costs appear consistent with the purpose of the program and are considered allowable in nature, the absence of documentation limits the ability to verify the appropriateness and accuracy of the expenditures. A majority of these transactions were related to temporary housing assistance, including payments to hotels. Cause - The organization does not currently have or did not follow a formal process to ensure that all disbursements are properly documented and reviewed. Effect - Failure to maintain adequate documentation impairs the organization’s ability to demonstrate compliance with federal requirements and increases the risk of errors or inappropriate expenditures going undetected. Questioned Costs - $0. No costs are questioned at this time, as the disbursements appear consistent with program objectives. Recommendation - We recommend that the organization strengthen internal controls over the disbursement process by implementing procedures requiring all expenses to be supported by documentation such as invoices or receipts and be reviewed and approved by appropriate personnel prior to payment. Views of Responsible Officials - we agree with the finding and determined it was due to an oversight by the organization on establishing proper procedures for a new program. Verbal communications were not recorded appropriately and approvals were not signed by management.
FA 2024-001 Improve Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Reporting Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D210012 (Year: 2021), S425U210012 (Year: 2021) Questioned Costs: $819,799.49 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan (ARP) Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $3,951,662.00 were expended and reported on the Hancock 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…” In addition, to assist school districts in improving their financial management systems and associated compliance over federal programs, GaDOE published the Financial Management for Georgia Local Units of Administration (FMGLUA) manual. The FMGLUA manual requires that LEAs submit a budget as part of each federal program’s Consolidated Application process. The program budget reflects details regarding the manner in which each school district intends to expend the program funds. The Consolidated Application, including the budget, for each program must be reviewed and approved by GaDOE personnel before the LEA is authorized to expend program funds. Amendments to the budget are to be submitted to and approved by GaDOE when a school district intends to spend funds in a manner not initially reported. LEA personnel must also provide program-specific assurances related to the ESSER program within the Consolidated Application system. These assurances are reflected in the Uniform Guidance, Section 200.415 – Required Certifications, and include provisions that require LEAs “to assure that expenditures are proper and in accordance with the terms and conditions of the Federal award and approved project budgets...” Furthermore, provisions included in the Uniform Guidance, Section 200.430 – Compensation- Personal Services prescribe standards for documentation of personnel expenses and state, in part, that “(a) … Costs for compensation are allowable to the extent that they satisfy… specific requirements…, and that the total compensation for individual employees: (1) is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i)…, [as follows:] (i) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity…” Lastly, provisions included in the Uniform Guidance, Section 200.302(a) state in part that “the non- Federal entity’s financial management systems must… be sufficient to permit the preparation of reports required by general and program-specific terms and conditions.” In addition, provisions included in the Uniform Guidance, Section 200.302(b)(2) state in part that the non-federal entity’s financial management system must provide for “accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements.” Condition: A review of the School District’s accounting records and approved expenditures reflected within the ESSER program Consolidated Application reviewed the following deficiencies: • A sample of 13 nonpersonal services 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. It was noted that prior approval was not obtained from GaDOE for two expenditures totaling $505,229.40 as these expenditures were not reflected in the approved budget or subsequent amendment within the Consolidated Application system as required. • A sample of 37 employees was randomly selected for testing using a non-statistical sampling approach. These employees were reviewed to determine if internal controls were implemented and applicable compliance requirements were met. It was noted that prior approval was not obtained from GaDOE for 29 expenditures totaling $181,761.00 as these expenditures were not reflected in the approved budget or subsequent amendment within the Consolidated Application system as required. • A review of indirect cost amounts charged to the ESSER program revealed that the total indirect cost amount budgeted by the School District, which totaled $600,000.00, was recorded as indirect cost expenditures during the period under review. However, the School District should have applied the indirect cost rate approved by the GaDOE to actual expenditures incurred during the fiscal year to calculate a maximum indirect cost amount of $467,190.96. Therefore, unallowable indirect costs totaling $132,809.04 were recorded within the ESSER fund. • Expenditures reported on the ARP ESSER completion report for the period July 1, 2023 through September 30, 2024 were not supported by the general ledger for several functions and objects reflected in the amended consolidated application. Questioned Costs: Upon testing a sample of $690,319.93 in nonpersonal services expenditures, known questioned costs of $505,229.40 were identified for expenditures not properly approved through the Consolidated Application process. Using the total nonpersonal services expenditures population of $2,507,902.88, we project the likely questioned costs to be approximately $1,835,476.87 In addition, upon testing a sample of $418,831.17 in personal services expenditures, known questioned costs of $181,761.05 were identified for expenditures not approved in the consolidated application. Using the total personal services expenditures population of $1,303,995.07 (excluding benefits payments), we project the likely questioned costs to be approximately $565,897.50. Furthermore, known questioned costs $132,809.04 were identified for unallowable indirect costs charged to the ESSER program. Therefore, the known and likely questioned costs identified for all unallowable payments totaled $819,799.49 and $2,534,183.41, respectively. The following Assistance Listing Numbers were affected by known and likely questioned costs: 84.425D & 84.425U. Cause: In discussing this deficiency with the School District, they stated that they did not consider the expenditure purchases unallowable and recorded them in the wrong account number due to oversight. Indirect costs were charged according to the budget without regard of the appropriate indirect cost rate. Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the ESSER Program. Failure to accurately develop and amend budget information through the Consolidated Application process and verify compliance with applicable policies and regulations prior to the expenditure of federal program funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unapproved and unallowable expenditures. Recommendation: The School District should evaluate current internal control procedures related to the ESSER Program. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that potential expenditures are approved through the Consolidated Application process and deemed to be allowable before spending federal funds. In addition, management should develop and implement a monitoring process to ensure that control procedures are being followed. Views of Responsible Officials: We concur with this finding.
Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Procurement and Suspension and Debarment Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Number and Title: 84.371C – Comprehensive Literacy Development Federal Award Number: S371C190016-19A (Years: 2017-21) Questioned Costs: $12,921.61 Repeat of Prior Year Findings: FA 2022-002, FA 2023-001 Description: A review of expenditures and journal entries charged to the Comprehensive Literacy Development program revealed that the School District’s internal control procedures were not operating to ensure that appropriate reviews and approvals occurred and the School District’s procurement procedures were followed. Background Information: The Comprehensive Literacy Development Program (CLD) was authorized under Sections 2222-2225 of the Elementary and Secondary Education Act of 1965 to create a comprehensive literacy program to advance literacy skills, including pre-literacy skills, reading, and writing, for children from birth to grade 12, with an emphasis on disadvantaged children, including children living in poverty, English learners, and children with disabilities. CLD funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the expenditure of funds by LEAs. CLD funds totaling $454,278.20 were expended and reported on the Burke 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, (h) Cost must be incurred during the approved budget period…” Lastly, 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: Auditors performed a review of various expenditure activity associated with the CLD program to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were identified: • A sample of 60 expenditures was randomly selected for testing using a non-statistical sampling approach. Evidence of review and approval was not reflected for 17 expenditures, and adequate evidence of receipt was not maintained for 20 expenditures. • A sample of two journal entries was randomly selected for testing using a non-statistical sampling approach. Evidence of review to ensure that the activity was allowable and occurred during the period of performance was not reflected for either journal entry tested. • A sample of 45 procurement transactions was randomly selected for testing using a non-statistical sampling approach. Four procurement transactions did not reflect evidence of supervisory review and approval, and the School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources for 13 small purchase procurements reviewed. Questioned Costs: Upon testing a sample of $45,625.42 in procurement transactions, known questioned costs of $12,921.61 were identified for expenditures that did not follow the School District’s procurement procedures. Using the total population of $327,567.83 in procurement transactions, we project the likely questioned costs to be approximately $92,770.73. Cause: The School District did not maintain evidence of review and approval of expenditures, journal entries, and procurement transactions as a result of oversight. Small purchase procurement transactions did not follow the School District’s procurement policy because the Federal Programs Director was unaware that it was necessary to follow these procedures for the purchase of instructional materials. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to review expenditures for allowability and journal entries for allowability and period of performance compliance exposes the School District to unnecessary risk of error and misuse of federal funds. In addition, failure to appropriately follow applicable procurement procedures exposes the School District to unnecessary risk of error and misuse of federal funds. Lastly, this deficiency could lead to the return of grant funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to the CLD program. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures, journal entries, and procurement transactions reflect evidence of review for associated compliance requirements. In addition, expenditure voucher packages should contain all required components. Furthermore, the School District should evaluate and improve internal control procedures to ensure that required procurement methods are properly identified and followed and required procurement documentation is properly identified, safeguarded, and retained. Management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: The finding states evidence of review and approval was not reflected for 17 expenditures. While 3 invoices were not approved, 14 were approved by multiple levels including the building level Principal, Central Office Director, including the Director in charge of the grant, and/or the Superintendent. Additionally, all expenditures charged to the grant were submitted to the Georgia Department of Education for review and approval for reimbursement of expenditures. All expenditures were approved and reimbursed. The finding states adequate evidence of receipt was not maintained for 20 expenditures; however, 10 of the expenditures were not for tangible items. Instead, the expenditures were for dues and fees and travel. Dues and fees and travel expenditures do not have packing slips due to the nature of the activity. Of the remaining 10, all but 1 were approved by multiple levels including the building level Principal, Central Office Director, including the Director in charge of the grant, and/or the Superintendent. Approval for payment isn’t granted unless items are received. The finding states evidence of review to ensure that the activity was allowable and occurred during the period of performance was not reflected for 2 journal entries. Both of the journal entries were usual in nature and occurred in the normal course of business including a journal entry to reverse accounts receivable from the prior year and a journal entry to record accounts receivable in the current year. Both journal entries are annual, standard journal entries that are required under Generally Accepted Accounting Principles. While not approved by the Director in charge of the grant, the journal entry was appropriate, allowable, and necessary to ensure revenues were accurately recorded in the proper accounting period. The finding states 4 procurement transactions did not reflect evidence of supervisory review and approval. While 4 transactions included invoices that were not approved by the Director in charge of the grant, 2 invoices were approved by the building level Principal and the Superintendent, and 1 was approved by the Superintendent. Three of the transactions included purchase orders that were properly approved by the Director in charge of the grant. Auditor’s Concluding Remarks: Under the Uniform Guidance, auditees are required to implement internal controls over federal awards. Upon completing procedures over internal controls associated with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, and Procurement and Suspension and Debarment compliance requirements, auditors obtained an understanding of internal controls put in place and subsequently tested those controls. Auditors noted that the internal controls described by the School District were not in place for the transactions identified. Based on this information, we reaffirm our finding and will review the status of the finding during our next audit.
Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D200012 (Year: 2021), S425U2100012 (Year: 2021) Questioned Costs: $328.00 Description: A review of expenditures related to the Elementary and Secondary School Emergency Relief program revealed that the School District’s internal control procedures were not operating appropriately to ensure that appropriate reviews and approvals occurred. Background Information: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $4,167,690.48 were expended and reported on the Burke 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. Additionally, 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…” Furthermore, to assist school districts in improving their financial management systems and associated compliance over federal programs, GaDOE published the Financial Management for Georgia Local Units of Administration (FMGLUA) manual. The FMGLUA manual requires that LEAs submit a budget as part of each federal program’s Consolidated Application process. The program budget reflects details regarding the manner in which each school district intends to expend the program funds. The Consolidated Application, including the budget, for each program must be reviewed and approved by GaDOE personnel before the LEA is authorized to expend program funds. Amendments to the budget are to be submitted to and approved by GaDOE when a school district intends to spend funds in a manner not initially reported. Lastly, LEA personnel must also provide program-specific assurances related to the ESSER programs within the Consolidated Application system. These assurances are reflected in the Uniform Guidance, Section 200.415 – Required Certifications, and include provisions that require LEAs “to assure that expenditures are proper and in accordance with the terms and conditions of the Federal award and approved project budgets...” 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 four expenditures, evidence of review and approval was not reflected within the voucher package. • Prior approval was not appropriately obtained from GaDOE for one expenditure totaling $328.00 as this expenditure was not reflected in the approved budget or subsequent amendment within the Consolidated Application system, as required. Questioned Costs: Upon testing a sample of $552,789.52 in nonpersonal expenditures, known questioned costs of $328.00 were identified for expenditures not properly approved through the Consolidated Application process. Using the total nonpersonal services expenditures population of $3,601,591.01, we project the likely questioned costs to be approximately $2,137.02. Cause: The School District did not maintain evidence of review and approval of expenditures as a result of oversight. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to review expenditures for allowability exposes the School District to unnecessary risk of error and misuse of federal funds. Recommendation: The School District should review current internal control procedures related to the ESSER program. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures reflect evidence of review for associated compliance requirements and potential expenditures are approved through the Consolidated Application process and deemed to be allowable before spending federal funds. Management should develop a monitoring process to ensure that control procedures are being followed. Views of Responsible Officials: We concur with this finding.
Compliance Requirement: Period of Performance Internal Control Impact: Material Weakness Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 84.027 – Special Education Grants to States COVID-19 – 84.027 – Special Education Grants to States 84.173 – Special Education Preschool Grants Federal Award Numbers: H027A220073 (Year: 2023), H027230073 (Year: 2024) H027X210073 (Year: 2022), H027A230081 (Year: 2024) Questioned Costs: None Identified Repeat of Prior Year Finding: FA 2023-003 Description: A review of journal entries charged to the Special Education Cluster revealed that the School District’s internal control procedures were not operating to ensure that appropriate reviews and approvals occurred, as required. Background Information: The Special Education Cluster (SEC), which is comprised of the Special Education Grants to States (IDEA, Part B) and Special Education Preschool Grants (IDEA Preschool) programs, was authorized under the Individuals with Disabilities Education Act (IDEA). Special Education Cluster funding is available to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs and prepares them for further education, employment, and independent living; ensure that the rights of children with disabilities and their parents are protected; assist states, localities, educational service agencies, and federal agencies to provide for the education of all children with disabilities; and assess and ensure the effectiveness of efforts to educate children with disabilities. SEC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. SEC funds totaling $1,323,542.89 were expended and reported on the Burke 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, (h) Cost must be incurred during the approved budget period…” Condition: A sample of two journal entries was randomly selected for testing using a non-statistical sampling approach to determine if appropriate internal controls were implemented and applicable compliance requirements were met. Evidence of review to ensure that the activity was allowable and occurred during the period of performance was not reflected for those journal entries. Cause: The School District did not maintain evidence of review and approval of journal entries as a result of oversight. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to review journal entries for allowability and period of performance compliance exposes the School District to unnecessary risk of error and misuse of federal funds. In addition, this deficiency could lead to the return of grant funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to the Special Education Cluster. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all journal entries reflect evidence of review for associated compliance requirements. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: The finding states evidence of review to ensure that the activity was allowable and occurred during the period of performance was not reflected for 2 journal entries. While not approved by the Director in charge of the grant, both journal entries were reclassifications of expenditures that were allowable and occurred during the period of performance. Both of the journal entries were usual in nature and occurred in the normal course of business. Auditor’s Concluding Remarks: Under the Uniform Guidance, auditees are required to implement internal controls over federal awards. Upon completing procedures over internal controls associated with the Period of Performance compliance requirement, auditors obtained an understanding of internal controls put in place and subsequently tested those controls. Auditors noted that the internal controls described by the School District were not in place for the journal entries identified. Based on this information, we reaffirm our finding and will review the status of the finding during our next audit.
2024-001 – Allowable Costs – Internal Control over Payroll and Non-Payroll Costs Federal Agency: U.S. Department of Veterans Affairs Federal Programs: Veteran Affairs Homeless Providers Grant and Per Diem Program (GPD) – Assistance Listing No. 64.024, Grant Period – October 1, 2023 through September 30, 2025.Staff Sergeant Parker Gordon Fox Suicide Prevention Grant Program (SSPG) – Assistance Listing No. 64.055, Grant Period – September 30, 2023 through September 30, 2024. Condition:Montachusett Veterans Outreach Center, Inc. (MVOC) did not follow its internal control policies and procedures for payroll and non-payroll costs charged to the federal awards. The allocation methodology used to charge payroll and non-payroll transactions to the Federal Award programs was not properly supported for multiple sampled transactions. Criteria: In accordance with Department of Veteran Affairs program guides for each program (the Guide), allowable expenses must meet all the requirements in 2 C.F.R. § 200 which requires expenses charged to the grants to be allocated consistently with a sound methodology and be clearly documented. Additionally, the Guide indicates allowable expenses must meet all the requirements in 2 C.F.R. § 200.403 part (d) and (g), except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: (d) be accorded consistent treatment and (g) be adequately documented when charged to a federal award. Cause: A formal cost allocation plan was not followed for expensed transactions. Additionally, multiple employee’s bi-weekly timesheets were not properly signed or approved. Effect: Costs charged to the grants may not be allowable for reimbursement by MVOC’s federal funding sources Context: Twelve out of twenty three non-payroll charges lacked supporting documentation for the amount allocated to the grant. Twenty seven out of fifty seven payroll transactions sampled lacked supporting documentation for the amount allocated to the grant. Additionally, those transactions lacked evidence of review by employee or supervisor. Our sample was not a statistically valid sample. Questioned Costs: GPD - $18,440 SSPG - $30,121 Recommendation: We recommend that MVOC, update its policies and procedures to help ensure effective internal controls are in place and implemented to adequately support allocations, and amounts charged to the Federal Awards. Management Response: Management agrees with the finding. See management’s attached corrective action plan.
Finding Number: 2024-004 Internal control weakness over activities allowed/allowable costs Federal Program: 84.027 & 84.173 Special Education Cluster (IDEA) Federal Program: 84.425D/84.425U Education Stabilization Fund Criteria: 2 CFR §200.302(b)(7) requires non-federal entities to establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing the federal award in compliance with Federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR §200.403 requires that costs charged to a federal award be allowable, reasonable, and allocable to the federal program. 2 CFR §§200.302(b)(3) and 200.302(b)(4) require financial management systems to maintain records that adequately identify the source and application of funds for federally funded activities and support the allowability of costs charged to federal programs. Condition: The District did not maintain adequate internal controls to ensure that expenditures charged to Education Stabilization Fund grants were for activities allowed and allowable under Uniform Guidance. Specifically, the District lacked documented procedures and control activities to review and approve expenditures for allowability prior to charging costs to the federal program. Cause: The deficiencies resulted from the absence of formally documented procedures and internal control activities addressing the review and approval of expenditures for allowability under Uniform Guidance. As a result, management did not establish controls to ensure that costs charged to Education Stabilization Fund grants were evaluated for allowability in accordance with federal requirements. Effect: This condition increases the risk that unallowable or improperly supported costs could be charged to Education Stabilization Fund grants and not be identified or corrected in a timely manner, resulting in noncompliance with Uniform Guidance requirements. Identification of Questioned Costs: None identified. Context: The absence of documented internal control procedures over activities allowed and allowable costs limited the District’s ability to readily demonstrate compliance with Uniform Guidance. Repeat Finding: This is a repeat finding of 2023-04. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan issued by the entity.
Criteria: In accordance with 2 CFR Part 200.403 of the Uniform Guidance, charges to Federal awards must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Condition: For the year ended June 30, 2024, the Agency did not maintain individual support for the allocation of allocable salaries. These were charged based on a flat rate. Furthermore, there are instances where an independent approved pay rate was not maintained by the human resources department. Cause: The allocable salaries and wages are not charged based on actual work performed. The approved pay rate was not properly documented by the human resources department. Effect: The Agency is not in compliance with 2 CFR Part 200.403 of the Uniform Guidance. Questioned Costs: None reported. Context: A random sampling of the federal expenditures. Repeat Finding: Not applicable. Recommendation: We recommend that the Agency establish a system to determine and document the time spent and amount charged to their programs. We also recommend the Agency ensure the staff’s approved salary is properly documented. View of Responsible Officials: See management’s corrective action plan.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Community Service Block Grant Assistance Listing Number: 93.569 Pass-through Agency: Pennsylvania Department of Community and Economic Development Pass-Through Number: Contract #C000082084 Award Period: January 1, 2022 – December 31, 2027 Type of Finding: • Material Weakness in Internal Control over Compliance • Other Matters Criteria: 3 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of period of performance. The Organization should have procedures and controls in place to ensure expenses are charged to a federal program within the approved period of performance. In addition, in accordance with 2 CFR Part 200.403, allowable costs should be determined in accordance with generally accepted accounting principles (GAAP), therefore payroll accruals should be appropriately reflected when recording program expenditures. Condition: During our testing, we noted there were several salary expenditures charged to the grant based on the payroll period ending date, however the costs were incurred for the period 12/23/23 - 1/5/24, which the first nine days were prior to the start of the period of performance. Questioned Costs: There were known questioned costs identified in the amount of $6,868. Context: During our testing of community service block grant costs recorded during the beginning of the approved period of performance (January 2024), we noted there were thirty five transactions tested charged to the federal program in January 2024 for salary and related payroll taxes which are portion was incurred prior to the start of the contract period. Based on the review of the supporting documentation, it was noted that the payroll period was 12/23/23 - 1/5/24, which the first nine days were prior to the start of the period of performance. The total amount of the transactions was $6,868. Cause: The Organization recorded the transactions into the general ledger based on the payroll period ending date and invoice date rather than the date the transactions were incurred by the Organization. Effect: If the organization includes expenses either incurred before the start date or after the end date of the approved period of performance, it could result in funds being required to be returned to the funding agency. Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2023- 006. Recommendation: The Organization should work with the federal agency to provide additional documentation or justification for the expenses, or to adjust the budget or funding limits to ensure that all expenses are within the approved period of performance. It is important to address any period of performance findings as soon as possible to avoid potential penalties or repayment obligations. The Organization should also review its process of entering invoices and payroll related expenses into the accounting software to ensure the correct period is used for federal expenditures. View of Responsible Officials and Planned Corrective Action: Please refer to Community Action Committee of the Lehigh Valley, Inc. and Subsidiaries’ Corrective Action Plan.
