Finding Number: 2023-029 Prior Year Finding Number: 2022-026 Compliance Requirement: Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of Defense Government Department/Agency: Office of the Adjutant General (OTAG) National Guard Military Operations and Maintenance (O&M) Projects ALN: 12.401 Award #: W9127P-23-2-1001, W9127P-22-2-1001 Award Period: 10/01/2021 – 09/30/2022 10/01/2022 – 09/30/2023 Criteria – CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records. - Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and - Support the distribution of employee salary across multiple activities or cost objectives. The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Condition – We sampled and selected 60 out of 652 payroll transactions and noted the following: - 1 instance where health insurance costs continued to be charged to the program after the employee retired, with no related time and effort. - 1 instance where the employee pay rate did not agree to the pay rate listed on their NOPA form. - 7 instances where the timesheet for the pay period selected was not provided. Further, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the allowable costs/cost principles compliance requirements. Questioned Costs – Not determinable. Context – This is a condition identified per review of OTAG’s compliance with the specified requirements using a statistically valid sample. The total amount of payroll expenditures charged to the program during fiscal year 2023 were $1,810,965 and the total amount of our sample was $188,082. The known amount of the exceptions amounted to $26,694. Effect – OTAG is not in compliance with the stated provisions. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding. Cause – OTAG does not appear to have adequate policies and procedures in place to ensure compliance with applicable cost principles stipulations. Recommendation – We recommend that OTAG improve internal controls to ensure adherence to Federal regulations related to the fiscal and administrative requirements for expending and accounting for payroll expenditures. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. OTAG implemented enhanced payroll controls including a dual manual and electronic timesheet system, verification of pay rates against NOPA forms, and separation controls to discontinue benefit charges upon employee separation or retirement. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2023-033 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of the Interior Government Department/Agency: Department of Planning and Natural Resources Fish and Wildlife Cluster ALN: 15.605, 15.611 Award #: Various Award Period: Various Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires the non-federal entities receiving Federal awards (1.e., auditee management) establish and maintain internal control designed to reasonable ensure compliance with Federal statutes, regulations, and other terms and conditions of the Federal Award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its activities allowed or unallowed, allowable cost/cost principal process. CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records. - Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and - Support the distribution of employee salary across multiple activities or cost objectives. Condition – During our testing of allowable costs for payroll expenditures incurred throughout the year, we sampled and selected 60 of 620 payroll disbursements and noted the following: - 8 instances where the approved timesheet for the pay period selected were not available for review. - 10 instances where an employees assigned project code documented on the Notice of Personnel Action was not a project code associated with the grant. Additionally, the payroll register reflected a different project code for these transactions. - 1 instance with a variance between the hours reported on the payroll register and the hours reported on the Detail Check History. As a result, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the compliance requirement. Questioned Costs – $38,914. Context – This is a condition identified per review of the Government’s compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to the program in fiscal year 2023 was $1,572,926. The amount sampled is $165,134. The value of transactions with exceptions totaled $38,914. Effect – An ineffective control system related to review of transactions to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major programs. Cause – The Government does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles and ensure that an appropriate level of review and approval was completed prior to charging costs to a federal program. Recommendation – We recommend that the Government reevaluate and improve internal controls to ensure adherence to federal regulations related to the fiscal administrative requirement for expending and accounting for payroll and to ensure proper and accurate funding allocation of payroll cost. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. We recognize that these findings highlight areas where improvements are necessary to ensure better compliance with applicable policies and regulations governing payroll and grant management. We are committed to implementing corrective actions and enhancing the internal controls to prevent recurrence. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2023-049 Prior Year Finding Number: N/A Compliance Requirement: Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of Education Government Department/Agency: Department of Education (VIDE) Special Education Cluster ALN: 84.027A, 84.027X Award #: Various Award Period: Various Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires the non-federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonable ensure compliance with Federal statutes, regulations, and other terms and conditions of the Federal Award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its activities allowed or unallowed, allowable cost/cost principal process. CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records. - Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and - Support the distribution of employee salary across multiple activities or cost objectives. Furthermore, CFR 200.113 requires that an applicant, recipient, or subrecipient of a Federal award must promptly disclose, in writing, whenever it has credible evidence of the commission of a violation of Federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations found in Title 18 of the United States Code, or a violation of the civil False Claims Act, in connection with the Federal award (including any activities or subawards thereunder). The disclosure must be made to the Federal agency, the agency’s Office of Inspector General, and the pass-through entity (if applicable). Condition – During our testing of allowable costs for payroll expenditures incurred throughout the year, we sampled and selected 40 of 2,573 payroll disbursements and noted 2 instances where the employee’s pay rate in the approved Notice of Personnel Action provided did not agree with the pay rate in the payroll register. Additionally, a fraud incident related to falsified payroll timesheet entries charged to this program was discovered and investigated during the year. It was discovered that bus driver timesheets were being approved with falsified time entries. An analysis conducted by VIDE determined the amount of theft to be $5,221. This incident was not disclosed or reported to the Federal awarding agency as required. As a result, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the compliance requirement. Questioned Costs – $5,221. Context – This is a condition identified per review of VIDE’s compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to the program in fiscal year 2023 was $5,744,863. The amount sampled is $102,945. Effect – An ineffective control system related to review of transactions to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major programs. Cause – VIDE does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles and ensure that an appropriate level of review was completed prior to charging costs to a federal program. Recommendation – We recommend that VIDE reevaluate and improve internal controls to ensure adherence to federal regulations related to the fiscal administrative requirement for expending and accounting for payroll transactions. Additionally, fraud incident should be reported to the appropriate federal awarding agency in accordance with mandatory disclosure requirements. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. VIDE is taking immediate action to align payroll controls with our established fiscal improvement plan and to institutionalize a mandatory federal reporting protocol for fraud. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number 2023-052 Prior Year Finding Number: N/A Compliance Requirement: Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of Education Government Department/Agency: Department of Education (VIDE) Consolidated Grant to the Outlying Areas ALN: 84.403A Award #: Various Award Period: Various Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires the non-federal entities receiving Federal awards (1.e., auditee management) establish and maintain internal control designed to reasonable ensure compliance with Federal statutes, regulations, and other terms and conditions of the Federal Award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its activities allowed or unallowed, allowable cost/cost principal process. CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records. - Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and - Support the distribution of employee salary across multiple activities or cost objectives. Condition – During our testing of allowable costs for payroll expenditures incurred throughout the year, we sampled and selected 40 of 4,518 payroll disbursements and noted the following: - 18 instances where the approved timesheet for the pay period selected were not available for review. - 2 instances where the per diem support were not readily identifiable. - 1 instance where the employee’s pay rate in the approved NOPA provided did not agree with the pay rate in the payroll register. As a result, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the compliance requirement. Questioned Costs – Not determinable. Context – This is a condition identified per review of VIDE’s compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to the program in fiscal year 2023 was $7,738,716. The amount sampled is $95,985. Effect – An ineffective control system related to review of transactions to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major programs. Cause – VIDE does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles and ensure that an appropriate level of review and approval was completed prior to charging costs to a federal program. Recommendation – We recommend that VIDE reevaluate and improve internal controls to ensure adherence to federal regulations related to the fiscal administrative requirement for expending and accounting for payroll and to ensure proper and accurate funding allocation of payroll cost. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. VIDE is taking immediate action to align payroll controls with the established fiscal improvement plan. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2023-063 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of Health and Human Services Government Department/Agency: Department of Human Services (DHS) Head Start Cluster ALN: 93.356, 93.600 Award #: Various Award Period: Various Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records. - Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and - Support the distribution of employee salary across multiple activities or cost objectives. Condition – During our testing of allowable costs for payroll expenditures incurred throughout the year, we sampled and selected 60 of 2,941 payroll disbursements and noted 1 instance where fringe benefits were incorrectly charged to the program. We found the employer share of fringe benefits charged to the program with no associated time and effort by the employee. The employee retired and the fringe benefit continued to be charged to the program subsequent to retirement. Further, we noted that internal controls identified did not appear to be operating at a level of precision to ensure compliance with the above-mentioned requirements. Questioned Costs - $4,688. Context – This is a condition identified per review of DHS’ compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to the program in fiscal year 2023 were $7,037,992. The amount sampled is $150,246. The known amount of instances of noncompliance is $4,688, which represents the fringe benefits charged to the program for the entire fiscal year with no associated time and effort by the employee. Effect – An ineffective control system related to review of transactions to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major programs. Cause – DHS does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles and ensure that an appropriate level of review and approval was completed prior to charging costs to a federal program. Recommendation – We recommend that DHS reevaluate and improve internal controls to ensure adherence to federal regulations related to the fiscal administrative requirement for expending and accounting for payroll and to ensure proper and accurate funding allocation of payroll cost. Views of Responsible Officials - The Government concurs with the auditor’s findings and recommendations. DHS has incorporated into its internal controls a step to ensure that the accounts, in retrospect, are reconciled to the actual Flex earning report. DHS intends on meeting with the Department of Finance to identify the nuances that create postings to occur contrary to the Flex Earning Report account coding. