Finding No. 2023‐001: Period of Performance – material weakness in internal control over compliance and compliance finding. Continuum of Care Program ALN 14.267 Criteria: As stipulated in 2 CFR Part 200.403(h) of the Uniform Guidance, a cost must be incurred during the approved budget period, unless otherwise authorized by the federal awarding agency or pass‐through entity. Condition: During period of performance testing 1 out of the 14 sample selections was not in compliance with period of performance requirements. Cause: TCHC’s management was not aware that prior authorization from grantor was required to charge expenses from the previous grant period to the new grant period. TCHC had exhausted all the previous grant period funds before the end of the grant period. Effect: TCHC incorrectly charged costs to the grant period beginning December 31, 2023, rather than to the grant period ending November 30, 2023 in accordance with when the costs were incurred. Questioned Costs: None in excess of reporting requirements. Recommendation: TCHC should put internal controls in place to ensure that costs are charged and allocated to the proper grant period. Management’s Response: See corrective action plan.
Finding No. 2023‐001: Period of Performance – material weakness in internal control over compliance and compliance finding. Continuum of Care Program ALN 14.267 Criteria: As stipulated in 2 CFR Part 200.403(h) of the Uniform Guidance, a cost must be incurred during the approved budget period, unless otherwise authorized by the federal awarding agency or pass‐through entity. Condition: During period of performance testing 1 out of the 14 sample selections was not in compliance with period of performance requirements. Cause: TCHC’s management was not aware that prior authorization from grantor was required to charge expenses from the previous grant period to the new grant period. TCHC had exhausted all the previous grant period funds before the end of the grant period. Effect: TCHC incorrectly charged costs to the grant period beginning December 31, 2023, rather than to the grant period ending November 30, 2023 in accordance with when the costs were incurred. Questioned Costs: None in excess of reporting requirements. Recommendation: TCHC should put internal controls in place to ensure that costs are charged and allocated to the proper grant period. Management’s Response: See corrective action plan.
Finding No. 2023‐001: Period of Performance – material weakness in internal control over compliance and compliance finding. Continuum of Care Program ALN 14.267 Criteria: As stipulated in 2 CFR Part 200.403(h) of the Uniform Guidance, a cost must be incurred during the approved budget period, unless otherwise authorized by the federal awarding agency or pass‐through entity. Condition: During period of performance testing 1 out of the 14 sample selections was not in compliance with period of performance requirements. Cause: TCHC’s management was not aware that prior authorization from grantor was required to charge expenses from the previous grant period to the new grant period. TCHC had exhausted all the previous grant period funds before the end of the grant period. Effect: TCHC incorrectly charged costs to the grant period beginning December 31, 2023, rather than to the grant period ending November 30, 2023 in accordance with when the costs were incurred. Questioned Costs: None in excess of reporting requirements. Recommendation: TCHC should put internal controls in place to ensure that costs are charged and allocated to the proper grant period. Management’s Response: See corrective action plan.
Federal Agency: Department of Justice Federal Assistance Listing Number: 16.756 Program: Court Appointed Special Advocates Award Number: 15JDP-21-GK-02762-CASA Criteria: The Uniform Guidance in 2 CFR §200.403 states that for costs to be allowable under federal awards, they must be adequately documented and there must be sufficient documentation. “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. 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: National CASA/GAL allocated expenditures to programs during 2023 based on a direct allocation methodology. This allocation is done manually, and the support was inconsistently maintained. During our testing of costs (excluding salaries), we noted in accordance with §200.403(g) that: • 4 of 60 transactions was partially charged in the incorrect fiscal period, though within the period of performance. The cost of these 4 transactions were $5,246. • 2 of 60 transactions had an error in the allocation rate utilized. The cost of these 8 transactions were $33. • 4 of 60 transactions lacked documentation of review and approval of the allocation of costs made through journal entries. Cause: National CASA/GAL did not have procedures in place to document, and maintain the documentation of, the review and approval of the allocation methodology and the allocation of costs (journal entries). Effect or Potential Effect: Without adequate controls in place to ensure costs are allowable and reimbursable, including controls over review of allocation methodologies, National CASA/GAL could incorrectly charge expenditures to the federal programs. Known Questioned Costs: $5,279 Likely Questioned Costs: $131,271 Context: This is a condition identified per review of National CASA/GAL’s compliance with specified requirements not using a statistically valid sample. Nonpayroll costs in 2023 were $3,612,154. The sample tested consisted of 60 transactions totaling $145,247. Questioned costs consist of amounts lacking underlying support or amounts in excess of supported allocations. Identification as a Repeat Finding: 2022-004 and 2022-008. Recommendation: We recommend that policies and procedures be updated to ensure underlying support, as well as support for allocations, is appropriately maintained as required by §200.403. Views of Responsible Officials: Management concurs with the finding that documentation of support and allocation of costs should be maintained. Policies and procedures were enhanced in 2023 and through 2024 to ensure compliance.