U.S. Department of Environmental Protection Agency Passed through State Department of Natural Resources and Conservation FFAL# 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Activities Allowed/Unallowed and Allowable Costs/Cost Principles Material Non-compliance Material Weakness in Internal Control Criteria: Per 2 CFR §200.303, non-federal entities must establish and maintain effective internal control over federal awards to provide reasonable assurance that the entity is managing the award in compliance with federal statutes, regulations, and the terms and conditions of the award. Per 2 CFR §200.403, costs must be adequately documented to be allowable under federal awards Condition: During our testing of allowable costs under Uniform Guidance, we noted that the client did not provide evidence of internal controls over the review and approval of costs charged to the federal program. Additionally, for 3 out of 4 sampled transactions, the client was unable to provide supporting documentation (invoices) for the expenditures tested. Cause: The client has not implemented sufficient procedures to ensure documentation is retained and controls are evidenced for allowable costs. Effect: Without evidence of internal controls and supporting documentation, there is an increased risk of noncompliance with Uniform Guidance requirements and potential questioned costs. Questioned Costs: $1,124,156 Context/Sampling: A nonstatistical sample of four invoices were selected for testing. Repeat Finding from Prior Years: No. Recommendation: We recommend the client implement and document internal control procedures over allowable costs, including maintaining invoice support for all expenditures charged to federal programs. Controls should include documented review and approval processes to ensure compliance with Uniform Guidance. Views of Responsible Officials: Agree.
Retain Supporting Documentation for Journal Entries (Material Weakness, Compliance Finding) Federal Agency: Department of Agriculture/Department of Education Cluster/Program: Child Nutrition Cluster/Education Stabilization Fund Assistance Listing Number(s): 10.553/10.555/10.559/84.425D Award Year: 2024 Compliance Requirement: Allowable Costs/Cost Principles Criteria Per 2 CFR 200.302 (Financial Management) and 2 CFR 200.403 (Factors Affecting Allowability of Costs) of the Uniform Guidance, recipients of federal awards must maintain records that identify adequately the source and application of funds. All accounting records, including journal entries affecting federal programs, must be supported by sufficient documentation to ensure costs are allowable, allocable, and properly authorized. Condition During our audit of federal grant programs, we identified several journal entries affecting federal grant expenditures that lacked adequate supporting documentation. Specifically, these entries did not include invoices, detailed calculations, approval signatures, or written explanations substantiating the nature and purpose of the transactions. Cause The District does not have a formalized policy or consistent procedure requiring that all journal entries be accompanied by adequate supporting documentation and maintained for audit and review purposes. Effect Without adequate supporting documentation, there is an increased risk that unallowable, inaccurate, or unauthorized costs could be charged to federal programs. This deficiency also impedes the ability to demonstrate compliance with federal requirements. Context Supporting documentation for journal entries was not maintained in fiscal year 2024. This was a recurring issue throughout the year. This issue was not present in previous fiscal years. Questioned Costs As a result of this finding, we have identified $54,856 in Child Nutrition Cluster federal expenditures and $523,315 in Education Stabilization Fund federal grant expenditures as questioned costs. These costs represent journal entries for which sufficient supporting documentation was not provided to substantiate allowability and compliance with federal requirements. Recommendation To rectify this material weakness, we recommend the District implement and enforce policies requiring that all journal entries be accompanied by appropriate supporting documentation and reviewed and approved by supervisory personnel prior to posting. View of Responsible Officials and Planned Corrective Actions The District’s corrective action plan is included at the end of this report.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S. Department of Health and Human Services (USDHHS) Program Name: Temporary Assistance for Needy Families ALN and Program Expenditures: 93.558 ($583,126,272) Award Numbers: Various – see table of award numbers Federal Award Year: Various – see table of award numbers Questioned Costs: $78,162 Compliance Requirement: Eligibility Finding 2024-010: Improper TANF Beneficiary Payments Condition Found: IDHS made improper payments to beneficiaries of the Temporary Assistance for Needy Families (TANF) program. During our testing of 50 TANF program beneficiary payments (with total payments sampled of $19,049), we noted one beneficiary (with a sampled payment of $262) received supplemental payments that were improperly calculated using amounts inconsistent with information contained in the beneficiary’s case file. As a result of the calculation error, the beneficiary was not eligible to receive the monthly supplemental payment. Total supplemental payments made to this beneficiary under the TANF program totaled $2,358 during the year ended June 30, 2024. We also noted two TANF beneficiary payments sampled (totaling $581) that were improperly calculated due to a diverted income system error. Diverted income occurs in dependent eligible only TANF cases where an ineligible working adult in the household has income which is allocated to the eligible members of the household to determine the overall TANF program benefit payment. The State’s benefit system was erroneously excluding the ineligible working adult in the diverted income calculation potentially resulting in an overpayment of TANF benefits on cases with diverted income. As a result of this error, the monthly payments made to these two beneficiaries were overstated by $244. Total payments made to these two beneficiaries under the TANF program were $5,130 for the year ended June 30, 2024. In response to the error identified in our testing, IDHS identified benefit payments paid during the year ended June 30, 2024 for 1,956 beneficiaries (totaling $7,238,104) were calculated using diverted income. The system calculation error related to these benefit payments resulted in total TANF overpayments of $75,804 during the year ended June 30, 2024. The payment errors identified above had not been corrected by IDHS or refunded to USDHHS (if required) as of the date we communicated our findings to IDHS (December 22, 2025). We further noted IDHS did not establish control procedures at an adequate level of precision to ensure TANF program benefits were accurately calculated based on the beneficiary’s case file supporting documentation. Payments made to beneficiaries of the TANF cash assistance program totaled $45,021,831 during the year ended June 30, 2024. Criteria or Requirement: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable under federal awards, costs must meet certain general criteria. Those criteria require, among other things, that each expenditure must be necessary, reasonable, and supported by adequate documentation.In accordance with the OMB Compliance Supplement, dated May 2024, IDHS is required to determine eligibility in accordance with eligibility requirements defined in the approved State Plan. The current State Plan requires payments to be made to eligible beneficiaries in accordance with payment levels established within the State Plan. Further, the State Plan requires an excluded or ineligible individual’s income to be considered in the calculation of the payment level of the TANF unit. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include establishing internal control at an appropriate level of precision to identify benefit payment errors in a timely manner. Cause: In discussing these conditions with IDHS officials, management stated the exceptions noted were due to an oversight to secure or upload supporting documentation adequately and case actions not being thoroughly reviewed. Possible Asserted Effect: Failure to properly calculate benefit payments may result in unallowable costs being charged to the TANF program. Repeat Finding: A similar finding was reported in the prior year audit as finding number 2023-016. (Finding Code 2024-010, 2023-016) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS review its current process for calculating beneficiary payments and consider changes necessary to ensure payments are properly calculated and paid. Views of IDHS Officials: The Department accepts the recommendation. IDHS will review its current process for calculating beneficiary payments and make changes to ensure payments are properly calculated and paid.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S. Department of Health and Human Services (USDHHS) Program Name: Temporary Assistance for Needy Families, Child Care and Development Fund (CCDF) Cluster ALN and Program Expenditures: 93.558 ($583,126,272), 93.575/93.596 ($747,612,292) Award Numbers: Various – see table of award numbers Federal Award Year: Various – see table of award numbers Questioned Costs: $1,317 (TANF Federal), $1,527 (TANF MOE), $1,174 (CCDF Federal), $372 (CCDF MOE) Compliance Requirement: Activities Allowed/Unallowed, Allowable Costs/Cost Principles Finding 2024-011: Unallowable Costs Charged to the TANF and CCDF Cluster Programs Condition Found: IDHS could not provide documentation to support payments made on behalf of beneficiaries of the Temporary Assistance for Needy Families (TANF) and Child Care and Development Fund (CCDF) Cluster programs. The State of Illinois operates the Child Care Assistance Program (CCAP) which provides eligible families child care services at approved, licensed providers. Payments are made by IDHS directly to the child care provider on behalf of an eligible family. Providers submit billings to IDHS detailing the name of the recipient of the services and the number of days for which services were received. IDHS performs monitoring reviews of childcare providers on a rotational basis. During these monitoring reviews, IDHS reviews provider records to ensure services billed are adequately documented. During our testing of CCAP beneficiary payments claimed under the TANF program (40 payments totaling $8,555 in federal claim and $34,968 in MOE claim) and CCDF (40 payments totaling $108,666 in federal claim and $3,882 in MOE claim), we noted four TANF payments and three CCDF payments for which IDHS could not provide documentation supporting the services provided to eligible beneficiaries which are unallowable costs. These unallowable expenditures were reported and claimed to federal programs as follows: "See Table in the Audit Report" Additionally, we noted IDHS has not performed a monitoring review in 2024 or either of the previous two fiscal years to ensure billing information provided by the child care providers is accurate for 50 of the 62 unique providers sampled. As a result, IDHS does not have adequate controls in place to ensure information provided by providers is accurate and the related child care payments made were appropriate. Criteria or Requirement: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable under federal awards, costs must meet certain general criteria. Those criteria require, among other things, that each expenditure must be necessary, reasonable, and supported by adequate documentation. Additionally, 45 CFR 98.67 requires lead agencies to expend and account for CCDF funds in accordance with their own laws and procedures, and for fiscal control and accounting procedures to be sufficient to permit the tracing of funds to a level of expenditure adequate to establish that such funds have not been used in violation of those laws and procedures. IDHS CCAP Policy Memo 07.10.01 requires the agency to perform monitoring reviews over all Child Care Resource and Referrals (CCR&Rs), site administered, and non-contracted child care providers who participate in the IDHS Child Care Assistance Program. These reviews are conducted to ensure that services billed to the Department are adequately documented and contractual obligations are fulfilled. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal control designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should be designed to ensure that supporting documentation for CCAP payments is obtained and maintained. Additionally, effective internal controls should be designed to ensure that billing information provided by providers is complete and accurate. Cause: In discussing these conditions with IDHS officials, management stated that submission of billing certificates to IDHS or its contracted agencies is not a condition of payment. Additionally, CCAP payments cited were entered by the providers through the IDHS Child Care Telephone Billing System - Integrated Voice Response (IVR) and IDHS did not have established procedures for monitoring these recipients. Possible Asserted Effect: Failure to maintain documentation that supports payments to TANF and CCDF beneficiaries of the Child Care Assistance Program and adequately monitor these beneficiaries results in noncompliance and unallowable costs. Repeat Finding: A similar finding was reported in the prior year audit as finding number 2023-014. (Finding Code 2024-011, 2023-014) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS review the process and procedures in place for collecting and maintaining documentation to support amounts paid to beneficiaries of the CCAP. Further, we recommend IDHS ensure monitoring reviews are performed for CCAP beneficiaries under the CCDF and TANF programs in accordance with established policies and procedures. Views of IDHS Officials: The Department accepts the recommendation. IDHS will review the processes and develop procedures for collecting and maintaining documentation supporting payments to CCAP beneficiaries. Additionally, IDHS will establish, review, and revise policies and procedures to ensure monitoring reviews are conducted with appropriate management oversight.