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2023-074 Prior Year Finding Number: 2022-071 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: U.S. Department of Health and Human Services Government Department/Agency: Department of Human Services (DHS) Social Services Block Grant ALN: 93.667 Award #: Various Award Period: Various Criteria – CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records. - Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and - Support the distribution of employee salary across multiple activities or cost objectives. Further, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires the non-federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonable ensure compliance with Federal statutes, regulations, and other terms and conditions of the Federal Award. Condition – We sampled and selected 60 of 1,380 payroll transactions and noted the following: - 2 instances in which the project code on an employee’s Notice of Personnel Action (NOPA), which is used to record time and effort to the appropriate grant, was expired and had not been updated. During the fiscal year, program personnel did make adjustments to ensure the employee’s time and effort was recorded to the correct grant. - 1 instance in which the hours noted per the employee’s timesheet did not agree to the hours in the payroll register. We also sampled 60 of 251 non-payroll transactions and noted the following: - 18 expenditures that do not seem to conform to DHS requirements for disbursing program funds. - 6 instances where the approved requisition was not available for review. - 1 instance where the invoice date is prior to the date of the Purchase Order. - 1 instance where no supporting documentation was available for review other than the approved requisition. Questioned Costs – Not determinable. Context – This is a condition identified per review of compliance with the specified requirements using a statistically valid sample. Total amount of payroll expenditures charged to the program in fiscal year 2023 were $3,343,590. Total amount sampled is $180,273. The known amount of the exceptions is $408. Total amount of non-payroll expenditures charged to the program in fiscal year 2023 were $2,551,775. Total amount sampled is $1,004,88. The known amount of the exception is $388,742. Effect - Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding. Cause – DHS does not appear to have adequate policies and procedures in place to ensure compliance with applicable cost principles and maintenance of underlying documentation. Recommendation – We recommend that DHS improve internal controls to ensure adherence to federal regulations related to the fiscal and administrative requirements for expending and accounting for payroll and non-payroll expenditures. Views of Responsible Officials - The Government concurs with the auditor’s findings and recommendations. The Department of Human Services (DHS) adopted the electronic Timeforce (STATS) system for payroll, replacing manual processes. Time and attendance are approved through management levels, with payroll based on Notice of Personnel Action (NOPA) cost centers. Financial Analysts reconcile payroll, and a workflow ensures accurate NOPA listings for payroll purposes. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
2023-005 – Department of the Interior Federal Program Name: Natural Resource Stewardship - Pass-Through Agency: N/A Assistance Listing Number: 15.944 Federal Award Identification Year: 2023 Award Period: 10/01/2022 – 09/30/2023 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance (Modified Opinion) Criteria: 2 CFR 200.414(c) – Federal awards recipients must negotiate an indirect cost rate with the cognizant agency for indirect costs, which is typically the federal agency that provides the most funding to the recipient. 2 CFR 200.403(d) – The negotiated rate must be applied consistently across all federal awards to ensure uniformity in cost allocation. 2 CFR 200.302(b)(3) – Recipients must maintain adequate documentation to support the indirect costs charged to federal awards, ensuring compliance with the cost principles outlined in the regulation Condition: For all invoices submitted to the grantor including those that included indirect cost rate calculations, there was no documented review and approval of the submission by management. Condition: Known: $94,287 Likely: $94,287 Context: Internal controls need to be formally documented as well as have support and authorization. With no authorization or proof that the internal control was completed, we cannot rely on the controls. Effect: Not having internal controls formalized and documented can lead to higher risk of noncompliance and misreporting. Cause: Internal controls are not formalized or documented Repeat Finding: The finding is not a repeat finding. Recommendation: We recommend that CIES modifies its internal control policies for general review and approval of the reporting requirements set forth by the criteria listed above. Management’s Views: See separate corrective action plan.
2023-007 – Department of the Interior Federal Program Name: Natural Resource Stewardship - Pass-Through Agency: N/A Assistance Listing Number: 15.944 Federal Award Identification Year: 2023 Award Period: 10/01/2022 – 09/30/2023 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance (Modified Opinion) Criteria: 2 CFR 200.403(a) - Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Condition: Regarding cash and payroll related disbursements, there was not documented review and approval of cash disbursements and payroll allocations and disbursements by management. Condition: Known: $672,870 Likely: $672,870 Context: Internal controls need to be formally documented as well as have support and authorization. With no authorization or proof that the internal control was completed, we cannot rely on the controls. Effect: Not having internal controls formalized and documented can lead to higher risk of noncompliance and misreporting. Cause: Internal controls are not formalized or documented. Repeat Finding: The finding is not a repeat finding. Recommendation: We recommend that CIES modifies its internal control policies for general review and approval of the allowable costs set forth by the criteria listed above. Management’s Views: See separate corrective action plan.
Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Block Grants for Community Mental Health Services ALN: 93.958 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 1B09SM087345, 6B09SM087345, 1B09SM087322-01 October 1, 2022 – September 30, 2024, October 17,2022 – October 16, 2024 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403(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). Condition: For projects with period of performance beginning dates during the fiscal year, audit procedures included testing transactions posted to the general ledger during the first month of the award. We noted the following instances of noncompliance: For the two sampled transactions, totaling $56,997, one of the expenditures, totaling $31,254, was related to costs incurred prior to the period of performance begin date. Questioned costs: $31,254. Context: See “Condition.” Cause: Current controls are not at the correct precision level to detect costs charged outside of the period of performance. Effect: Ineffective internal controls may result in questioned costs and noncompliance with the terms of the grant. Repeat finding: No Recommendation: HHSC should enhance and/or modify existing controls to ensure that costs charged to a project have service dates within the period of performance stated in the federal award. Views of responsible officials: HHSC concurs with the finding.
Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Block Grants for Community Mental Health Services ALN: 93.958 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 1B09SM087345, 6B09SM087345, 1B09SM087322-01 October 1, 2022 – September 30, 2024, October 17,2022 – October 16, 2024 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403(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). Condition: For projects with period of performance beginning dates during the fiscal year, audit procedures included testing transactions posted to the general ledger during the first month of the award. We noted the following instances of noncompliance: For the two sampled transactions, totaling $56,997, one of the expenditures, totaling $31,254, was related to costs incurred prior to the period of performance begin date. Questioned costs: $31,254. Context: See “Condition.” Cause: Current controls are not at the correct precision level to detect costs charged outside of the period of performance. Effect: Ineffective internal controls may result in questioned costs and noncompliance with the terms of the grant. Repeat finding: No Recommendation: HHSC should enhance and/or modify existing controls to ensure that costs charged to a project have service dates within the period of performance stated in the federal award. Views of responsible officials: HHSC concurs with the finding.
Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Block Grants for Community Mental Health Services ALN: 93.958 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 1B09SM087345, 6B09SM087345, 1B09SM087322-01 October 1, 2022 – September 30, 2024, October 17,2022 – October 16, 2024 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403(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). Condition: For projects with period of performance beginning dates during the fiscal year, audit procedures included testing transactions posted to the general ledger during the first month of the award. We noted the following instances of noncompliance: For the two sampled transactions, totaling $56,997, one of the expenditures, totaling $31,254, was related to costs incurred prior to the period of performance begin date. Questioned costs: $31,254. Context: See “Condition.” Cause: Current controls are not at the correct precision level to detect costs charged outside of the period of performance. Effect: Ineffective internal controls may result in questioned costs and noncompliance with the terms of the grant. Repeat finding: No Recommendation: HHSC should enhance and/or modify existing controls to ensure that costs charged to a project have service dates within the period of performance stated in the federal award. Views of responsible officials: HHSC concurs with the finding.
Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Block Grants for Community Mental Health Services ALN: 93.958 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 1B09SM087345, 6B09SM087345, 1B09SM087322-01 October 1, 2022 – September 30, 2024, October 17,2022 – October 16, 2024 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403(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). Condition: For projects with period of performance beginning dates during the fiscal year, audit procedures included testing transactions posted to the general ledger during the first month of the award. We noted the following instances of noncompliance: For the two sampled transactions, totaling $56,997, one of the expenditures, totaling $31,254, was related to costs incurred prior to the period of performance begin date. Questioned costs: $31,254. Context: See “Condition.” Cause: Current controls are not at the correct precision level to detect costs charged outside of the period of performance. Effect: Ineffective internal controls may result in questioned costs and noncompliance with the terms of the grant. Repeat finding: No Recommendation: HHSC should enhance and/or modify existing controls to ensure that costs charged to a project have service dates within the period of performance stated in the federal award. Views of responsible officials: HHSC concurs with the finding.
Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Block Grants for Community Mental Health Services ALN: 93.958 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 1B09SM087345, 6B09SM087345, 1B09SM087322-01 October 1, 2022 – September 30, 2024, October 17,2022 – October 16, 2024 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403(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). Condition: For projects with period of performance beginning dates during the fiscal year, audit procedures included testing transactions posted to the general ledger during the first month of the award. We noted the following instances of noncompliance: For the two sampled transactions, totaling $56,997, one of the expenditures, totaling $31,254, was related to costs incurred prior to the period of performance begin date. Questioned costs: $31,254. Context: See “Condition.” Cause: Current controls are not at the correct precision level to detect costs charged outside of the period of performance. Effect: Ineffective internal controls may result in questioned costs and noncompliance with the terms of the grant. Repeat finding: No Recommendation: HHSC should enhance and/or modify existing controls to ensure that costs charged to a project have service dates within the period of performance stated in the federal award. Views of responsible officials: HHSC concurs with the finding.
Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Block Grants for Community Mental Health Services ALN: 93.958 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 1B09SM087345, 6B09SM087345, 1B09SM087322-01 October 1, 2022 – September 30, 2024, October 17,2022 – October 16, 2024 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403(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). Condition: For projects with period of performance beginning dates during the fiscal year, audit procedures included testing transactions posted to the general ledger during the first month of the award. We noted the following instances of noncompliance: For the two sampled transactions, totaling $56,997, one of the expenditures, totaling $31,254, was related to costs incurred prior to the period of performance begin date. Questioned costs: $31,254. Context: See “Condition.” Cause: Current controls are not at the correct precision level to detect costs charged outside of the period of performance. Effect: Ineffective internal controls may result in questioned costs and noncompliance with the terms of the grant. Repeat finding: No Recommendation: HHSC should enhance and/or modify existing controls to ensure that costs charged to a project have service dates within the period of performance stated in the federal award. Views of responsible officials: HHSC concurs with the finding.