Criteria or specified requirement (including statutory, regulatory, or other citation: 2 CFR section 200.303 of the Uniform Guidance requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards 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 awards. The 2 CFR section 200.303 indicates that the internal controls required to be established by a non-federal entity receiving federal awards 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. 2 CFR section 200.403 states the following: “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; (f) not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period; (g) be adequately documented; and (h) cost must be incurred during the approved budget period.” Condition: The New York and Presbyterian Hospital (the Hospital) has processes and internal controls in place to ensure costs submitted to the Federal Emergency Management Agency (“FEMA”) in relation to the Disaster Grants – Public Assistance program were eligible under FEMA’s provisions and were allowable COVID-19-related expenses. These internal controls include ensuring completeness and accuracy of the costs to ensure the costs comply with the terms and conditions of the award. The Hospital’s internal controls did not identify that management inadvertently included certain costs in the FEMA reimbursement submission that were based on the invoiced amounts from a specific vendor that differed from the actual amounts paid by the Hospital. Cause: The Hospital’s internal controls did not identify that management inadvertently included certain costs in the FEMA reimbursement submission that were based on the invoiced amounts from a specific vendor that differed from the actual amounts paid by the Hospital. The difference was due to payment discount provisions utilized in accordance with a previously existing vendor agreement for one specific vendor, resulting in an overstatement of amounts included in the FEMA reimbursement request submitted in the Grants Portal. Additionally, through the Uniform Guidance audit procedures and management’s further review of submitted costs, duplicated items totaling approximately $184,400 were identified within the population of submitted costs. Effect or potential effect: Due to the above, there is a misstatement of the amounts reported in the FEMA reimbursement submission in the Grants Portal resulting in questioned costs of approximately $268,900. Questioned costs: Approximately $268,900, representing the difference between the amounts paid for certain invoices as compared to the amounts incorrectly submitted in the Grants Portal and certain duplicated items. Context: During our testing of FEMA expenditures underlying the grant for FEMA project number 140215, we identified expenditures that were paid at discounted amounts (in accordance with payment terms with a specific vendor) but included in the FEMA reimbursement submission in the Grants Portal at the full invoice amount, without consideration to the discount taken. The invoiced amounts exceeded the actual amounts paid by approximately $84,500. The terms and conditions of the FEMA award require recipients to submit eligible costs incurred limited to the amount paid, thus this issue results in questioned costs. Additionally, through the Uniform Guidance audit procedures and management’s further review of submitted costs, duplicated items totaling approximately $184,400 were identified within the population of submitted costs. The total FEMA expenditures for project number 140215 included on the Hospital’s schedule of expenditures of federal awards is $174.1 million, which includes $16.9 million related to the specific vendor for the payment-related issue described above. The FEMA-obligated amount under this grant is the third obligation for costs that the Hospital submitted to FEMA for reimbursement under this project. The project was initially established through FEMA’s optional expedited funding application and subsequently amended to a streamlined project under FEMA’s provisions; the amendment also extended the grant period beyond the initial ninety-day period of the original application to cover the period through July 1, 2022. The Hospital has adjusted for a portion of the questioned costs in a subsequent claim submission and management has indicated that they will follow this same process for the balance of the questioned cost items. Additionally, management anticipates that any reimbursement revisions, such as for the questioned costs described above, identified related to the third obligated amount will be addressed through the reconciliation of the overall project cost, inclusive of expected payments to the Hospital for additional eligible costs that have been submitted by the Hospital. Identification as a repeat finding, if applicable: The finding is not a repeat finding. Recommendation: Management should correct the cost summary schedule for this project during the reconciliation of the overall project cost, or address in another manner as directed by FEMA. Additionally, management should continue to review on an ongoing basis for similar costs included in the FEMA reimbursement submission for potential submission errors related to discounted amounts. View of responsible officials: Management agrees with the finding.