State Agency: Illinois Department of Children and Family Services (DCFS) Federal Agency: U.S. Department of Health and Human Services (USDHHS) Program Name: Foster Care – Title IV-E ALN and Program Expenditures: 93.658 ($157,279,978) Award Numbers: Various – see table of award numbers Federal Award Year: Various – see table of award numbers Questioned Costs: Cannot be determined Compliance Requirement: Activities Allowed/Unallowed and Allowable Costs/Cost Principles Finding 2024-022: Inadequate Process for Foster Care Daycare Maintenance Assistance Payments Condition Found: DCFS does not have an adequate process in place to ensure Foster Care daycare maintenance assistance payments are accurately paid based on its approved rate schedule. The foster care program provides funds to States for maintenance assistance payments to deliver substitute care for children who are under the jurisdiction of a Title IV-E agency and who need temporary placement or care outside their homes. Maintenance payments are made on behalf of eligible Title IV-E beneficiaries to individuals serving as foster family homes, to childcare institutions, or public or private child-placement or child-care agencies in accordance with the Title IV-E agency’s maintenance rate schedule. During our testing of foster care maintenance assistance payments, we reviewed 50 case files and related beneficiary payments (totaling $55,816) charged to the Foster Care program during the year ended June 30, 2024 for compliance with eligibility requirements and allowability of related benefits. We noted in our testing DCFS has not established adequate internal controls to ensure the daycare rates paid for Foster Care maintenance payments are consistent with the approved rate schedule. Specifically, we identified two day care maintenance assistance payments sampled (totaling $1,668) were not calculated using rates consistent with the approved DCFS day care rate schedule. The daily provider rates used to calculate the sampled payments were $40 and $44 respectively; whereas the rate that should have been used for both of these payments according to the approved DCFS day care rate schedule was $46. Accordingly, the payments calculated by DCFS were $172 less than what the payments should have been using the approved rate schedule. In response to the errors identified in our testing, we requested DCFS evaluate the population of daycare maintenance assistance payments made during the year ended June 30, 2024 to determine the cause of the errors in the payment rates used. Rather than evaluating the full population of daycare maintenance assistance payments, DCFS sampled 59 payments and identified 10 additional payments which were paid rates inconsistent with the approved rate schedule, but were not able to determine the extent of errors in the population. Accordingly, we were not able to quantify the magnitude of any noncompliance in the population to determine if material noncompliance occurred during the year ended June 30, 2024. Daycare maintenance assistance payments made on behalf of Foster Care beneficiaries totaled $2,055,171 during the year ended June 30, 2024. Payments made on behalf of beneficiaries of the Foster Care program totaled $33,332,268 during the year ended June 30, 2024. Criteria or Requirement: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable under federal awards, costs must meet certain general criteria. Those criteria require, among other things, that the expenditure be adequately documented. According to 42 USC 671(a)(11), which is implemented by 45 CFR 1356.21, the amount of payments made as foster care maintenance payments must be periodically reviewed to assure their appropriateness. Funds may be expended for foster care maintenance payments on behalf of eligible children, in accordance with the Title IV-E agency’s foster care maintenance payment rate schedule and in accordance with 45 CFR section 1356.21, to individuals serving as foster family homes, to childcare institutions, or public or private child-placement or child-care agencies. Such payments may include the cost of (and the cost of providing, including certain associated administrative and operating costs of a child care institution) food, clothing, shelter, daily supervision, school supplies, personal incidentals, liability insurance with respect to a child, and reasonable travel to the child’s home for visitation, as well as reasonable travel for the child to remain in the same school he or she was attending before placement in foster care (42 USC 672(b)(1) and (2), (c)(2), and 675(4)). In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure payments are made at the approved rates. Cause: In discussing these conditions with DCFS officials, they stated the issue was due to the certification rate forms that were filled out by childcare providers. Providers would sometimes fill out the forms using lower rates than they were entitled to charge. Possible Asserted Effect: Failure to ensure payment calculations are properly performed and approved provider rates are accurately entered in the system may result in unallowable costs. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding code 2024-022) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend DCFS implement procedures to ensure foster care maintenance payments are properly calculated and consistent with the approved DCFS payment rate schedules. Views of DCFS Officials: The Department agrees and has implemented corrective action. In July 2025, the daycare eligibility program discontinued the use of certification rate forms. As a result, all childcare providers now receive the State established reimbursement rate, regardless of the rate they charge private-paying families. This change ensures that all childcare providers receive the funding that they are entitled to.
State Agency: Illinois Department of Children and Family Services (DCFS) Federal Agency: U.S. Department of Health and Human Services (USDHHS) Program Name: Foster Care – Title IV-E Adoption Assistance, Temporary Assistance for Needy Families ALN and Program Expenditures: 93.658 ($157,279,978) 93.659 ($103,674,138), 93.558 ($583,126,272) Award Numbers: Various – see table of award numbers Federal Award Year: Various – see table of award numbers Questioned Costs: Cannot be determined Compliance Requirement: Activities Allowed/Unallowed and Allowable Costs/Cost Principles Finding 2024-023: Failure to Provide Supporting Documentation for Payroll and Related Costs Condition Found: DCFS could not provide adequate supporting documentation to substantiate payroll and related costs claimed for federal reimbursement under the Foster Care – Title IV-E (Foster Care), Adoption Assistance, and Temporary Assistance for Needy Families (TANF) programs. On a weekly basis, DCFS employees complete and sign timesheets to report and certify their time. These timesheets are then reviewed and approved by the employee’s immediate supervisor. The supervisor approves the timesheets based on their knowledge of the employee’s hours worked during the pay period. Timesheets are scanned for archiving once a month by the payroll department. Timesheets are manually entered into the time reporting system (Employee Monthly Time Report) which is used to accumulate the costs related to each cost center. Cost pool data from the time reporting system is used to identify personal service expenditures attributable to DCFS’s State and federal programs and to calculate and allocate the related fringe benefit charges and indirect costs. During our testing of 25 direct payroll expenditures charged to the cost pools allocated to the Foster Care, Adoption Assistance, and TANF programs (totaling $127,344) during the year ended June 30, 2024, we noted the following: • The timesheet for one employee (supporting cost pool payroll expenditures sampled of $3,735) could not be provided for testing. DCFS personnel stated they were unable to locate the timesheet for this employee for the sampled period. Upon further review, DCFS personnel noted timesheets were unable to be located for this employee and all employees within the same department (totaling four additional employees) for the entire fiscal year, resulting in approximately 120 missing timesheets (related to payroll, fringe benefits, and indirect costs included in the cost pool totaling $497,277, $399,834, and $194,253, respectively). As a result, the personal service (payroll and fringe benefit) expenditures, as well as related indirect costs, were not appropriately supported in accordance with the requirements of the applicable cost principles. Accordingly, the personal service expenditures and indirect costs were not allowable. • The hours reported for three employees (with sampled personal services expenditures from the cost pool of $15,727) in the timekeeping system used to allocate personal services expenditures to Foster Care, Adoption Assistance, TANF, and other programs operated by the agency exceeded the hours reported on manual timesheets prepared by the employees and approved by supervisors. The unsupported hours reported in the timekeeping system ranged from half an hour to 13.2 hours resulting in unsupported personal service expenditures from the cost pool of $783. Additionally, we noted the controls to ensure required documentation is obtained to support payroll and related costs and maintained to evidence management approval of payroll information were not operating effectively. We also noted adequate internal controls have not been established to ensure the data included in the timekeeping system and used to allocate personal services expenditures to Foster Care, Adoption Assistance, TANF, and other programs operated by DCFS is consistent with the hours reported on manual timesheets prepared by the employees and approved by supervisor. Personal service (payroll and fringe benefit) expenditures and related indirect costs charged to the Foster Care, Adoption Assistance, and TANF programs for the year ended June 30, 2024, were as follows: "See Table in the Audit Report" Criteria or Requirement: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable under federal awards, costs must meet certain general criteria. Those criteria require, among other things, that the expenditure be adequately documented. According to 2 CFR 200.430(g), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be, among other things, supported by a system of internal control, comply with the established accounting policies and practices of the non-Federal entity, and support the distribution of the employee’s salary or wages amount across specific activities or cost objectives if the employee works on more than one federal award; an indirect cost activity and a direct cost activity; two or more indirect activities allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure required documentation is obtained to support payroll and related costs and to maintain documentation evidencing management approval of payroll information. Cause: In discussing these conditions with DCFS officials, they stated these exceptions were due to human error and the limitations of keeping a complete file record for the paper-based overtime approval and timesheet process. Possible Asserted Effect: Failure to accurately document and maintain required timesheets results in noncompliance with federal regulations and unallowable costs. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding code 2024-023) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend DCFS review its current procedures and consider any changes necessary to ensure supporting documentation for payroll and related costs is maintained and accurately reflects work performed in accordance with the applicable federal regulations. Views of DCFS Officials: The Department has improved communication with and the training of its timekeepers to ensure accurate and consistent timekeeping standards. The Department has also instituted new quality control procedures to identify and correct errors. All timesheets are digitally archived to ensure proper record retention. The Department is also actively pursuing modernization efforts for both payroll and timekeeping, whether it is e-Time and CMS Payroll or the statewide ERP solutions.