Finding 2023-002 – Material Weakness & Material Noncompliance – Allowable Costs/Cost Principles related to Title I, Part A – Grants to Local Education Agencies, Assistance Listing Number 84.010A, Award Number 231530 and the Education Stabilization Fund, Assistance Listing Number 84.425D, Award Number 213712 Criteria: Management is responsible for complying with the specific compliance requirements set forth by the Uniform Guidance, the U.S. Department of Education, and the District’s pass-through entity Michigan Department of Education (MDE), as it relates to federally funded grants. 2 CFR 200.403 requires that costs be charged appropriately according to budget and that costs be necessary and reasonable for the performance of the grant. Condition: As a result of our audit procedures, we identified that function and object codes allocated to the Title I, Part A – Grants to Local Education Agencies were materially over the budget approved by MDE or not within the approved budget. The Education Stabilization Fund had a similar budgetary issue, however, it was not material to the grant. These grants were not overspent in total, nor would the grant expenditures tested have been considered unallowable if they had been within budget. Cause and Effect: The District’s internal control over grant compliance, along with budgetary review, were not sufficient to detect and correct errors in a timely manner. The effect was that actual costs exceeded the approved grant budget by function. Questioned Costs: Title I - The District exceeded budget by $127,769, calculated by comparing functional amounts charged to the budget by function. In addition, the District initially recorded $78,440 as a grant expenditure within the incorrect function compared to the approved budget and was subsequently reclassified to the correct function. Education Stabilization Fund - The District exceeded budget beyond the 10% allowable by function without a budget amendment by $91,851. In addition, the District initially recorded $8,761 as a grant expenditure that was not approved within the budget and was subsequently reclassified to the General Fund. Recommendation: We recommend the District expand its internal control over budgetary review of its grants, particularly in regard to reviewing MDE approved budgeted amounts to actual expenditures. Views of Responsible Officials: Management agrees with the finding. Corrective Action Plan: See attached corrective action plan.
Finding 2023-002 – Material Weakness & Material Noncompliance – Allowable Costs/Cost Principles related to Title I, Part A – Grants to Local Education Agencies, Assistance Listing Number 84.010A, Award Number 231530 and the Education Stabilization Fund, Assistance Listing Number 84.425D, Award Number 213712 Criteria: Management is responsible for complying with the specific compliance requirements set forth by the Uniform Guidance, the U.S. Department of Education, and the District’s pass-through entity Michigan Department of Education (MDE), as it relates to federally funded grants. 2 CFR 200.403 requires that costs be charged appropriately according to budget and that costs be necessary and reasonable for the performance of the grant. Condition: As a result of our audit procedures, we identified that function and object codes allocated to the Title I, Part A – Grants to Local Education Agencies were materially over the budget approved by MDE or not within the approved budget. The Education Stabilization Fund had a similar budgetary issue, however, it was not material to the grant. These grants were not overspent in total, nor would the grant expenditures tested have been considered unallowable if they had been within budget. Cause and Effect: The District’s internal control over grant compliance, along with budgetary review, were not sufficient to detect and correct errors in a timely manner. The effect was that actual costs exceeded the approved grant budget by function. Questioned Costs: Title I - The District exceeded budget by $127,769, calculated by comparing functional amounts charged to the budget by function. In addition, the District initially recorded $78,440 as a grant expenditure within the incorrect function compared to the approved budget and was subsequently reclassified to the correct function. Education Stabilization Fund - The District exceeded budget beyond the 10% allowable by function without a budget amendment by $91,851. In addition, the District initially recorded $8,761 as a grant expenditure that was not approved within the budget and was subsequently reclassified to the General Fund. Recommendation: We recommend the District expand its internal control over budgetary review of its grants, particularly in regard to reviewing MDE approved budgeted amounts to actual expenditures. Views of Responsible Officials: Management agrees with the finding. Corrective Action Plan: See attached corrective action plan.
Assistance Title: Education Stabilization Fund Assistance Listing Number: 84.425E and 84.425F Federal Agency: Department of Education Type of Finding: Significant Deficiency and Noncompliance Category of Finding: Allowable Costs and Activities Allowed Known Questioned Costs: $864 Likely Questioned Costs: Up to $3,000 Criteria: Under 2 CFR 200.403(g), costs must be adequately documented to be allowable under Federal awards. Condition: We tested a sample of sixty expenditures charged to the Education Stabilization Fund and identified two instances of noncompliance and deficiencies in internal control. For one student who received a student award under the Higher Education Emergency Relief Fund (HEERF), there was an absence of clarity regarding approved and unapproved expenditures, along with inadequate itemized receipts. Additionally, for one student who received a student award under HEERF, there was no completed application or supporting documentation to support the award. Cause: Lack of robust review process to ensure that all expenditures have detailed, appropriate supporting documentation. Effect: Unallowable costs could be incurred with Federal funds, subjecting the College to potential penalties and claw backs. Recommendation: We recommend that procedures be strengthened to ensure adequate documentation of expenses charged to Federal awards. Management’s Response: Management concurs with this finding. See Management’s Response and Corrective Action plan.
Information on Federal Program: U.S. Department of Education (Twenty-First Century Community Learning Centers, 84.287), passed through the New York State Education Department. Condition: During our testing of payroll expenditures charged to this program, it was noted that salaries were being charged that were not allowable under the grant. Criteria: Compliance under 2 CFR Part 200, Subpart E §200.403 and 200.404 under compliance requirement Allowable Costs/Cost Principles. Cause: While the District had policies in place for documentation of time and effort of salaries charged to the grant, there was a misinterpretation of the allowable costs relating to salaries being charged. Effect: Costs were charged to the grant that were unallowable in the amount of $27,980. After management discussed the specific situation with the Fiscal Manager who approved the District’s grant, management received approval to move these costs to cover allowable payroll costs the District incurred, that were allowable under the grant and not reimbursed under any other federal grants. These funds were therefore not fully required to be returned. Questioned Costs: None Perspective Information/Context: As part of testing compliance, a selection of employees charged to the grants was tested for compliance with applicable direct and material compliance requirements. Of the 40 individuals selected for testing, one employee’s time charged to the grant was for hours worked during the school day. For these specific tasks, the grant only allows for reimbursement if the time worked is outside of school hours. Therefore, the time that was related to work performed during school hours was deemed unallowable due to the time the work was performed, not the tasks being performed. This is also the first year the District received this funding. Identification of Repeat Finding: No Recommendation: We recommend that grant documents and regulations be reviewed regularly to ensure a clear understanding of the allowable costs, to ensure only allowable costs are charged to the grant at the time costs are incurred. District Response: The District acknowledges the finding regarding the unallowed costs associated with the 21st CCLC Grant. During the audit process, we found that salary costs within this grant were included in error and should not have been. We have contacted both the fiscal department for 21st CCLC and NYSED Grants Finance, in hopes to correct this issue. We adjusted the FS10F report for final expenses and copies are being sent out to the appropriate departments for correction. This issue should be resolved by January 2024 and will be implemented by the Business Manager, Christopher Karwiel.