FINDING 2023-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Allowable Costs/Cost Principles Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): YR 2023 Compliance Requirements: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Condition and Context The County elected to receive the standard revenue loss allowance, allowing it to claim its total COVID-19 - Coronavirus State and Local Fiscal Recovery Fund (SLFRF) allocation of $4,014,711 as revenue loss to use for government services. As such, all SLFRF program funds to date were expended under the revenue loss eligible use category. The U.S. Department of the Treasury (Treasury) determined that there are no subawards under this eligible use category and that recipients' use of revenue loss funds would not give rise to subrecipient relationships as there is no federal program or purpose to carry out in the case of the revenue loss portion of the award. INDIANA STATE BOARD OF ACCOUNTS 17 SULLIVAN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) On May 11, 2021, the Board of County Commissioners passed Ordinance 2021-07 that created a new fund and adopted the American Rescue Plan (ARP). The Ordinance included the procedures for spending the ARP funding which included the following: The Board of County Commissioners will establish the plan, conditions, and rules upon which the funds are to be requested and used. Funds shall be appropriated by the County's fiscal body before use. All expenditure of funds shall be approved by the Board of County Commissioners with any and all claims to be paid from the County's ARP fund. The County Council approved appropriations for all eleven expenditures from the ARP fund in 2023. All eleven expenditures were tested for compliance with the Allowable Costs/Cost Principles compliance requirement. Two of the eleven expenditures, totaling $44,500, did not have adequate supporting documentation to determine the allowability of the cost. In addition, the County did not have written procedures for determining the allowability of costs in accordance with subpart E of 2 CFR 200. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. . . . (g) Be adequately documented. . . ." 2 CFR 200.302(b)states: "The financial management system of each non-Federal entity must provide for the following . . . (7) Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award." INDIANA STATE BOARD OF ACCOUNTS 18 SULLIVAN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The lack of internal controls allowed for the County to charge questionable expenditures to the SLFRF program that could be requested to be returned by the Treasury. The County also did not adopt the required written procedures for determining allowability of costs for federal awards. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, costs that were not adequately documented were paid for with federal funds. Questioned Costs Known questioned costs of $44,500 were identified as detailed in the Condition and Context. Recommendation We recommend the County's management establish a proper system of internal controls and develop policies and procedures to ensure costs are allowable for SLFRF award funds. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Period of Performance Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): CY 2023 Compliance Requirement: Period of Performance Audit Findings: Material Weakness, Modified Opinion Condition and Context On December 15, 2020, the City entered into a Lease-Purchase agreement with the Crossroads Bank for police and fire radios. On August 28, 2023, the City made a payment of $2,431,243 to the Crossroads Bank to pay the remaining balance due for the police and fire radios from its Coronavirus State and Local Fiscal Recovery Funds (SLFRF) allocation. Per SLFRF program regulations, the period of performance for the SLFRF award began on March 3, 2021, when the funds were disbursed by the grantor agency. All costs must be incurred by December 31, 2024, and funds must be liquidated before December 31, 2026. Although the City's purchase is an eligible purchase under the SLFRF Final Rule, the purchase was initiated and approved by the City prior to the SLFRF period of performance beginning date of March 3, 2021. Further, the project was not prospective in nature, and the City incurred a financial obligation prior to the beginning of the period of performance. As such, the payment of $2,431,243 was determined to be questioned costs. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 31 CFR 35.5(a) states: "In general. A recipient may only use funds for the purposes enumerated in § 35.6 (b) through (f) to cover costs incurred during the period beginning March 3, 2021, and ending December 31, 2024, subject to the restrictions set forth in sections 602(c)(2) and 603(c)(2) of the Social Security Act, as applicable. A recipient may only use funds for the purposes enumerated in § 35.6 (g) through (h) to cover costs incurred during the period beginning December 29, 2022, and ending December 31, 2024, subject to the restrictions set forth in sections 602(c)(2), 602(c)(5)(C), 603(c)(2), and 603(c)(6)(B) of the Social Security Act, as applicable." 31 CFR 35.3 states in part: ". . . Obligation means an order placed for property and services and entering into contracts, subawards, and similar transactions that require payment. . . ." 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: . . . (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 Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these polices. The system of internal controls, as designed and implemented by management of the City, was not effective to ensure SLFRF funds were used appropriately. The original date of the contract was not considered when determining the funding source of the payment. Effect Without the proper implementation of an effectively designed system of internal controls, a payment on a debt associated with a project outside of the period of performance occurred. Noncompliance with the provisions of federal statutes, regulations, and terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs Known questioned costs in the amount of $2,431,243 were identified as noted in the Condition and Context. Recommendation We recommended that management of the City establish a system of internal controls and develop policies and procedures to ensure SLFRF funds are used appropriately. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2023-001: Activities Allowed or Unallowed & Allowable Costs/Cost Principles - Material Weakness in Internal Control and Material Noncompliance Repeat of Prior Audit Finding 2022-001 Federal Program: Trans-National Crime Federal Agency: U.S. Department of State - Bureau of International Narcotics and Law Enforcement Affairs Federal Assistance Listing Number: 19.705 Federal Award Year: December 31, 2023 Criteria: 2 CFR section 200.303(a) of the Uniform Guidance requires all non-Federal entities to establish and maintain effective internal control over the Federal awards 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 awards. In addition, 2 CFR sections 200.405 and 200.403(g) require federal awards be expended only for allowable activities and be adequately documented, respectively. Condition/Context: The Corporation was unable to provide a signed contract, payment information, invoice or reconciliation to evidence allowability of the expenditures or documentation of review and approval for the following: • For 3 out of 80 selections, no evidence of approval of the invoice or approval of signed contract could be provided (control). • For 27 out of 80 selections, no evidence of signed contract or payment support could be provided (compliance). This was not a statistically valid sample. Questioned Costs: Questioned costs were approximately $24,563. Cause: The Corporation did not retain/could not retrieve the signed contract or any related support for the disbursements due to poor document retention and staffing turnover and did not follow its internal control procedures by including formal, written review of disbursement payments. Effect: The Corporation has not complied with the specific requirements for activities allowed or unallowed and allowable costs/cost principles as described in the Uniform Guidance. Unallowable costs may have been charged to the federal program. Recommendation: We recommend that the Corporation review its process and implement procedures that would allow management to properly maintain all required documentation on its federal expenditures. Views of Responsible Officials: Over the past year, the Corporation has made significant improvements, reducing the occurrence of these findings compared to 2022. To continue to improve on and address this, the Corporation implemented a new HR solution, Rippling, in 2024, which will ensure all future agreements and rate changes are properly tracked and documented. This system will enhance the Corporation's document retention process and ensure compliance with federal regulations moving forward.
Finding: Allowable Costs/Cost Principles Major program: U.S. Department of Homeland Security Federal Assistance Listing Number: 97.036 - COVID-19 Disaster Grants - Public Assistance (Presidentially Declared Disasters) Passed through New York State Division of Homeland Security and Emergency Services, Pass-through entity identifying number 542653 Criteria or specific requirement: According to § 200.403(f) of the Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, allowable costs must “not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period” Condition: During the year ended December 31, 2023, Village Center for Care was granted project funding under the FEMA Public Assistance grant program in response to the COVID-19 public health emergency. A total of $1,934,664 of FEMA assistance payments were received from the pass-through entity, New York State Division of Homeland Security and Emergency Services. The eligible expenses that were obligated and disbursed for FEMA funding were incurred between March 2020 and January 2021, during which some of the expenses were also eligible for and reimbursed by other federal sources of funding and other previous FEMA projects. It was discovered that a total of $199,590 of COVID-19 eligible expenses (i.e. contract labor and supplies) that were reimbursed by other federal sources of funding and other previous FEMA projects were duplicative of those reported as project obligations to the FEMA project funding granted to Village Center for Care in 2023. Questioned costs: $199,590 Context: The entire population of $1,934,664 of FEMA expenditures reported on the current year schedule of expenditures of federal awards was compared against previously reimbursed COVID-19 funding that Village Center for Care has received. From this review of the entire population, 48 expenditures in the population were found to have been previously reimbursed by other federal sources totaling $199,590. Effect: Village Center for Care reported certain expenses in this FEMA project application that were previously reimbursed by other federal sources of funding and other previous FEMA projects. Cause: Prior to submitting this project application to FEMA, the Village Center for Care accounting department aggregated the total amount of eligible expenses available to be used for their FEMA projects as well as for other federal funding sources and determined that there were more expenses than the total award amounts that they received. However, they did not identify that expenses which were already reimbursed by other federal sources of funding and other previous FEMA projects were also included in this FEMA project funding. As a result there was duplicative submission of certain expenses. Identification as a repeat finding: This is not a repeat finding. Recommendation: We recommend that Village Center for Care not only look at total expenses that are allowable for use under multiple federal sources of funding but should also review the expenses at a detailed level to ensure that individual expenses are not double counted. Views of responsible officials and planned corrective actions: Village Center for Care agrees with the recommendation that expenses should be reviewed at a detailed level to ensure that individual expenses are not double counted. See separate auditee document for planned corrective action.