Health Center Program Cluster – Assistance Listing Nos. 93.224 and 93.527 U.S. Department of Health and Human Services Award No. 6 H80CS00751-22-03, April 1, 2023 – March 31, 2024 Award No. 6 H8FCS41089‐01‐03, April 1, 2021 – March 31, 2024 Community Health Center Program – State Identifying No. 435.151301 Wisconsin Department of Health Agreement No. 435100-G24-3919588107-90, July 1, 2023 – June 30, 2024 Agreement No. 435100-G23-3919588107-390, July 1, 2022 – June 30, 2023 Criteria or Specific Requirement – Allowable Costs/Cost Principles – Federal: 45 CFR 75.403. State: Wisconsin Department of Health Services Allowable Cost Policy Manual (ACPM) and 2 CFR 200.403. Condition – Costs were included as a cost on more than one federal and/or state award program in the current period. Questioned Costs – Federal: $88,199. State: $4,792. Questioned costs were determined by identifying all employees who appeared on more than one grant expenditure listing and reviewing the specific payroll periods charged to each award for duplicates. Questioned costs by federal award identification number are: • Assistance Listing No. 93.224 Award No. 6 H8FCS41089 and Agreement No. 435100-G24-3919588107-390 - $2,056 • Assistance Listing No. 93.527 Award No. 6 H80CS00751 and Agreement No. 435100-G24-3919588107-90 – $2,736 • Assistance Listing No. 93.527 Award No. 6H80CS00751 and Assistance Listing No. 93.224 Award No. 6 H8FCS41089 – $83,407 Context – Salaries and wages for two employees of the Organization were identified as being charged to both Award No. 6 H80CS00751 and 6 H8FCS41089 within the Health Center Program Cluster (HCP) for five to seven months during the fiscal year. For two other employees, salaries and wages were identified as being charged to both the Wisconsin Department of Health Community Health Center Program (CHCG) and one of the awards in the HCP, but instances were limited to only certain payroll periods. Effect – The Organization charged payroll expenditures to more than one funding stream within the HCP and CHCG grant awards. Cause – Salaries and wages are charged to federal and state awards through separate manual tracking spreadsheets, which link back to payroll supporting documentation summarized monthly based on pay date. The Organization’s internal controls intended to prevent charging amounts to more than one award includes a separate spreadsheet listing all employees and identifying the budgeted percentage of salaries and wages associated with each federal and state awards. The system was not accurately updated to reflect changes throughout the year or monitored when the Organization prepared “catch-up” drawdowns after-the-fact to justify use of remaining available grant funds. Identification as a repeat finding, if applicable – Not a repeat finding Recommendation – The Organization should consolidate tracking of salaries and wages charged to federal and state awards into a single listing for each payroll period rather than separate spreadsheets based on summarized monthly payroll data. The Organization should support the distribution of employees’ salaries and wages amongst federal and state awards to accurately reflect the work performed through the timekeeping system and payroll records. Views of responsible officials and planned corrective actions – Upon identification of costs allocated to more than one grant, the Organization identified allowable costs previously charged to program income and reallocated the duplicated expenditures without creating other instances of noncompliance (such as cash management or period of performance). Although the initial support provided to auditors contained instances of expenditures charged to more than one grant, expenditure justification has been updated to reflect corrections and all subsequent grant expenditure detail has been reviewed to ensure no recurrence in the subsequent period. The Organization has also reviewed our internal processes to capture all salaries supported by grants accurately and timely. Additional internal controls such as limiting the number of grants an employee can be on at one time and the reduction of more catch-up drawdowns to account for staffing changes within the organization were implemented. We are also working with our accounting software vendor and payroll vendor to automate the allocation of grant salaries based on time and effort of each individual rather than after-the-fact allocations to grants. This will reduce the need to maintain manual spreadsheets to track staff and essentially eliminate the risk of charging expenditures to more than one grant. Further, relevant staff participated in a training focused on CHC grants management matters in December 2024 and will continue to look for learning opportunities to support and challenge compliance matters.
Health Center Program Cluster – Assistance Listing Nos. 93.224 and 93.527 U.S. Department of Health and Human Services Award No. 6 H80CS00751-22-03, April 1, 2023 – March 31, 2024 Award No. 6 H8FCS41089‐01‐03, April 1, 2021 – March 31, 2024 Community Health Center Program – State Identifying No. 435.151301 Wisconsin Department of Health Agreement No. 435100-G24-3919588107-90, July 1, 2023 – June 30, 2024 Agreement No. 435100-G23-3919588107-390, July 1, 2022 – June 30, 2023 Criteria or Specific Requirement – Allowable Costs/Cost Principles – Federal: 45 CFR 75.403. State: Wisconsin Department of Health Services Allowable Cost Policy Manual (ACPM) and 2 CFR 200.403. Condition – Costs were included as a cost on more than one federal and/or state award program in the current period. Questioned Costs – Federal: $88,199. State: $4,792. Questioned costs were determined by identifying all employees who appeared on more than one grant expenditure listing and reviewing the specific payroll periods charged to each award for duplicates. Questioned costs by federal award identification number are: • Assistance Listing No. 93.224 Award No. 6 H8FCS41089 and Agreement No. 435100-G24-3919588107-390 - $2,056 • Assistance Listing No. 93.527 Award No. 6 H80CS00751 and Agreement No. 435100-G24-3919588107-90 – $2,736 • Assistance Listing No. 93.527 Award No. 6H80CS00751 and Assistance Listing No. 93.224 Award No. 6 H8FCS41089 – $83,407 Context – Salaries and wages for two employees of the Organization were identified as being charged to both Award No. 6 H80CS00751 and 6 H8FCS41089 within the Health Center Program Cluster (HCP) for five to seven months during the fiscal year. For two other employees, salaries and wages were identified as being charged to both the Wisconsin Department of Health Community Health Center Program (CHCG) and one of the awards in the HCP, but instances were limited to only certain payroll periods. Effect – The Organization charged payroll expenditures to more than one funding stream within the HCP and CHCG grant awards. Cause – Salaries and wages are charged to federal and state awards through separate manual tracking spreadsheets, which link back to payroll supporting documentation summarized monthly based on pay date. The Organization’s internal controls intended to prevent charging amounts to more than one award includes a separate spreadsheet listing all employees and identifying the budgeted percentage of salaries and wages associated with each federal and state awards. The system was not accurately updated to reflect changes throughout the year or monitored when the Organization prepared “catch-up” drawdowns after-the-fact to justify use of remaining available grant funds. Identification as a repeat finding, if applicable – Not a repeat finding Recommendation – The Organization should consolidate tracking of salaries and wages charged to federal and state awards into a single listing for each payroll period rather than separate spreadsheets based on summarized monthly payroll data. The Organization should support the distribution of employees’ salaries and wages amongst federal and state awards to accurately reflect the work performed through the timekeeping system and payroll records. Views of responsible officials and planned corrective actions – Upon identification of costs allocated to more than one grant, the Organization identified allowable costs previously charged to program income and reallocated the duplicated expenditures without creating other instances of noncompliance (such as cash management or period of performance). Although the initial support provided to auditors contained instances of expenditures charged to more than one grant, expenditure justification has been updated to reflect corrections and all subsequent grant expenditure detail has been reviewed to ensure no recurrence in the subsequent period. The Organization has also reviewed our internal processes to capture all salaries supported by grants accurately and timely. Additional internal controls such as limiting the number of grants an employee can be on at one time and the reduction of more catch-up drawdowns to account for staffing changes within the organization were implemented. We are also working with our accounting software vendor and payroll vendor to automate the allocation of grant salaries based on time and effort of each individual rather than after-the-fact allocations to grants. This will reduce the need to maintain manual spreadsheets to track staff and essentially eliminate the risk of charging expenditures to more than one grant. Further, relevant staff participated in a training focused on CHC grants management matters in December 2024 and will continue to look for learning opportunities to support and challenge compliance matters.
Health Center Program Cluster – Assistance Listing Nos. 93.224 and 93.527 U.S. Department of Health and Human Services Award No. 6 H80CS00751-22-03, April 1, 2023 – March 31, 2024 Award No. 6 H8FCS41089‐01‐03, April 1, 2021 – March 31, 2024 Community Health Center Program – State Identifying No. 435.151301 Wisconsin Department of Health Agreement No. 435100-G24-3919588107-90, July 1, 2023 – June 30, 2024 Agreement No. 435100-G23-3919588107-390, July 1, 2022 – June 30, 2023 Criteria or Specific Requirement – Allowable Costs/Cost Principles – Federal: 45 CFR 75.403. State: Wisconsin Department of Health Services Allowable Cost Policy Manual (ACPM) and 2 CFR 200.403. Condition – Costs were included as a cost on more than one federal and/or state award program in the current period. Questioned Costs – Federal: $88,199. State: $4,792. Questioned costs were determined by identifying all employees who appeared on more than one grant expenditure listing and reviewing the specific payroll periods charged to each award for duplicates. Questioned costs by federal award identification number are: • Assistance Listing No. 93.224 Award No. 6 H8FCS41089 and Agreement No. 435100-G24-3919588107-390 - $2,056 • Assistance Listing No. 93.527 Award No. 6 H80CS00751 and Agreement No. 435100-G24-3919588107-90 – $2,736 • Assistance Listing No. 93.527 Award No. 6H80CS00751 and Assistance Listing No. 93.224 Award No. 6 H8FCS41089 – $83,407 Context – Salaries and wages for two employees of the Organization were identified as being charged to both Award No. 6 H80CS00751 and 6 H8FCS41089 within the Health Center Program Cluster (HCP) for five to seven months during the fiscal year. For two other employees, salaries and wages were identified as being charged to both the Wisconsin Department of Health Community Health Center Program (CHCG) and one of the awards in the HCP, but instances were limited to only certain payroll periods. Effect – The Organization charged payroll expenditures to more than one funding stream within the HCP and CHCG grant awards. Cause – Salaries and wages are charged to federal and state awards through separate manual tracking spreadsheets, which link back to payroll supporting documentation summarized monthly based on pay date. The Organization’s internal controls intended to prevent charging amounts to more than one award includes a separate spreadsheet listing all employees and identifying the budgeted percentage of salaries and wages associated with each federal and state awards. The system was not accurately updated to reflect changes throughout the year or monitored when the Organization prepared “catch-up” drawdowns after-the-fact to justify use of remaining available grant funds. Identification as a repeat finding, if applicable – Not a repeat finding Recommendation – The Organization should consolidate tracking of salaries and wages charged to federal and state awards into a single listing for each payroll period rather than separate spreadsheets based on summarized monthly payroll data. The Organization should support the distribution of employees’ salaries and wages amongst federal and state awards to accurately reflect the work performed through the timekeeping system and payroll records. Views of responsible officials and planned corrective actions – Upon identification of costs allocated to more than one grant, the Organization identified allowable costs previously charged to program income and reallocated the duplicated expenditures without creating other instances of noncompliance (such as cash management or period of performance). Although the initial support provided to auditors contained instances of expenditures charged to more than one grant, expenditure justification has been updated to reflect corrections and all subsequent grant expenditure detail has been reviewed to ensure no recurrence in the subsequent period. The Organization has also reviewed our internal processes to capture all salaries supported by grants accurately and timely. Additional internal controls such as limiting the number of grants an employee can be on at one time and the reduction of more catch-up drawdowns to account for staffing changes within the organization were implemented. We are also working with our accounting software vendor and payroll vendor to automate the allocation of grant salaries based on time and effort of each individual rather than after-the-fact allocations to grants. This will reduce the need to maintain manual spreadsheets to track staff and essentially eliminate the risk of charging expenditures to more than one grant. Further, relevant staff participated in a training focused on CHC grants management matters in December 2024 and will continue to look for learning opportunities to support and challenge compliance matters.