2023 – 002 INTERNAL CONTROLS OVER DISBURSEMENTS Significant Deficiency U.S. DEPARTMENTS OF EDUCATION Federal Assistance No. 84.425U COVID-19: ARP - Elementary and Secondary Schools Emergency Relief Passthrough Agency: New Mexico Public Education Department Award Period: July 1, 2022 – June 30, 2023 Allowable Costs/Cost Principles Condition: During the testing there was an invoice in the amount of $299,271 that was paid of twice during June 2023. The expenditure was submitted for reimbursement from federal funds. The District was notified by the vendor of the double payment while asking to use it as credit against a separate invoice. Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS § 200.303 Internal controls. 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. § 200.403 Factors affecting allowability of costs. 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. See also § 200.306(b). (g) Be adequately documented. See also § 200.300 through 200.309 of this part. (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). Cause: The facilities department submitted the invoice to the finance department for payment at the beginning of June and towards the end of June. The accounts payable clerk bypassed the system error that the invoice number had been entered previously. Questioned costs: $299,271 was the amount of the duplicate payment. The expenditure from the duplicate payment was not reported in the schedule of expenditures in federal awards and was reported as a receivable from the vendor in the financial statements for Fund 24330. Effect or potential effect: Expenditures could be overstated, as well as revenues, if invoices are paid more than once and then also reimbursed. As a result, a receivable and unearned income must be recognized. Recommendation: Training should be given to accounts payable staff regarding the importance system warnings and the need to monitor invoices form the vendors. A tracking system should be implemented for tracking major projects to ensure than invoices are not reported more than once. Invoices should be stamped received upon receipt, marked when applied to a major project, and marked recorded once entered into the accounting system. Management’s response: Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023
2023 – 002 INTERNAL CONTROLS OVER DISBURSEMENTS Significant Deficiency U.S. DEPARTMENTS OF EDUCATION Federal Assistance No. 84.425U COVID-19: ARP - Elementary and Secondary Schools Emergency Relief Passthrough Agency: New Mexico Public Education Department Award Period: July 1, 2022 – June 30, 2023 Allowable Costs/Cost Principles Condition: During the testing there was an invoice in the amount of $299,271 that was paid of twice during June 2023. The expenditure was submitted for reimbursement from federal funds. The District was notified by the vendor of the double payment while asking to use it as credit against a separate invoice. Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS § 200.303 Internal controls. 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. § 200.403 Factors affecting allowability of costs. 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. See also § 200.306(b). (g) Be adequately documented. See also § 200.300 through 200.309 of this part. (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). Cause: The facilities department submitted the invoice to the finance department for payment at the beginning of June and towards the end of June. The accounts payable clerk bypassed the system error that the invoice number had been entered previously. Questioned costs: $299,271 was the amount of the duplicate payment. The expenditure from the duplicate payment was not reported in the schedule of expenditures in federal awards and was reported as a receivable from the vendor in the financial statements for Fund 24330. Effect or potential effect: Expenditures could be overstated, as well as revenues, if invoices are paid more than once and then also reimbursed. As a result, a receivable and unearned income must be recognized. Recommendation: Training should be given to accounts payable staff regarding the importance system warnings and the need to monitor invoices form the vendors. A tracking system should be implemented for tracking major projects to ensure than invoices are not reported more than once. Invoices should be stamped received upon receipt, marked when applied to a major project, and marked recorded once entered into the accounting system. Management’s response: Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023
2023 – 002 INTERNAL CONTROLS OVER DISBURSEMENTS Significant Deficiency U.S. DEPARTMENTS OF EDUCATION Federal Assistance No. 84.425U COVID-19: ARP - Elementary and Secondary Schools Emergency Relief Passthrough Agency: New Mexico Public Education Department Award Period: July 1, 2022 – June 30, 2023 Allowable Costs/Cost Principles Condition: During the testing there was an invoice in the amount of $299,271 that was paid of twice during June 2023. The expenditure was submitted for reimbursement from federal funds. The District was notified by the vendor of the double payment while asking to use it as credit against a separate invoice. Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS § 200.303 Internal controls. 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. § 200.403 Factors affecting allowability of costs. 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. See also § 200.306(b). (g) Be adequately documented. See also § 200.300 through 200.309 of this part. (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). Cause: The facilities department submitted the invoice to the finance department for payment at the beginning of June and towards the end of June. The accounts payable clerk bypassed the system error that the invoice number had been entered previously. Questioned costs: $299,271 was the amount of the duplicate payment. The expenditure from the duplicate payment was not reported in the schedule of expenditures in federal awards and was reported as a receivable from the vendor in the financial statements for Fund 24330. Effect or potential effect: Expenditures could be overstated, as well as revenues, if invoices are paid more than once and then also reimbursed. As a result, a receivable and unearned income must be recognized. Recommendation: Training should be given to accounts payable staff regarding the importance system warnings and the need to monitor invoices form the vendors. A tracking system should be implemented for tracking major projects to ensure than invoices are not reported more than once. Invoices should be stamped received upon receipt, marked when applied to a major project, and marked recorded once entered into the accounting system. Management’s response: Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023
2023 – 002 INTERNAL CONTROLS OVER DISBURSEMENTS Significant Deficiency U.S. DEPARTMENTS OF EDUCATION Federal Assistance No. 84.425U COVID-19: ARP - Elementary and Secondary Schools Emergency Relief Passthrough Agency: New Mexico Public Education Department Award Period: July 1, 2022 – June 30, 2023 Allowable Costs/Cost Principles Condition: During the testing there was an invoice in the amount of $299,271 that was paid of twice during June 2023. The expenditure was submitted for reimbursement from federal funds. The District was notified by the vendor of the double payment while asking to use it as credit against a separate invoice. Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS § 200.303 Internal controls. 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. § 200.403 Factors affecting allowability of costs. 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. See also § 200.306(b). (g) Be adequately documented. See also § 200.300 through 200.309 of this part. (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). Cause: The facilities department submitted the invoice to the finance department for payment at the beginning of June and towards the end of June. The accounts payable clerk bypassed the system error that the invoice number had been entered previously. Questioned costs: $299,271 was the amount of the duplicate payment. The expenditure from the duplicate payment was not reported in the schedule of expenditures in federal awards and was reported as a receivable from the vendor in the financial statements for Fund 24330. Effect or potential effect: Expenditures could be overstated, as well as revenues, if invoices are paid more than once and then also reimbursed. As a result, a receivable and unearned income must be recognized. Recommendation: Training should be given to accounts payable staff regarding the importance system warnings and the need to monitor invoices form the vendors. A tracking system should be implemented for tracking major projects to ensure than invoices are not reported more than once. Invoices should be stamped received upon receipt, marked when applied to a major project, and marked recorded once entered into the accounting system. Management’s response: Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023
2023 – 002 INTERNAL CONTROLS OVER DISBURSEMENTS Significant Deficiency U.S. DEPARTMENTS OF EDUCATION Federal Assistance No. 84.425U COVID-19: ARP - Elementary and Secondary Schools Emergency Relief Passthrough Agency: New Mexico Public Education Department Award Period: July 1, 2022 – June 30, 2023 Allowable Costs/Cost Principles Condition: During the testing there was an invoice in the amount of $299,271 that was paid of twice during June 2023. The expenditure was submitted for reimbursement from federal funds. The District was notified by the vendor of the double payment while asking to use it as credit against a separate invoice. Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS § 200.303 Internal controls. 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. § 200.403 Factors affecting allowability of costs. 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. See also § 200.306(b). (g) Be adequately documented. See also § 200.300 through 200.309 of this part. (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). Cause: The facilities department submitted the invoice to the finance department for payment at the beginning of June and towards the end of June. The accounts payable clerk bypassed the system error that the invoice number had been entered previously. Questioned costs: $299,271 was the amount of the duplicate payment. The expenditure from the duplicate payment was not reported in the schedule of expenditures in federal awards and was reported as a receivable from the vendor in the financial statements for Fund 24330. Effect or potential effect: Expenditures could be overstated, as well as revenues, if invoices are paid more than once and then also reimbursed. As a result, a receivable and unearned income must be recognized. Recommendation: Training should be given to accounts payable staff regarding the importance system warnings and the need to monitor invoices form the vendors. A tracking system should be implemented for tracking major projects to ensure than invoices are not reported more than once. Invoices should be stamped received upon receipt, marked when applied to a major project, and marked recorded once entered into the accounting system. Management’s response: Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023
2023 – 002 INTERNAL CONTROLS OVER DISBURSEMENTS Significant Deficiency U.S. DEPARTMENTS OF EDUCATION Federal Assistance No. 84.425U COVID-19: ARP - Elementary and Secondary Schools Emergency Relief Passthrough Agency: New Mexico Public Education Department Award Period: July 1, 2022 – June 30, 2023 Allowable Costs/Cost Principles Condition: During the testing there was an invoice in the amount of $299,271 that was paid of twice during June 2023. The expenditure was submitted for reimbursement from federal funds. The District was notified by the vendor of the double payment while asking to use it as credit against a separate invoice. Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS § 200.303 Internal controls. 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. § 200.403 Factors affecting allowability of costs. 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. See also § 200.306(b). (g) Be adequately documented. See also § 200.300 through 200.309 of this part. (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). Cause: The facilities department submitted the invoice to the finance department for payment at the beginning of June and towards the end of June. The accounts payable clerk bypassed the system error that the invoice number had been entered previously. Questioned costs: $299,271 was the amount of the duplicate payment. The expenditure from the duplicate payment was not reported in the schedule of expenditures in federal awards and was reported as a receivable from the vendor in the financial statements for Fund 24330. Effect or potential effect: Expenditures could be overstated, as well as revenues, if invoices are paid more than once and then also reimbursed. As a result, a receivable and unearned income must be recognized. Recommendation: Training should be given to accounts payable staff regarding the importance system warnings and the need to monitor invoices form the vendors. A tracking system should be implemented for tracking major projects to ensure than invoices are not reported more than once. Invoices should be stamped received upon receipt, marked when applied to a major project, and marked recorded once entered into the accounting system. Management’s response: Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023
2023 – 002 INTERNAL CONTROLS OVER DISBURSEMENTS Significant Deficiency U.S. DEPARTMENTS OF EDUCATION Federal Assistance No. 84.425U COVID-19: ARP - Elementary and Secondary Schools Emergency Relief Passthrough Agency: New Mexico Public Education Department Award Period: July 1, 2022 – June 30, 2023 Allowable Costs/Cost Principles Condition: During the testing there was an invoice in the amount of $299,271 that was paid of twice during June 2023. The expenditure was submitted for reimbursement from federal funds. The District was notified by the vendor of the double payment while asking to use it as credit against a separate invoice. Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS § 200.303 Internal controls. 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. § 200.403 Factors affecting allowability of costs. 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. See also § 200.306(b). (g) Be adequately documented. See also § 200.300 through 200.309 of this part. (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). Cause: The facilities department submitted the invoice to the finance department for payment at the beginning of June and towards the end of June. The accounts payable clerk bypassed the system error that the invoice number had been entered previously. Questioned costs: $299,271 was the amount of the duplicate payment. The expenditure from the duplicate payment was not reported in the schedule of expenditures in federal awards and was reported as a receivable from the vendor in the financial statements for Fund 24330. Effect or potential effect: Expenditures could be overstated, as well as revenues, if invoices are paid more than once and then also reimbursed. As a result, a receivable and unearned income must be recognized. Recommendation: Training should be given to accounts payable staff regarding the importance system warnings and the need to monitor invoices form the vendors. A tracking system should be implemented for tracking major projects to ensure than invoices are not reported more than once. Invoices should be stamped received upon receipt, marked when applied to a major project, and marked recorded once entered into the accounting system. Management’s response: Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023