2023-002 – SIGNIFICANT DEFICIENCY – Claims Payments Made Based on Incorrect Calculations of Amounts to be Reimbursed (Originated in 2022) U.S. Department of Treasury – Passed through the State of Alabama Department of Treasury – COVID 19 Coronavirus State and Local Fiscal Recovery Fund – ALN #21.027 – Program Year 2023 Criteria – Per 2 CFR Subpart E - 200.403(a) and (b), allowable costs under federal award programs must be necessary and reasonable for the performance of the federal award and must conform to any limitations or exclusions set forth in the federal award as to types or amounts of cost items. In addition, per 2 CFR Subpart E – 200.405(a), a cost is allocable to a particular federal award if the goods or services involved are chargeable or assignable to that federal award in accordance with relative benefits received. Finally, per CFR 200.303(a), non-federal entities are required to establish and maintain effective internal controls over federal awards. Condition – For 1 of 60 disbursements sampled, reimbursed claims amounts included un-allowable costs due to the reimbursement calculations being performed incorrectly in the determination of the appropriate reimbursement amount. Cause – As a result of the Foundation’s reliance solely on certifications received, amounts were not appropriately disbursed under the federal award program. Effect – Claims payments included amounts that were not chargeable or assignable to the federal award in accordance with relative benefits received. Questioned Costs – $95,663 known questioned costs (total amounts paid based on incorrect reimbursement calculations), $529,835 likely questioned costs – amount extrapolated to entire population based on % of known questioned costs. Auditor’s Recommendation – Policies and procedures should be designed, implemented, and monitored which ensure that detailed supporting documentation is obtained and reviewed for all disbursements in accordance with federal award requirements. In addition, all calculations of amounts to be reimbursed should be appropriately recalculated to ensure the proper amount is included in the claims payments. Management response and current status – See management corrective action plan
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Foster Care – Title IV-E Assistance Listing Number: 93.658 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 2301MNFOST Federal Award Identification Number and Year: 2301MNFOST, 2023 Compliance Requirement Affected: Activities Allowed/Allowable Costs Award Period: Year Ending December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or Specific Requirement: 2 CFR 200.403 lists general criteria for allowability of costs under federal awards, and the Social Services Fund Quarterly Expense Report (2256) also has further guidance on what can be reported. Condition: For 1 of 40 disbursements tested, it was noted the costs were not allowable. Questioned Costs: $620. Context: Auditor tested one warrant coded to the DHS Social Services Fund Quarterly Expense Report (2256) that fell in a category explicitly excluded from allowability according to the report instructions. Cause: Level of invoice detail and client's understanding of the instructions for what can be coded. Effect: Ineligible costs could be reported. Repeat Finding: No. Recommendation: We recommend that the County continue to be diligent in their review of what is allowable when coding to certain account codes that flow into the DHS reports. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding. The County will continue to be diligent in their review of what is allowable when coding to certain account codes that flow into the DHS reports.