Health Center Program Cluster – Assistance Listing Nos. 93.224 and 93.527 U.S. Department of Health and Human Services Award No. 6 H80CS00751-22-03, April 1, 2023 – March 31, 2024 Award No. 6 H8FCS41089‐01‐03, April 1, 2021 – March 31, 2024 Community Health Center Program – State Identifying No. 435.151301 Wisconsin Department of Health Agreement No. 435100-G24-3919588107-90, July 1, 2023 – June 30, 2024 Agreement No. 435100-G23-3919588107-390, July 1, 2022 – June 30, 2023 Criteria or Specific Requirement – Allowable Costs/Cost Principles – Federal: 45 CFR 75.403. State: Wisconsin Department of Health Services Allowable Cost Policy Manual (ACPM) and 2 CFR 200.403. Condition – Costs were included as a cost on more than one federal and/or state award program in the current period. Questioned Costs – Federal: $88,199. State: $4,792. Questioned costs were determined by identifying all employees who appeared on more than one grant expenditure listing and reviewing the specific payroll periods charged to each award for duplicates. Questioned costs by federal award identification number are: • Assistance Listing No. 93.224 Award No. 6 H8FCS41089 and Agreement No. 435100-G24-3919588107-390 - $2,056 • Assistance Listing No. 93.527 Award No. 6 H80CS00751 and Agreement No. 435100-G24-3919588107-90 – $2,736 • Assistance Listing No. 93.527 Award No. 6H80CS00751 and Assistance Listing No. 93.224 Award No. 6 H8FCS41089 – $83,407 Context – Salaries and wages for two employees of the Organization were identified as being charged to both Award No. 6 H80CS00751 and 6 H8FCS41089 within the Health Center Program Cluster (HCP) for five to seven months during the fiscal year. For two other employees, salaries and wages were identified as being charged to both the Wisconsin Department of Health Community Health Center Program (CHCG) and one of the awards in the HCP, but instances were limited to only certain payroll periods. Effect – The Organization charged payroll expenditures to more than one funding stream within the HCP and CHCG grant awards. Cause – Salaries and wages are charged to federal and state awards through separate manual tracking spreadsheets, which link back to payroll supporting documentation summarized monthly based on pay date. The Organization’s internal controls intended to prevent charging amounts to more than one award includes a separate spreadsheet listing all employees and identifying the budgeted percentage of salaries and wages associated with each federal and state awards. The system was not accurately updated to reflect changes throughout the year or monitored when the Organization prepared “catch-up” drawdowns after-the-fact to justify use of remaining available grant funds. Identification as a repeat finding, if applicable – Not a repeat finding Recommendation – The Organization should consolidate tracking of salaries and wages charged to federal and state awards into a single listing for each payroll period rather than separate spreadsheets based on summarized monthly payroll data. The Organization should support the distribution of employees’ salaries and wages amongst federal and state awards to accurately reflect the work performed through the timekeeping system and payroll records. Views of responsible officials and planned corrective actions – Upon identification of costs allocated to more than one grant, the Organization identified allowable costs previously charged to program income and reallocated the duplicated expenditures without creating other instances of noncompliance (such as cash management or period of performance). Although the initial support provided to auditors contained instances of expenditures charged to more than one grant, expenditure justification has been updated to reflect corrections and all subsequent grant expenditure detail has been reviewed to ensure no recurrence in the subsequent period. The Organization has also reviewed our internal processes to capture all salaries supported by grants accurately and timely. Additional internal controls such as limiting the number of grants an employee can be on at one time and the reduction of more catch-up drawdowns to account for staffing changes within the organization were implemented. We are also working with our accounting software vendor and payroll vendor to automate the allocation of grant salaries based on time and effort of each individual rather than after-the-fact allocations to grants. This will reduce the need to maintain manual spreadsheets to track staff and essentially eliminate the risk of charging expenditures to more than one grant. Further, relevant staff participated in a training focused on CHC grants management matters in December 2024 and will continue to look for learning opportunities to support and challenge compliance matters.
2024-005 Period of Performance Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684, H8GC48547, H8LCS51197 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Title 2 CFR 200.403(h) requires that costs be incurred in the approved budget period for the applicable awards and Title 2 CFR 200.403(e) requires that those costs be determined according to generally accepted accounting principles (GAAP). Condition The Organization’s federal expenditures includes costs for goods and/or services outside of the approved budget periods for the awards. Cause The Organization’s internal controls over compliance did not include consideration of when the goods were received or services were performed compared to the budget periods for the awards. Lack of understanding of GAAP and the requirements of accrual basis accounting allowed expenditures outside of the applicable budget periods to be approved and claimed as current federal expenditures based solely on management’s decision to pay for the expenditure in the current year. Effect The Organization may allocate unallowable costs to the federal awards. Questioned Costs $321,877 (of which $283,128 was previously reported in finding 2024-004 above) Context In a sample of sixty invoices, we noted eight included expenditures for goods or services that were not provided in the current budget period. $283,129 of expenditures charged to the program were for goods or services related to future budget periods. $38,748 of expenditures charged to the program were for goods or services related to previous budget periods. Recommendation We recommend management personnel authorized to approve expenditures of federal awards be limited to those who have a basic understanding of GAAP and the relationship between the accrual basis of accounting and the period of performance requirements. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.
2024-005 Period of Performance Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684, H8GC48547, H8LCS51197 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Title 2 CFR 200.403(h) requires that costs be incurred in the approved budget period for the applicable awards and Title 2 CFR 200.403(e) requires that those costs be determined according to generally accepted accounting principles (GAAP). Condition The Organization’s federal expenditures includes costs for goods and/or services outside of the approved budget periods for the awards. Cause The Organization’s internal controls over compliance did not include consideration of when the goods were received or services were performed compared to the budget periods for the awards. Lack of understanding of GAAP and the requirements of accrual basis accounting allowed expenditures outside of the applicable budget periods to be approved and claimed as current federal expenditures based solely on management’s decision to pay for the expenditure in the current year. Effect The Organization may allocate unallowable costs to the federal awards. Questioned Costs $321,877 (of which $283,128 was previously reported in finding 2024-004 above) Context In a sample of sixty invoices, we noted eight included expenditures for goods or services that were not provided in the current budget period. $283,129 of expenditures charged to the program were for goods or services related to future budget periods. $38,748 of expenditures charged to the program were for goods or services related to previous budget periods. Recommendation We recommend management personnel authorized to approve expenditures of federal awards be limited to those who have a basic understanding of GAAP and the relationship between the accrual basis of accounting and the period of performance requirements. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.
2024-005 Period of Performance Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684, H8GC48547, H8LCS51197 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Title 2 CFR 200.403(h) requires that costs be incurred in the approved budget period for the applicable awards and Title 2 CFR 200.403(e) requires that those costs be determined according to generally accepted accounting principles (GAAP). Condition The Organization’s federal expenditures includes costs for goods and/or services outside of the approved budget periods for the awards. Cause The Organization’s internal controls over compliance did not include consideration of when the goods were received or services were performed compared to the budget periods for the awards. Lack of understanding of GAAP and the requirements of accrual basis accounting allowed expenditures outside of the applicable budget periods to be approved and claimed as current federal expenditures based solely on management’s decision to pay for the expenditure in the current year. Effect The Organization may allocate unallowable costs to the federal awards. Questioned Costs $321,877 (of which $283,128 was previously reported in finding 2024-004 above) Context In a sample of sixty invoices, we noted eight included expenditures for goods or services that were not provided in the current budget period. $283,129 of expenditures charged to the program were for goods or services related to future budget periods. $38,748 of expenditures charged to the program were for goods or services related to previous budget periods. Recommendation We recommend management personnel authorized to approve expenditures of federal awards be limited to those who have a basic understanding of GAAP and the relationship between the accrual basis of accounting and the period of performance requirements. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.
2024-005 Period of Performance Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684, H8GC48547, H8LCS51197 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Title 2 CFR 200.403(h) requires that costs be incurred in the approved budget period for the applicable awards and Title 2 CFR 200.403(e) requires that those costs be determined according to generally accepted accounting principles (GAAP). Condition The Organization’s federal expenditures includes costs for goods and/or services outside of the approved budget periods for the awards. Cause The Organization’s internal controls over compliance did not include consideration of when the goods were received or services were performed compared to the budget periods for the awards. Lack of understanding of GAAP and the requirements of accrual basis accounting allowed expenditures outside of the applicable budget periods to be approved and claimed as current federal expenditures based solely on management’s decision to pay for the expenditure in the current year. Effect The Organization may allocate unallowable costs to the federal awards. Questioned Costs $321,877 (of which $283,128 was previously reported in finding 2024-004 above) Context In a sample of sixty invoices, we noted eight included expenditures for goods or services that were not provided in the current budget period. $283,129 of expenditures charged to the program were for goods or services related to future budget periods. $38,748 of expenditures charged to the program were for goods or services related to previous budget periods. Recommendation We recommend management personnel authorized to approve expenditures of federal awards be limited to those who have a basic understanding of GAAP and the relationship between the accrual basis of accounting and the period of performance requirements. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.