2023 – 002 INTERNAL CONTROLS OVER DISBURSEMENTS Significant Deficiency U.S. DEPARTMENTS OF EDUCATION Federal Assistance No. 84.425U COVID-19: ARP - Elementary and Secondary Schools Emergency Relief Passthrough Agency: New Mexico Public Education Department Award Period: July 1, 2022 – June 30, 2023 Allowable Costs/Cost Principles Condition: During the testing there was an invoice in the amount of $299,271 that was paid of twice during June 2023. The expenditure was submitted for reimbursement from federal funds. The District was notified by the vendor of the double payment while asking to use it as credit against a separate invoice. Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS § 200.303 Internal controls. 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. § 200.403 Factors affecting allowability of costs. 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. See also § 200.306(b). (g) Be adequately documented. See also § 200.300 through 200.309 of this part. (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). Cause: The facilities department submitted the invoice to the finance department for payment at the beginning of June and towards the end of June. The accounts payable clerk bypassed the system error that the invoice number had been entered previously. Questioned costs: $299,271 was the amount of the duplicate payment. The expenditure from the duplicate payment was not reported in the schedule of expenditures in federal awards and was reported as a receivable from the vendor in the financial statements for Fund 24330. Effect or potential effect: Expenditures could be overstated, as well as revenues, if invoices are paid more than once and then also reimbursed. As a result, a receivable and unearned income must be recognized. Recommendation: Training should be given to accounts payable staff regarding the importance system warnings and the need to monitor invoices form the vendors. A tracking system should be implemented for tracking major projects to ensure than invoices are not reported more than once. Invoices should be stamped received upon receipt, marked when applied to a major project, and marked recorded once entered into the accounting system. Management’s response: Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023
8. Criteria or specific requirement (including statutory, regulatory, or other citation): The compliance requirements for B. Allowability of Costs pursuant to § 200.403 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…”. Further, LEA personnel must also provide program-specific assurances related to the ESSER program when completing the grant application. These assurances are reflected in the Uniform Guidance, § 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…”. 9. Condition: A sample of 118 payroll-related expenditures were randomly selected for testing using a random sampling approach, of which included a total of 37 district employees paid & claimed under this grant. These payroll-related expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. Upon completing this testing, we noted the following discrepancies: -There were 4 employee salary & benefits claimed that were not included in the 22-4998-E3 grant budget detail. The budget specified teachers & paraprofessionals, and support staff were not included, resulting in known questioned costs of $4,857.50. -There were 11 employees where a portion of the claimed payroll & benefits were deemed allowable per the budget but $8,947.88 was deemed not allowable, resulting in known questioned costs of $8,947.88. -Additionally, there were $6,686.25 of the employee salary & benefits that was not deemed allowable per the budget as the pay period dates did not align with “loss of learning” related pay dates or other approved activities. 10. Questioned Costs: $20,492 of known questioned costs (based on testing 30.49% of population). $67,209 of projected questioned costs (estimate based on 100% of population). 11. Context: Upon testing a sample of $200,352.23 of payroll-related expenditures, known questioned costs of $20,491.63 were identified. Using the total salary & benefits claimed at 6/30/23 population of $722,722, we project the likely questioned costs to be approximately $67,209.45. 12. Effect: The District’s was not in compliance with the Uniform Guidance related to the ESSER program. Failure to accurately develop and amend budget information throughout the application process and verify compliance with applicable policies and regulations prior to the expenditure of federal program funds may expose the District to unnecessary financial strains and shortages as ISBE may require the District to return funds associated with unapproved and unallowable expenditures. 13. Cause: The District did not establish appropriate internal control procedures, such as a review by appropriate personnel to ensure compliance with the approved ESSER 22-4998-E3 Budget prior to the expenditure of federal funds. Additionally, the existence of multiple ESSER programs and lack of understanding of the related grant application led to the District’s failure to establish appropriate internal control procedures to ensure the expenditure was properly claimed per the approved itemized budget that funded the expenditure. 14. Recommendation: The District should develop and/or modify its policies and procedures to ensure that potential expenditures are approved are 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. 15. Management's response: The District has agreed with the findings and recommendations as presented. See Corrective Action Plan provided by the District.
Finding 2023-002: Questioned Cost – Material Weakness Criteria: 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)). Also, costs should not be included as a cost of any other federally financed programs in either the current or prior period. Costs charged to federal grants should be reviewed by an individual familiar with the Cost Principles for Nonprofit Organizations contained in 2 CFR, Section 200 as part of the SEFA review process. Condition: Costs for US Department of Transportation, Mobility Management Grant 20.507 Section 5307 included a $30,000 charge for use of the Data Management System (DMS). The charge is based on a contract rate charged to outside entities that varies depending on the number of users. Management stated the charge was to recoup costs for use of the DMS. Costs for the DMS consist of historical costs to get the system functioning, along with current personnel costs to operate the system and provide the contracted training. The historical costs occurred outside the period of performance and are thus unallowable. Personnel costs are already being charged to the grant through the allocated payroll and benefits of trainers and other personnel, and thus should not also be charged through the contract rate. In addition, if the contract rate includes a profit component this would also be unallowable to charge to the grant. We also noted the same $30,000 charge was included in US Department of Transportation, Enhanced Mobility of Seniors and Individuals with Disabilities, Section 5310. Cause: Paratransit’s internal controls over the determination of allowable costs were not operating effectively. Effect: The DMS costs were removed and replaced with an allowable 10% de minimus overhead charge. Recommendation: We recommend that costs charged to federal grants be reviewed by an individual familiar with the Cost Principles for Nonprofit Organizations contained in 2 CFR, Section 200 as part of the SEFA review process. Management’s Response: See corrective action plan.
Disaster Grants – Public Assistance (Presidentially Declared Disasters) Assistance Listing Numbers – 97.036 Criteria: The Uniform Guidance Federal regulations per 2 CFR section 200.403 requires among other things, the specific criteria be met, costs are adequately documented and be necessary and reasonable for the performance of the federal award and be allocable thereto under these principles. Universe/Population: The total population was all employees using equipment for the purpose of aid to the general public during the Presidentially Declared Emergency period. Based on these requirements, the population consisted of 435 individuals, 1,863 days, and a total dollar amount of $593,233. Condition: 40 individuals spanning a total of 393 days with a total dollar amount of $117,899 were selected for testing. We noted for two individuals, on 3 separate days, charges were more for equipment hours than the employees were physically at work. The Louisiana State Police (LSP), in its oversite capacity had reviewed 100% of the charges and found overages, including the two individuals noted in our sampled test, for a total overage of $2,913 out of the total population amount of $593,233. Cause: During a period of shifting positions and job responsibilities, the Sheriff did not check and review the employees and charges requested for reimbursement under the grant award, with a sufficient level of detail. Effect: Without accurate review of the costs being submitted for reimbursement, the Sherrif could request for reimbursement costs that are unallowable. There is no questioned cost noted due to the reimbursements being adjusted after LSP’s review. Recommendation: The Sheriff should review all costs before being submitted for reimbursement to ensure appropriate allowability and accuracy of the requests. View of Responsible Official: Management agrees with this finding and will implement a more detailed review process of FEMA grant reimbursement requests for future disasters to ensure equipment hour costs reported are accurate.
Disaster Grants – Public Assistance (Presidentially Declared Disasters) Assistance Listing Numbers – 97.036 Criteria: The Uniform Guidance Federal regulations per 2 CFR section 200.403 requires among other things, the specific criteria be met, costs are adequately documented and be necessary and reasonable for the performance of the federal award and be allocable thereto under these principles. Universe/Population: The total population was all employees using equipment for the purpose of aid to the general public during the Presidentially Declared Emergency period. Based on these requirements, the population consisted of 435 individuals, 1,863 days, and a total dollar amount of $593,233. Condition: 40 individuals spanning a total of 393 days with a total dollar amount of $117,899 were selected for testing. We noted for two individuals, on 3 separate days, charges were more for equipment hours than the employees were physically at work. The Louisiana State Police (LSP), in its oversite capacity had reviewed 100% of the charges and found overages, including the two individuals noted in our sampled test, for a total overage of $2,913 out of the total population amount of $593,233. Cause: During a period of shifting positions and job responsibilities, the Sheriff did not check and review the employees and charges requested for reimbursement under the grant award, with a sufficient level of detail. Effect: Without accurate review of the costs being submitted for reimbursement, the Sherrif could request for reimbursement costs that are unallowable. There is no questioned cost noted due to the reimbursements being adjusted after LSP’s review. Recommendation: The Sheriff should review all costs before being submitted for reimbursement to ensure appropriate allowability and accuracy of the requests. View of Responsible Official: Management agrees with this finding and will implement a more detailed review process of FEMA grant reimbursement requests for future disasters to ensure equipment hour costs reported are accurate.
Disaster Grants – Public Assistance (Presidentially Declared Disasters) Assistance Listing Numbers – 97.036 Criteria: The Uniform Guidance Federal regulations per 2 CFR section 200.403 requires among other things, the specific criteria be met, costs are adequately documented and be necessary and reasonable for the performance of the federal award and be allocable thereto under these principles. Universe/Population: The total population was all employees using equipment for the purpose of aid to the general public during the Presidentially Declared Emergency period. Based on these requirements, the population consisted of 435 individuals, 1,863 days, and a total dollar amount of $593,233. Condition: 40 individuals spanning a total of 393 days with a total dollar amount of $117,899 were selected for testing. We noted for two individuals, on 3 separate days, charges were more for equipment hours than the employees were physically at work. The Louisiana State Police (LSP), in its oversite capacity had reviewed 100% of the charges and found overages, including the two individuals noted in our sampled test, for a total overage of $2,913 out of the total population amount of $593,233. Cause: During a period of shifting positions and job responsibilities, the Sheriff did not check and review the employees and charges requested for reimbursement under the grant award, with a sufficient level of detail. Effect: Without accurate review of the costs being submitted for reimbursement, the Sherrif could request for reimbursement costs that are unallowable. There is no questioned cost noted due to the reimbursements being adjusted after LSP’s review. Recommendation: The Sheriff should review all costs before being submitted for reimbursement to ensure appropriate allowability and accuracy of the requests. View of Responsible Official: Management agrees with this finding and will implement a more detailed review process of FEMA grant reimbursement requests for future disasters to ensure equipment hour costs reported are accurate.
Disaster Grants – Public Assistance (Presidentially Declared Disasters) Assistance Listing Numbers – 97.036 Criteria: The Uniform Guidance Federal regulations per 2 CFR section 200.403 requires among other things, the specific criteria be met, costs are adequately documented and be necessary and reasonable for the performance of the federal award and be allocable thereto under these principles. Universe/Population: The total population was all employees using equipment for the purpose of aid to the general public during the Presidentially Declared Emergency period. Based on these requirements, the population consisted of 435 individuals, 1,863 days, and a total dollar amount of $593,233. Condition: 40 individuals spanning a total of 393 days with a total dollar amount of $117,899 were selected for testing. We noted for two individuals, on 3 separate days, charges were more for equipment hours than the employees were physically at work. The Louisiana State Police (LSP), in its oversite capacity had reviewed 100% of the charges and found overages, including the two individuals noted in our sampled test, for a total overage of $2,913 out of the total population amount of $593,233. Cause: During a period of shifting positions and job responsibilities, the Sheriff did not check and review the employees and charges requested for reimbursement under the grant award, with a sufficient level of detail. Effect: Without accurate review of the costs being submitted for reimbursement, the Sherrif could request for reimbursement costs that are unallowable. There is no questioned cost noted due to the reimbursements being adjusted after LSP’s review. Recommendation: The Sheriff should review all costs before being submitted for reimbursement to ensure appropriate allowability and accuracy of the requests. View of Responsible Official: Management agrees with this finding and will implement a more detailed review process of FEMA grant reimbursement requests for future disasters to ensure equipment hour costs reported are accurate.
2 C.F.R. § 3474.1 gives regulatory effect to the Department of Education for 2 C.F.R. § 200.403 Factors affecting allowability of costs. 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. Section 2003 of the American Rescue Plan Act of 2021 (ARP) (Pub. L. 117-2) (award or grant) by the U.S. Department of Education (Department) are governed by section 2003 of the ARP and section 314 of the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA) (Pub. L. 116-260) and the following terms and conditions of this Certification and Agreement (C&A): Use of Grant Funds: 1. Section 2003(7) of the ARP requires Recipient, an institution of higher education as defined in section 101 or 102(c) of the Higher Education Act of 1965, as amended (HEA), 20 USC § 1001 or 1002(c), to provide emergency financial aid grants to students in an amount equivalent to the sum of two amounts: 50 percent of the portion of its allocation that is based on formula factors from CRRSAA section 314(a)(1)(A)-(D) and 100 percent of the portion of its allocation that is based on formula factors from CRRSAA section 314(a)(1)(E)-(F). The amount of funds made available by this award under Assistance Listing Number (ALN) 84.425E represents the minimum amount that Recipient must use for making emergency financial aid grants to students. 2. Under section 2003(7) of the ARP and section 314(c)(3) of the CRRSAA, Recipient must make emergency financial aid grants to students (which may include students exclusively enrolled in distance education), which may be used for any component of the student’s cost of attendance or for emergency costs that arise due to coronavirus, such as tuition, food, housing, health care (including mental health care), or child care. The Center failed to spend $12,517 of its ARP #84.425E funds on grants to students, funds were spent on administrative expenditures. In addition, interest submitted to the Department of Health and Human Services owed from the prior audit period was paid from HEERF funds in the amount of $328 and Adult Education fund in the amount of $396, however since the interest earned was all credited to the General fund, the repayment to the Department of Health and Human Services should have been made from the General fund. Failure to expend funds as required under the grant agreement could lead to future questioned costs, reduced future federal funding, and the requirement to repay the Department of Health and Human Services. The Treasurer and Superintendent should ensure expenditures paid by federal grant funds are within the constraints of the grant agreement.
2 C.F.R. § 3474.1 gives regulatory effect to the Department of Education for 2 C.F.R. § 200.403 Factors affecting allowability of costs. 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. Section 2003 of the American Rescue Plan Act of 2021 (ARP) (Pub. L. 117-2) (award or grant) by the U.S. Department of Education (Department) are governed by section 2003 of the ARP and section 314 of the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA) (Pub. L. 116-260) and the following terms and conditions of this Certification and Agreement (C&A): Use of Grant Funds: 1. Section 2003(7) of the ARP requires Recipient, an institution of higher education as defined in section 101 or 102(c) of the Higher Education Act of 1965, as amended (HEA), 20 USC § 1001 or 1002(c), to provide emergency financial aid grants to students in an amount equivalent to the sum of two amounts: 50 percent of the portion of its allocation that is based on formula factors from CRRSAA section 314(a)(1)(A)-(D) and 100 percent of the portion of its allocation that is based on formula factors from CRRSAA section 314(a)(1)(E)-(F). The amount of funds made available by this award under Assistance Listing Number (ALN) 84.425E represents the minimum amount that Recipient must use for making emergency financial aid grants to students. 2. Under section 2003(7) of the ARP and section 314(c)(3) of the CRRSAA, Recipient must make emergency financial aid grants to students (which may include students exclusively enrolled in distance education), which may be used for any component of the student’s cost of attendance or for emergency costs that arise due to coronavirus, such as tuition, food, housing, health care (including mental health care), or child care. The Center failed to spend $12,517 of its ARP #84.425E funds on grants to students, funds were spent on administrative expenditures. In addition, interest submitted to the Department of Health and Human Services owed from the prior audit period was paid from HEERF funds in the amount of $328 and Adult Education fund in the amount of $396, however since the interest earned was all credited to the General fund, the repayment to the Department of Health and Human Services should have been made from the General fund. Failure to expend funds as required under the grant agreement could lead to future questioned costs, reduced future federal funding, and the requirement to repay the Department of Health and Human Services. The Treasurer and Superintendent should ensure expenditures paid by federal grant funds are within the constraints of the grant agreement.
2 C.F.R. § 3474.1 gives regulatory effect to the Department of Education for 2 C.F.R. § 200.403 Factors affecting allowability of costs. 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. Section 2003 of the American Rescue Plan Act of 2021 (ARP) (Pub. L. 117-2) (award or grant) by the U.S. Department of Education (Department) are governed by section 2003 of the ARP and section 314 of the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA) (Pub. L. 116-260) and the following terms and conditions of this Certification and Agreement (C&A): Use of Grant Funds: 1. Section 2003(7) of the ARP requires Recipient, an institution of higher education as defined in section 101 or 102(c) of the Higher Education Act of 1965, as amended (HEA), 20 USC § 1001 or 1002(c), to provide emergency financial aid grants to students in an amount equivalent to the sum of two amounts: 50 percent of the portion of its allocation that is based on formula factors from CRRSAA section 314(a)(1)(A)-(D) and 100 percent of the portion of its allocation that is based on formula factors from CRRSAA section 314(a)(1)(E)-(F). The amount of funds made available by this award under Assistance Listing Number (ALN) 84.425E represents the minimum amount that Recipient must use for making emergency financial aid grants to students. 2. Under section 2003(7) of the ARP and section 314(c)(3) of the CRRSAA, Recipient must make emergency financial aid grants to students (which may include students exclusively enrolled in distance education), which may be used for any component of the student’s cost of attendance or for emergency costs that arise due to coronavirus, such as tuition, food, housing, health care (including mental health care), or child care. The Center failed to spend $12,517 of its ARP #84.425E funds on grants to students, funds were spent on administrative expenditures. In addition, interest submitted to the Department of Health and Human Services owed from the prior audit period was paid from HEERF funds in the amount of $328 and Adult Education fund in the amount of $396, however since the interest earned was all credited to the General fund, the repayment to the Department of Health and Human Services should have been made from the General fund. Failure to expend funds as required under the grant agreement could lead to future questioned costs, reduced future federal funding, and the requirement to repay the Department of Health and Human Services. The Treasurer and Superintendent should ensure expenditures paid by federal grant funds are within the constraints of the grant agreement.
2 C.F.R. § 3474.1 gives regulatory effect to the Department of Education for 2 C.F.R. § 200.403 Factors affecting allowability of costs. 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. Section 2003 of the American Rescue Plan Act of 2021 (ARP) (Pub. L. 117-2) (award or grant) by the U.S. Department of Education (Department) are governed by section 2003 of the ARP and section 314 of the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA) (Pub. L. 116-260) and the following terms and conditions of this Certification and Agreement (C&A): Use of Grant Funds: 1. Section 2003(7) of the ARP requires Recipient, an institution of higher education as defined in section 101 or 102(c) of the Higher Education Act of 1965, as amended (HEA), 20 USC § 1001 or 1002(c), to provide emergency financial aid grants to students in an amount equivalent to the sum of two amounts: 50 percent of the portion of its allocation that is based on formula factors from CRRSAA section 314(a)(1)(A)-(D) and 100 percent of the portion of its allocation that is based on formula factors from CRRSAA section 314(a)(1)(E)-(F). The amount of funds made available by this award under Assistance Listing Number (ALN) 84.425E represents the minimum amount that Recipient must use for making emergency financial aid grants to students. 2. Under section 2003(7) of the ARP and section 314(c)(3) of the CRRSAA, Recipient must make emergency financial aid grants to students (which may include students exclusively enrolled in distance education), which may be used for any component of the student’s cost of attendance or for emergency costs that arise due to coronavirus, such as tuition, food, housing, health care (including mental health care), or child care. The Center failed to spend $12,517 of its ARP #84.425E funds on grants to students, funds were spent on administrative expenditures. In addition, interest submitted to the Department of Health and Human Services owed from the prior audit period was paid from HEERF funds in the amount of $328 and Adult Education fund in the amount of $396, however since the interest earned was all credited to the General fund, the repayment to the Department of Health and Human Services should have been made from the General fund. Failure to expend funds as required under the grant agreement could lead to future questioned costs, reduced future federal funding, and the requirement to repay the Department of Health and Human Services. The Treasurer and Superintendent should ensure expenditures paid by federal grant funds are within the constraints of the grant agreement.