2024-005 Period of Performance Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684, H8GC48547, H8LCS51197 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Title 2 CFR 200.403(h) requires that costs be incurred in the approved budget period for the applicable awards and Title 2 CFR 200.403(e) requires that those costs be determined according to generally accepted accounting principles (GAAP). Condition The Organization’s federal expenditures includes costs for goods and/or services outside of the approved budget periods for the awards. Cause The Organization’s internal controls over compliance did not include consideration of when the goods were received or services were performed compared to the budget periods for the awards. Lack of understanding of GAAP and the requirements of accrual basis accounting allowed expenditures outside of the applicable budget periods to be approved and claimed as current federal expenditures based solely on management’s decision to pay for the expenditure in the current year. Effect The Organization may allocate unallowable costs to the federal awards. Questioned Costs $321,877 (of which $283,128 was previously reported in finding 2024-004 above) Context In a sample of sixty invoices, we noted eight included expenditures for goods or services that were not provided in the current budget period. $283,129 of expenditures charged to the program were for goods or services related to future budget periods. $38,748 of expenditures charged to the program were for goods or services related to previous budget periods. Recommendation We recommend management personnel authorized to approve expenditures of federal awards be limited to those who have a basic understanding of GAAP and the relationship between the accrual basis of accounting and the period of performance requirements. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.
2024-005 Period of Performance Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684, H8GC48547, H8LCS51197 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Title 2 CFR 200.403(h) requires that costs be incurred in the approved budget period for the applicable awards and Title 2 CFR 200.403(e) requires that those costs be determined according to generally accepted accounting principles (GAAP). Condition The Organization’s federal expenditures includes costs for goods and/or services outside of the approved budget periods for the awards. Cause The Organization’s internal controls over compliance did not include consideration of when the goods were received or services were performed compared to the budget periods for the awards. Lack of understanding of GAAP and the requirements of accrual basis accounting allowed expenditures outside of the applicable budget periods to be approved and claimed as current federal expenditures based solely on management’s decision to pay for the expenditure in the current year. Effect The Organization may allocate unallowable costs to the federal awards. Questioned Costs $321,877 (of which $283,128 was previously reported in finding 2024-004 above) Context In a sample of sixty invoices, we noted eight included expenditures for goods or services that were not provided in the current budget period. $283,129 of expenditures charged to the program were for goods or services related to future budget periods. $38,748 of expenditures charged to the program were for goods or services related to previous budget periods. Recommendation We recommend management personnel authorized to approve expenditures of federal awards be limited to those who have a basic understanding of GAAP and the relationship between the accrual basis of accounting and the period of performance requirements. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.
2024-005 Period of Performance Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684, H8GC48547, H8LCS51197 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Title 2 CFR 200.403(h) requires that costs be incurred in the approved budget period for the applicable awards and Title 2 CFR 200.403(e) requires that those costs be determined according to generally accepted accounting principles (GAAP). Condition The Organization’s federal expenditures includes costs for goods and/or services outside of the approved budget periods for the awards. Cause The Organization’s internal controls over compliance did not include consideration of when the goods were received or services were performed compared to the budget periods for the awards. Lack of understanding of GAAP and the requirements of accrual basis accounting allowed expenditures outside of the applicable budget periods to be approved and claimed as current federal expenditures based solely on management’s decision to pay for the expenditure in the current year. Effect The Organization may allocate unallowable costs to the federal awards. Questioned Costs $321,877 (of which $283,128 was previously reported in finding 2024-004 above) Context In a sample of sixty invoices, we noted eight included expenditures for goods or services that were not provided in the current budget period. $283,129 of expenditures charged to the program were for goods or services related to future budget periods. $38,748 of expenditures charged to the program were for goods or services related to previous budget periods. Recommendation We recommend management personnel authorized to approve expenditures of federal awards be limited to those who have a basic understanding of GAAP and the relationship between the accrual basis of accounting and the period of performance requirements. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.
2024-005 Period of Performance Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684, H8GC48547, H8LCS51197 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Title 2 CFR 200.403(h) requires that costs be incurred in the approved budget period for the applicable awards and Title 2 CFR 200.403(e) requires that those costs be determined according to generally accepted accounting principles (GAAP). Condition The Organization’s federal expenditures includes costs for goods and/or services outside of the approved budget periods for the awards. Cause The Organization’s internal controls over compliance did not include consideration of when the goods were received or services were performed compared to the budget periods for the awards. Lack of understanding of GAAP and the requirements of accrual basis accounting allowed expenditures outside of the applicable budget periods to be approved and claimed as current federal expenditures based solely on management’s decision to pay for the expenditure in the current year. Effect The Organization may allocate unallowable costs to the federal awards. Questioned Costs $321,877 (of which $283,128 was previously reported in finding 2024-004 above) Context In a sample of sixty invoices, we noted eight included expenditures for goods or services that were not provided in the current budget period. $283,129 of expenditures charged to the program were for goods or services related to future budget periods. $38,748 of expenditures charged to the program were for goods or services related to previous budget periods. Recommendation We recommend management personnel authorized to approve expenditures of federal awards be limited to those who have a basic understanding of GAAP and the relationship between the accrual basis of accounting and the period of performance requirements. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.
Condition: We identified unallowable costs totaling $11,454, comprised of $2,275 of employee meals and $9,179 of investment advisory fees. Criteria: Title 2, CFR, Part 200, Subpart E-Cost Principles, Basic Considerations, section 200.403, Factors Affecting Allowability of Costs, states, in part, that “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: a) be necessary and reasonable for the performance of the Federal award, b) be properly documented showing the business nature of the charge. Cause: Internal controls over reporting compliance requirements were not properly designed and were not placed in operation. Management is responsible for compliance with the requirements of allowable/unallowable costs and for the design, implementation, and maintenance of effective internal controls over compliance with the requirements of laws, statutes, regulations, rules, and provisions of grant agreements applicable to its federal program. Effect: The lack of internal controls and procedures over compliance increases the risk of using federal funds for unallowable costs. Recommendation: We recommend the Agency develop a written policies and procedures manual for allowable/unallowable costs compliance, which should include a checklist detailing all the necessary steps to ensure a proper review of all costs charged to the federal program.
Eligibility and Allowable Costs Material Weakness U.S. DEPARTMENT OF HOMELAND SECURITY – FEMA Passed through from United Way Worldwide ALN #: 97.024 Federal Award Identification #: LRO #782600077 Condition: Documentation was not retained to prove eligibility and allowable costs to the program for both rental assistance and utility assistance participants. Criteria: 2 CFR Part 200.403 Questioned Costs: $28,604 Context: Out of 26 tested for eligibility, 11 recipients did not have adequate support to prove eligibility for both rental assistance and utility assistance. Harmony could not locate documentation to support certain participants including the participant's lease and did not maintain proper participant identification on file. Additionally, within the sample selected, there were individuals who received utility assistance; however, Harmony could not locate the utility bill to support the amounts paid on behalf of the participant. Therefore, there was not a way to verify that the utility assistance met the various utility assistance eligibility requirements as outlined in the grant agreement. Lastly, for one rental assistance recipient, the amount of support provided was greater than three months of assistance as limited by the program. Cause: Lack of supporting documentation or not properly retaining documentation to support the eligibility of recipients. Effect: Lack of supporting documentation or not retaining the documentation to support the eligibility causes the funds to become questioned costs. Identification as repeat finding, if applicable: Not applicable. Recommendation: We recommend the Organization periodically review supporting documentation for completed applications to ensure all support is retained. We also recommend implementing enhanced internal controls to verify all support is properly retained. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. See corrective action plan.
Eligibility and Allowable Costs Material Weakness U.S. DEPARTMENT OF HOMELAND SECURITY – FEMA Passed through from United Way Worldwide ALN #: 97.024 Federal Award Identification #: LRO #782600077 Condition: Documentation was not retained to prove eligibility and allowable costs to the program for both rental assistance and utility assistance participants. Criteria: 2 CFR Part 200.403 Questioned Costs: $28,604 Context: Out of 26 tested for eligibility, 11 recipients did not have adequate support to prove eligibility for both rental assistance and utility assistance. Harmony could not locate documentation to support certain participants including the participant's lease and did not maintain proper participant identification on file. Additionally, within the sample selected, there were individuals who received utility assistance; however, Harmony could not locate the utility bill to support the amounts paid on behalf of the participant. Therefore, there was not a way to verify that the utility assistance met the various utility assistance eligibility requirements as outlined in the grant agreement. Lastly, for one rental assistance recipient, the amount of support provided was greater than three months of assistance as limited by the program. Cause: Lack of supporting documentation or not properly retaining documentation to support the eligibility of recipients. Effect: Lack of supporting documentation or not retaining the documentation to support the eligibility causes the funds to become questioned costs. Identification as repeat finding, if applicable: Not applicable. Recommendation: We recommend the Organization periodically review supporting documentation for completed applications to ensure all support is retained. We also recommend implementing enhanced internal controls to verify all support is properly retained. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. See corrective action plan.
2023 001 Activities Allowed or Unallowed and Allowable Costs/ Cost Principles U.S. Department of Homeland Security: Passed through the State of New Jersey, Department of Law and Public Safety: Disaster Grants – Public Assistance (Presidentially Declared Disasters) – ALN 97.036 Federal Grant Numbers and Years State of New Jersey pass-through number: UH1WX Project Worksheet #1822 – October 5, 2021 to March 5, 2022 (Application 553330) Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Prior Year Findings: None Criteria Compliance – Program Specific The Federal Emergency Management Agency (FEMA), as part of the U.S. Department of Homeland Security, evaluates the eligibility of all costs claimed by the applicant. Not all costs incurred as a result of the incident are eligible. (PAPPG v4) Chapter 4, page(s) 51-54; Chapter 6, page(s) 65 & 93-95. Cost must be: • Directly tied to the performance of eligible work; • Adequately documented (2 CFR section 200.403(g)); • Reduced by all applicable credits, such as insurance proceeds and salvage values (Stafford Act section 312, 42 USC section 5155, and 2 CFR section 200.406); • Authorized and not prohibited under federal, state, territorial, tribal, or local government laws or regulations; • Consistent with applicant’s internal policies, regulations, and procedures that apply uniformly to both federal awards and other activities of the applicant; and • Necessary and reasonable to accomplish the work properly and efficiently (2 CFR section 200.403). 1. Applicant (Force Account) Labor FEMA refers to the applicant’s personnel as “force account.” FEMA reimburses force account labor based on actual hourly rates plus the cost of the employee’s actual fringe benefits. FEMA calculates the fringe benefit cost based on a percentage of the hourly pay rate. Because certain items in a benefit package are not dependent on hours worked (e.g., health insurance), the percentage for overtime is usually different than the percentage for straight-time. Compliance – General Per 2 CFR Section 200.430, charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally assisted and all other activities compensated by the non-federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-federal entity. Internal Control Per 2 CFR section 200.303(a), a non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition and Context The New Jersey Turnpike Authority (the “Authority”), through the State of New Jersey, Department of Homeland Security (the State), administers the federal Disaster Grants – Public Assistance (Presidentially Declared Disasters) program and is reimbursed for eligible expenditures when a presidentially declared disaster occurs. For the Authority’s force account labor costs, the Authority utilizes manual Daily Worksheets (timesheets) as the official records for time and effort worked during an event by the Authority’s personnel. These timesheets are then entered into the Authority’s information system (PeopleSoft) for review and approval, reconciling back to the information entered on the respective timesheet. For two of forty timesheets selected for testwork, the Authority was unable to provide the timesheets as the official record for the time and effort charged to the federal program. However, the Authority successfully demonstrated through PeopleSoft system that the time and effort charged to the federal program was properly reviewed and approved and reconciled to the amounts of reimbursement requested from the State. Cause The Authority did not maintain and make readily available certain timesheets used as the official record for the time and effort charged to the federal program in accordance with the Uniform Guidance. Effect The Authority did not comply with 2 CFR Section 200.430 related to incorporating the physical timesheets into the official records of the Authority. Questioned Costs None as the time and effort amounts charged were determined to be allowable. Recommendation We recommend that the Authority strengthen its processes to ensure that all timesheets for disaster related events that are federally funded are maintained and are made readily available if subject to audit or other inspection in accordance with the Uniform Guidance. Views of Responsible Officials Management agrees with the finding. We are committed to strengthening our processes to ensure that all physical timesheets related to FEMA-declared disaster events are properly maintained and readily accessible. To achieve this, we will implement enhanced procedures and controls to ensure full compliance with the Uniform Guidance requirements.