Criteria: The Uniform Guidance administrative requirements and cost principles apply to federal funding awarded on or after December 26, 2014. 2 CFR 200, Subpart E – Cost Principles Section 200.403(a) states that costs must be necessary and reasonable for the performance of the federal award and be allocable thereto under cost principles. Condition: The City requested and received reimbursement from Federal Emergency Management Agency (FEMA) in the amount of $68,728, of which $36,438 (or 884 hours) related to force equipment and $32,290 (or 1,061 overtime manhours) related to force labor. Out of a population of 884 force equipment hours, or $36,438, 350 hours were tested. Of the tested amount, 298 hours, or $12,236, lacked equipment hours logs. Out of a population of 1,061 overtime manhours, or $32,290, spread across 27 employees, we tested 388 overtime manhours, or $9,648, spread across 5 employees. Of the tested amount, there were discrepancies in rates charged for the employees, as well as hour classification between overtime and straight time. Additionally, the time sheet for one employee was for a different period than the period in which reimbursement was requested. This accounted for 96 of the tested hours. When analyzing differences in costs requested, of the total $9,648 tested it was found that $1,782, or 18.5%, was over requested. When projected to the population, it results in a request that is approximately $6,000 too high. Cause: The City does not have policies and procedures in place to ensure compliance with federal cost requirements regarding the allowability of reimbursed costs. Questioned Costs: $18,201 Effect: The City may be in noncompliance with the Uniform Guidance Allowable Costs standards. Recommendation: The City should implement policies and procedures that ensure an effective review of reimbursement requests prior to submission to ensure all costs requested are legitimate and allowable. Identification of a repeat finding: This is a new finding in the current year. View of Responsible Official: Management concurs with the finding.
Campus management is responsible for establishing and maintaining internal controls over disbursements that are adequate to ensure that all financial activities are properly processed and reported. Additionally, the Campus is required, except where otherwise authorized by statute, to ensure costs meet the general criteria outlined in 2 CFR 200.403 in order to be allowable under federal awards, including the costs be necessary and reasonable for the performance of the federal award and be allocable thereto under these principles. The Single Audit Reporting Package must have a report date nine months after fiscal year-end.
Campus management is responsible for establishing and maintaining internal controls over disbursements that are adequate to ensure that all financial activities are properly processed and reported. Additionally, the Campus is required, except where otherwise authorized by statute, to ensure costs meet the general criteria outlined in 2 CFR 200.403 in order to be allowable under federal awards, including the costs be necessary and reasonable for the performance of the federal award and be allocable thereto under these principles. The Single Audit Reporting Package must have a report date nine months after fiscal year-end.
Assistance Listing Number, Federal Agency, and Program Name - 14.218, Department of Housing and Urban Development, CDBG Entitlement Grants Cluster - Community Development Block Grant/Entitlement Grants (CDBG) 14.241, Department of Housing and Urban Development, Housing Opportunities for Persons With Aids (HOPWA) 14.905, Department of Housing and Urban Development, Lead Hazard Reduction Demonstration Grant Program (Lead) Federal Award Identification Number and Year - CDBG - B-22-MC-26-0006 HOPWA - MIH22F001 Lead - MILNG0007-19, and MILHB0682-18 Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal 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). Per 2 CFR 200.403(9), costs must be adequately documented. Condition - The City duplicated costs charged to certain grants. Questioned Costs - None Identification of How Questioned Costs Were Computed - Refer to context below Context - In conjunction with the year-end close process, the City manually reviews invoices received subsequent to year end and identifies amounts to be accrued. These amounts are accrued via manual journal entries posted to period 13. As this is a period 13 entry, the amounts automatically reverse in the new year. During this process, the City duplicated costs to be accrued in the amount of $12,300 under ALN 14.218 (CDBG), $327,709 under ALN 14.241 (HOPWA), and $235,911 under ALN 14.905 (Lead). Despite being accrued, the City did not request reimbursement for these costs, as reimbursement is only requested after expenses are paid. Upon identification of the error, the City reduced the amounts reported on the schedule of expenditures of federal awards (SEFA) by the amounts noted above. Cause and Effect - The City's control regarding the year-end close process did not identify that certain costs accrued were duplicated. As a result, the initial SEFA provided to the auditors was overstated by these costs. The City excluded the duplicate costs from the final SEFA. Recommendation - We recommend the City review its processes and controls to ensure that the preparation and review of journal entries to accrue for costs include a review for duplicate costs. Views of Responsible Officials and Corrective Action Plan - The City will review its journal entry controls and processes to help ensure journal entries are posted accurately and implement a review for duplicate costs.
Assistance Listing Number, Federal Agency, and Program Name - 14.218, Department of Housing and Urban Development, CDBG Entitlement Grants Cluster - Community Development Block Grant/Entitlement Grants (CDBG) 14.241, Department of Housing and Urban Development, Housing Opportunities for Persons With Aids (HOPWA) 14.905, Department of Housing and Urban Development, Lead Hazard Reduction Demonstration Grant Program (Lead) Federal Award Identification Number and Year - CDBG - B-22-MC-26-0006 HOPWA - MIH22F001 Lead - MILNG0007-19, and MILHB0682-18 Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal 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). Per 2 CFR 200.403(9), costs must be adequately documented. Condition - The City duplicated costs charged to certain grants. Questioned Costs - None Identification of How Questioned Costs Were Computed - Refer to context below Context - In conjunction with the year-end close process, the City manually reviews invoices received subsequent to year end and identifies amounts to be accrued. These amounts are accrued via manual journal entries posted to period 13. As this is a period 13 entry, the amounts automatically reverse in the new year. During this process, the City duplicated costs to be accrued in the amount of $12,300 under ALN 14.218 (CDBG), $327,709 under ALN 14.241 (HOPWA), and $235,911 under ALN 14.905 (Lead). Despite being accrued, the City did not request reimbursement for these costs, as reimbursement is only requested after expenses are paid. Upon identification of the error, the City reduced the amounts reported on the schedule of expenditures of federal awards (SEFA) by the amounts noted above. Cause and Effect - The City's control regarding the year-end close process did not identify that certain costs accrued were duplicated. As a result, the initial SEFA provided to the auditors was overstated by these costs. The City excluded the duplicate costs from the final SEFA. Recommendation - We recommend the City review its processes and controls to ensure that the preparation and review of journal entries to accrue for costs include a review for duplicate costs. Views of Responsible Officials and Corrective Action Plan - The City will review its journal entry controls and processes to help ensure journal entries are posted accurately and implement a review for duplicate costs.
Assistance Listing Number, Federal Agency, and Program Name - 14.218, Department of Housing and Urban Development, CDBG Entitlement Grants Cluster - Community Development Block Grant/Entitlement Grants (CDBG) 14.241, Department of Housing and Urban Development, Housing Opportunities for Persons With Aids (HOPWA) 14.905, Department of Housing and Urban Development, Lead Hazard Reduction Demonstration Grant Program (Lead) Federal Award Identification Number and Year - CDBG - B-22-MC-26-0006 HOPWA - MIH22F001 Lead - MILNG0007-19, and MILHB0682-18 Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal 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). Per 2 CFR 200.403(9), costs must be adequately documented. Condition - The City duplicated costs charged to certain grants. Questioned Costs - None Identification of How Questioned Costs Were Computed - Refer to context below Context - In conjunction with the year-end close process, the City manually reviews invoices received subsequent to year end and identifies amounts to be accrued. These amounts are accrued via manual journal entries posted to period 13. As this is a period 13 entry, the amounts automatically reverse in the new year. During this process, the City duplicated costs to be accrued in the amount of $12,300 under ALN 14.218 (CDBG), $327,709 under ALN 14.241 (HOPWA), and $235,911 under ALN 14.905 (Lead). Despite being accrued, the City did not request reimbursement for these costs, as reimbursement is only requested after expenses are paid. Upon identification of the error, the City reduced the amounts reported on the schedule of expenditures of federal awards (SEFA) by the amounts noted above. Cause and Effect - The City's control regarding the year-end close process did not identify that certain costs accrued were duplicated. As a result, the initial SEFA provided to the auditors was overstated by these costs. The City excluded the duplicate costs from the final SEFA. Recommendation - We recommend the City review its processes and controls to ensure that the preparation and review of journal entries to accrue for costs include a review for duplicate costs. Views of Responsible Officials and Corrective Action Plan - The City will review its journal entry controls and processes to help ensure journal entries are posted accurately and implement a review for duplicate costs.
Assistance Listing Number, Federal Agency, and Program Name - 14.218, Department of Housing and Urban Development, CDBG Entitlement Grants Cluster - Community Development Block Grant/Entitlement Grants (CDBG) 14.241, Department of Housing and Urban Development, Housing Opportunities for Persons With Aids (HOPWA) 14.905, Department of Housing and Urban Development, Lead Hazard Reduction Demonstration Grant Program (Lead) Federal Award Identification Number and Year - CDBG - B-22-MC-26-0006 HOPWA - MIH22F001 Lead - MILNG0007-19, and MILHB0682-18 Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal 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). Per 2 CFR 200.403(9), costs must be adequately documented. Condition - The City duplicated costs charged to certain grants. Questioned Costs - None Identification of How Questioned Costs Were Computed - Refer to context below Context - In conjunction with the year-end close process, the City manually reviews invoices received subsequent to year end and identifies amounts to be accrued. These amounts are accrued via manual journal entries posted to period 13. As this is a period 13 entry, the amounts automatically reverse in the new year. During this process, the City duplicated costs to be accrued in the amount of $12,300 under ALN 14.218 (CDBG), $327,709 under ALN 14.241 (HOPWA), and $235,911 under ALN 14.905 (Lead). Despite being accrued, the City did not request reimbursement for these costs, as reimbursement is only requested after expenses are paid. Upon identification of the error, the City reduced the amounts reported on the schedule of expenditures of federal awards (SEFA) by the amounts noted above. Cause and Effect - The City's control regarding the year-end close process did not identify that certain costs accrued were duplicated. As a result, the initial SEFA provided to the auditors was overstated by these costs. The City excluded the duplicate costs from the final SEFA. Recommendation - We recommend the City review its processes and controls to ensure that the preparation and review of journal entries to accrue for costs include a review for duplicate costs. Views of Responsible Officials and Corrective Action Plan - The City will review its journal entry controls and processes to help ensure journal entries are posted accurately and implement a review for duplicate costs.