2023-001- Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs and Cost Principles Information on the Major Federal Program U.S. Department of Health and Human Services Center for Disease Control and Prevention Assistance Listing Number: 93.988 Assistance Listing Name: Cooperative Agreements for State-Based Diabetes Control Programs and Evaluation of Surveillance Systems Grant Award Number(s): 1 NU58DP007372-01-00 Award Period: June 30, 2023 to June 29, 2028 Criteria or Specific Requirement – The Uniform Guidance 2 CFR Section 200.303 requires non-Federal entities receiving Federal awards establish and maintain internal control to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In addition, per 2 CFR Section 200.403, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally- financed program in either the current or a prior period. g) Be adequately documented. h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3).” Furthermore, according to the Uniform Guidance (2 CFR Part 200), specifically §200.430(i), “charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated”. The records must also be supported by the approval of an individual with firsthand knowledge of the work performed. Condition - During our audit, within the tested sample of seven timesheets out of a population of twenty-six, three timesheets for employees charged to the federal program did not have proper approval in the system. The lack of signed approval indicates that the timesheets were not reviewed and approved by an individual with knowledge of the work performed, as required under the Uniform Guidance. ADA has documented expenditure policies and procedures. However, the review and approval process did not operate as designed. Cause – ADA did not adhere to its internal policies and procedures to ensure timesheets were properly reviewed and approved. Effect or Potential Effect – Without adequate internal controls in place to ensure costs are properly verified and approved, ADA could unallowably and inaccurately charge salary and wages expenditures to the federal program. Questioned Costs – None Context - This is a condition based on testing of ADA’s compliance. Based on tested samples, we noted four out of seven sampled timesheets were not properly approved in the system. The samples were selected using a non-statistical method. Repeat Finding - This finding is not a repeat finding. Recommendation - BDO recommends that ADA adhere to its documented policies and procedures to ensure all timesheets are reviewed and approved by authorized personnel with knowledge of the work performed. ADA should also provide training to all employees involved in the timesheet preparation and approval process to ensure compliance with the Uniform Guidance requirements. Views of Responsible Officials: The findings were primarily related to a change that ADA made to the Human Resources Information System. Going forward, ADA will adhere to our documented policies and procedures to ensure all timesheets are reviewed and approved by authorized personnel with knowledge of the work performed. Additionally, we will provide training to all employees involved in the timesheet preparation and approval process to ensure compliance with the Uniform Guidance requirements.
Federal agency: All agencies in the SEFA Assistance Listing Number: See SEFA Award Period: 01/01/2023 to 12/31/2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria or Specific Requirement: The compliance requirements for Federal Assistance Number 93.558 – Temporary Assistance for Needy Families (TANF) State Programs includes a Period of Performance element. The compliance requirement related to period of performance is that a non-federal entity may charge only allowable costs incurred during the approved budget period (also identified as the grant 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)). Condition: Allocations of indirect costs are performed once during the year-end closing process based on time study data for the entire year, and when program attendance data for programs that are ran for various increments throughout the year is available. The TANF grant period that was tested as a major program was December 2022 – August 2023. As the grant period ended in September, no costs incurred after that date should be considered major program expenditures. Questioned Costs: Indeterminable. The questioned costs could be considered those indirect costs considered TANF expenditures that were incurred after August 2023. In addition, because the program attendance is used to allocate costs between programs, program attendance after August 2023 may be inappropriate to be considered when allocating those indirect costs to specific programs. Context: Indirect cost allocations are performed once during the year-end closing process by the auditee. Time studies are performed to allocate indirect costs between supporting and program functions. The indirect costs allocated to the program functions are then allocated between individual programs, including federally funded programs, based on the number of participant hours in each program. The time study and program hours used to allocate indirect costs are based on the entire year and not just the major program grant period. In addition, indirect costs that are allocated are incurred during the entire year and not just the major program grant period. Cause: Time and program participation data used to allocate costs are not consistent with the grant period. In addition, the costs that are allocated are not consistent with the grant period. Effect: The single annual allocation of costs means that costs incurred outside the major program grant/budget period are being allocated to the major program. In addition, allocation base data from outside the grant/budget period is being used as a base for the indirect cost allocation. Repeat Finding: No Auditor’s Recommendation: We recommend the auditee perform indirect cost allocations so that the costs and allocation base align with the grant/budget period. Performing the allocation of indirect costs annually may not create an equitable allocation at the individual program level. Views of Responsible Officials and Planned Corrective Actions: We agree that the allocation being performed once annually does not create the most equitable allocation of costs between our individual programs. We will perform our indirect cost allocations more periodically during the course of the fiscal year to ensure that more appropriate times studies and applicable participant hours are being utilized to limit the potential of allocating unrelated indirect costs from the year to individual programs, including the federally funded programs.
Federal agency: All agencies in the SEFA Assistance Listing Number: See SEFA Award Period: 01/01/2023 to 12/31/2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria or Specific Requirement: The compliance requirements for Federal Assistance Number 93.558 – Temporary Assistance for Needy Families (TANF) State Programs includes a Period of Performance element. The compliance requirement related to period of performance is that a non-federal entity may charge only allowable costs incurred during the approved budget period (also identified as the grant 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)). Condition: Allocations of indirect costs are performed once during the year-end closing process based on time study data for the entire year, and when program attendance data for programs that are ran for various increments throughout the year is available. The TANF grant period that was tested as a major program was December 2022 – August 2023. As the grant period ended in September, no costs incurred after that date should be considered major program expenditures. Questioned Costs: Indeterminable. The questioned costs could be considered those indirect costs considered TANF expenditures that were incurred after August 2023. In addition, because the program attendance is used to allocate costs between programs, program attendance after August 2023 may be inappropriate to be considered when allocating those indirect costs to specific programs. Context: Indirect cost allocations are performed once during the year-end closing process by the auditee. Time studies are performed to allocate indirect costs between supporting and program functions. The indirect costs allocated to the program functions are then allocated between individual programs, including federally funded programs, based on the number of participant hours in each program. The time study and program hours used to allocate indirect costs are based on the entire year and not just the major program grant period. In addition, indirect costs that are allocated are incurred during the entire year and not just the major program grant period. Cause: Time and program participation data used to allocate costs are not consistent with the grant period. In addition, the costs that are allocated are not consistent with the grant period. Effect: The single annual allocation of costs means that costs incurred outside the major program grant/budget period are being allocated to the major program. In addition, allocation base data from outside the grant/budget period is being used as a base for the indirect cost allocation. Repeat Finding: No Auditor’s Recommendation: We recommend the auditee perform indirect cost allocations so that the costs and allocation base align with the grant/budget period. Performing the allocation of indirect costs annually may not create an equitable allocation at the individual program level. Views of Responsible Officials and Planned Corrective Actions: We agree that the allocation being performed once annually does not create the most equitable allocation of costs between our individual programs. We will perform our indirect cost allocations more periodically during the course of the fiscal year to ensure that more appropriate times studies and applicable participant hours are being utilized to limit the potential of allocating unrelated indirect costs from the year to individual programs, including the federally funded programs.
2023 – 004: Cost Allocation of Fringe Benefits to LSC Grants Federal Agency: Legal Services Corporation (LSC) Federal Program Name: LSC Native American Grant Assistance Listing Number: 09.706060 Federal Award Identification Number and Year: 09-706060 - 2023 Award Period: January 1, 2023 – December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Other Matters Criteria or specific requirement: Federal regulations (45 CFR 1630.5 and 2 CFR 200.403) state that expenditures are allowable under an LSC (or federal) grant or contract only if the recipient can demonstrate that the cost was consistent with accounting policies and procedures that apply uniformly to both LSC (or, federal)-funded and non-LSC (of, federal) -funded activities. Condition: During our testing we noted that 100% of medical insurance for a specific location was allocated to the grant. However, we noted that medical insurance for other pay periods and locations were allocated on a trimester basis using an allocation base of total grant hours for the period divided by total general fund hours. As such, the fringe benefit cost mentioned above was allocated in an inconsistent manner to other grant fringe benefit costs was not fully representative of the employees’ time and effort. However, management noted that these costs were allocated in a manner to comply with 45 CFR 1630.5(g) which allows LSC award recipients to allocate proportional share of another funding source’s share of an indirect cost to LSC funds. Questioned costs: None. Context: This single instance was noted during testing of 26 payroll and payroll-related disbursements. Cause: The Organization’s employee benefit cost allocation methodology is primarily based on a periodic calculation of grant hours versus general fund hours multiplied by period costs, but it often includes manual adjustments based on review of individual expense data. Therefore, the methodology is challenging to apply consistently, document contemporaneously, and apply in accordance with federal regulations. Effect: The inclusion of frequent manual adjustments in the Organization’s employee benefit cost allocation methodology could cause costs to be allocated to grants in a manner where costs are not applied uniformly to both LSC (or, federal)-funded and non-LSC (of, federal) -funded activities. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization consider updating its employee benefit cost allocation methodology and process to reduce the frequency of manual adjustments based on review of expense data and maximize the use of automated allocations that are calculated in a consistent manner that ensure costs are applied uniformly to respective benefited activities. Views of responsible officials: There is no disagreement with the audit finding