Program Information Federal Agency: U.S. Department of Education, Department of Health and Human Services Federal Agency: Student Financial Assistance Cluster, Research and Development Cluster Federal Programs: 84.033 Federal Work-Study Program, 93.243 Drug Abuse and Addiction Research Programs, and 93.855 Allergy and Infectious Diseases Research Pass-through entity(ies): None Federal Award Year: July 1, 2022 – June 30, 2023 Criteria or Requirement Title 2, U.S. Code of Federal Regulations Part 200 (2 CRF 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award, (Subpart E, Section 200.403), requires that charges to federal awards for salaries and wages be based on records that accurately reflect the work performed. Per chapter 2, Volume 6, of the 2022-2023 Federal Student Aid Handbook, institutions must maintain adequate timesheets or records of hours worked for Federal Work Study (FWS) students. Students working for your school must have their timesheets certified by either their supervisor or an official at the school. Students working in off-campus jobs must have their timesheets certified by an official at the off-campus site Title 200 part 2 CFR 200.303 states that the Institution, as a federal grant recipient, must “establish and maintain effective internal controls over the Federal awards 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. Condition found, including facts that support the deficiency identified in the finding and information to provide proper perspective for judging the prevalence and consequences of the finding For 3 of 80 payroll transactions selected for testing, the engagement team identified that the timesheet did not contain evidence of approval by the supervisor/manager. Cause and Possible Asserted Effect The University did not have sufficient controls over approval of time worked. As a result, expenditures may be charged to federal grants for time that was not worked. Identification of questioned costs and how they were computed None Sample statistically valid The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding from prior year The audit finding is not a repeat finding. Recommendation We recommend that the University strengthen its controls over timekeeping approvals of all employee timesheets, in order to ensure that payroll expenditures charged to the program are allowable. Views on responsible officials Pacific University acknowledges the importance of an effective control environment. The University’s policies do currently require approval of all timesheets; therefore, management will re-emphasize the importance of this approval control, including review of supervisor compliance with this approval requirement, and follow-up with supervisors who may not be meeting requirements. Additionally, management will begin offering mandatory annual training for all supervisors overseeing Federal Work Study students.
Program Information Federal Agency: U.S. Department of Education, Department of Health and Human Services Federal Agency: Student Financial Assistance Cluster, Research and Development Cluster Federal Programs: 84.033 Federal Work-Study Program, 93.243 Drug Abuse and Addiction Research Programs, and 93.855 Allergy and Infectious Diseases Research Pass-through entity(ies): None Federal Award Year: July 1, 2022 – June 30, 2023 Criteria or Requirement Title 2, U.S. Code of Federal Regulations Part 200 (2 CRF 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award, (Subpart E, Section 200.403), requires that charges to federal awards for salaries and wages be based on records that accurately reflect the work performed. Per chapter 2, Volume 6, of the 2022-2023 Federal Student Aid Handbook, institutions must maintain adequate timesheets or records of hours worked for Federal Work Study (FWS) students. Students working for your school must have their timesheets certified by either their supervisor or an official at the school. Students working in off-campus jobs must have their timesheets certified by an official at the off-campus site Title 200 part 2 CFR 200.303 states that the Institution, as a federal grant recipient, must “establish and maintain effective internal controls over the Federal awards 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. Condition found, including facts that support the deficiency identified in the finding and information to provide proper perspective for judging the prevalence and consequences of the finding For 3 of 80 payroll transactions selected for testing, the engagement team identified that the timesheet did not contain evidence of approval by the supervisor/manager. Cause and Possible Asserted Effect The University did not have sufficient controls over approval of time worked. As a result, expenditures may be charged to federal grants for time that was not worked. Identification of questioned costs and how they were computed None Sample statistically valid The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding from prior year The audit finding is not a repeat finding. Recommendation We recommend that the University strengthen its controls over timekeeping approvals of all employee timesheets, in order to ensure that payroll expenditures charged to the program are allowable. Views on responsible officials Pacific University acknowledges the importance of an effective control environment. The University’s policies do currently require approval of all timesheets; therefore, management will re-emphasize the importance of this approval control, including review of supervisor compliance with this approval requirement, and follow-up with supervisors who may not be meeting requirements. Additionally, management will begin offering mandatory annual training for all supervisors overseeing Federal Work Study students.
Program Information Federal Agency: U.S. Department of Education, Department of Health and Human Services Federal Agency: Student Financial Assistance Cluster, Research and Development Cluster Federal Programs: 84.033 Federal Work-Study Program, 93.243 Drug Abuse and Addiction Research Programs, and 93.855 Allergy and Infectious Diseases Research Pass-through entity(ies): None Federal Award Year: July 1, 2022 – June 30, 2023 Criteria or Requirement Title 2, U.S. Code of Federal Regulations Part 200 (2 CRF 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award, (Subpart E, Section 200.403), requires that charges to federal awards for salaries and wages be based on records that accurately reflect the work performed. Per chapter 2, Volume 6, of the 2022-2023 Federal Student Aid Handbook, institutions must maintain adequate timesheets or records of hours worked for Federal Work Study (FWS) students. Students working for your school must have their timesheets certified by either their supervisor or an official at the school. Students working in off-campus jobs must have their timesheets certified by an official at the off-campus site Title 200 part 2 CFR 200.303 states that the Institution, as a federal grant recipient, must “establish and maintain effective internal controls over the Federal awards 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. Condition found, including facts that support the deficiency identified in the finding and information to provide proper perspective for judging the prevalence and consequences of the finding For 3 of 80 payroll transactions selected for testing, the engagement team identified that the timesheet did not contain evidence of approval by the supervisor/manager. Cause and Possible Asserted Effect The University did not have sufficient controls over approval of time worked. As a result, expenditures may be charged to federal grants for time that was not worked. Identification of questioned costs and how they were computed None Sample statistically valid The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding from prior year The audit finding is not a repeat finding. Recommendation We recommend that the University strengthen its controls over timekeeping approvals of all employee timesheets, in order to ensure that payroll expenditures charged to the program are allowable. Views on responsible officials Pacific University acknowledges the importance of an effective control environment. The University’s policies do currently require approval of all timesheets; therefore, management will re-emphasize the importance of this approval control, including review of supervisor compliance with this approval requirement, and follow-up with supervisors who may not be meeting requirements. Additionally, management will begin offering mandatory annual training for all supervisors overseeing Federal Work Study students.
FINDING 2023-004 Information on the federal program: Subject: Special Education Cluster (IDEA) – Internal Controls Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-046-PN01, 21619-046-PN01, 22619-046-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Earmarking Audit Findings: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)...." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:… (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and earmarking compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the earmarking requirements. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: The School Corporation is a member of the Porter County Education Interlocal (Cooperative). During fiscal year 2022-2023, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22619-046-PN01 grant award could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the non-public school budgeted expenditures. As such, we were unable to identify if the minimum amount per the grant award was expended and properly reported to IDOE as required. The lack of internal controls was isolated to the 21611-046-PN01, 21619-046-PN01, and 22619-046-PN01 grant awards. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to monitor the Cooperative and ensure non-public proportionate share funds are appropriately allocated to the member school based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-004 Information on the federal program: Subject: Special Education Cluster (IDEA) – Internal Controls Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-046-PN01, 21619-046-PN01, 22619-046-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Earmarking Audit Findings: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)...." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:… (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and earmarking compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the earmarking requirements. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: The School Corporation is a member of the Porter County Education Interlocal (Cooperative). During fiscal year 2022-2023, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22619-046-PN01 grant award could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the non-public school budgeted expenditures. As such, we were unable to identify if the minimum amount per the grant award was expended and properly reported to IDOE as required. The lack of internal controls was isolated to the 21611-046-PN01, 21619-046-PN01, and 22619-046-PN01 grant awards. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to monitor the Cooperative and ensure non-public proportionate share funds are appropriately allocated to the member school based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-004 Information on the federal program: Subject: Special Education Cluster (IDEA) – Internal Controls Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-046-PN01, 21619-046-PN01, 22619-046-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Earmarking Audit Findings: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)...." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:… (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and earmarking compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the earmarking requirements. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: The School Corporation is a member of the Porter County Education Interlocal (Cooperative). During fiscal year 2022-2023, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22619-046-PN01 grant award could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the non-public school budgeted expenditures. As such, we were unable to identify if the minimum amount per the grant award was expended and properly reported to IDOE as required. The lack of internal controls was isolated to the 21611-046-PN01, 21619-046-PN01, and 22619-046-PN01 grant awards. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to monitor the Cooperative and ensure non-public proportionate share funds are appropriately allocated to the member school based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-004 Information on the federal program: Subject: Special Education Cluster (IDEA) – Internal Controls Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-046-PN01, 21619-046-PN01, 22619-046-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Earmarking Audit Findings: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)...." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:… (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and earmarking compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the earmarking requirements. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: The School Corporation is a member of the Porter County Education Interlocal (Cooperative). During fiscal year 2022-2023, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22619-046-PN01 grant award could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the non-public school budgeted expenditures. As such, we were unable to identify if the minimum amount per the grant award was expended and properly reported to IDOE as required. The lack of internal controls was isolated to the 21611-046-PN01, 21619-046-PN01, and 22619-046-PN01 grant awards. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to monitor the Cooperative and ensure non-public proportionate share funds are appropriately allocated to the member school based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.