(3) Federal Award Findings and Questioned Costs: Finding Number: 2023-001 Program: COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Federal Agency Name: Federal Emergency Management Agency Federal Award Number: N/A Federal Award Year: 2023 Federal Assistance Listing Number: 97.036 Compliance Requirement: Criteria Per Title 2, U.S. Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, (Subpart D, Section 200.303), the nonfederal entity must establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Further, Subpart E Section 200.403 states that costs must be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for. Conditions Found In one of 25 selections for testwork over allowability of costs, expenditures related to inventory were submitted for reimbursement to FEMA at an incorrect value. Further, as the expenditures were not properly reviewed, this is an instance of the District’s internal control not operating as designed. Cause The District does not have adequate processes and controls in place to ensure that all inventory expenditures submitted for reimbursement by FEMA under the COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) program are priced accurately. Effect Without effective controls in place, expenditures could be reimbursed by the program that are considered unallowed or are not at appropriate values, resulting in non-compliance with program requirements. Questioned Costs $21,437, representing the known amount of expenditures incorrectly reimbursed by COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) program. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding This finding is not a repeat finding in the immediate prior audit. Recommendation We recommend that management strengthen processes and controls in place to ensure all inventory expenditures submitted to FEMA for reimbursement under the COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) program are appropriately reviewed prior to submission to ensure they are allowable and priced accurately. Views of Responsible Officials The District agrees with the finding and accepts the recommendation.
Federal program information: Funding agency: U.S. Department of Health and Human Services Title: Medical Assistance Program, COVID-19 Block Grants for Prevention and Treatment of Substance Abuse ALN: 93.778, 93.959 Award period: July 1, 2022 – June 30, 2024 Criteria: According to 2 CFR Part 200.403, to be allowable under federal awards, costs must be adequately documented. Additionally, the 2 CFR Part 200.430 requires that charges to Federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: Employee benefits expenditures charged to the programs do not agree to supporting documentation, such as employee benefit provider premiums invoices. Additionally, the pay rate paid to an employee was different from their approved pay rate. Lastly, an employee received eight hours of birthday pay (as allowed under ABHS’s personnel policies) in two different pay periods. Context: Nine of 25 employee benefit expenditures tested did not agree with employee benefit provider premium invoices. One of 25 employees tested was paid at a rate different from their approved pay rate. One of 25 employees tested received eight hours of birthday pay in two different pay periods. Questioned Costs: $358 for the Medical Assistance Program and $0 for the COVID-19 Block Grants for Prevention and Treatment of Substance Abuse program. Cause: The employer portion of employee benefit premiums are preloaded into the accounting system each year to be allocated to the different business units/programs at ABHS. ABHS does not have a process in place to subsequently reconcile these expenditures to the employer benefits provider premium invoices and/or employee benefit election forms. There was also a lack of review of approved pay rates and leave requests during 2023. Effect: ABHS may not be able to demonstrate that the costs charged to federal programs are allowable. Auditor’s Recommendations: ABHS should implement a reconciliation process to ensure that employee benefit expenditures charged to federal programs agree with employee benefit provider premiums invoices and/or employee benefit election forms.41 Management’s Response: ABHS acknowledges the finding related to employer benefits. As a corrective measure, we have initiated a comprehensive review of our current systems and identified key areas that require immediate upgrades. With the adoption of these upgrades, ABHS will perform an interim review of the expenditures recorded in the accounting system compared to the invoices.
Federal program information: Funding agency: U.S. Department of Health and Human Services Title: Medical Assistance Program, COVID-19 Block Grants for Prevention and Treatment of Substance Abuse ALN: 93.778, 93.959 Award period: July 1, 2022 – June 30, 2024 Criteria: According to 2 CFR Part 200.403, to be allowable under federal awards, costs must be adequately documented. Additionally, the 2 CFR Part 200.430 requires that charges to Federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: Employee benefits expenditures charged to the programs do not agree to supporting documentation, such as employee benefit provider premiums invoices. Additionally, the pay rate paid to an employee was different from their approved pay rate. Lastly, an employee received eight hours of birthday pay (as allowed under ABHS’s personnel policies) in two different pay periods. Context: Nine of 25 employee benefit expenditures tested did not agree with employee benefit provider premium invoices. One of 25 employees tested was paid at a rate different from their approved pay rate. One of 25 employees tested received eight hours of birthday pay in two different pay periods. Questioned Costs: $358 for the Medical Assistance Program and $0 for the COVID-19 Block Grants for Prevention and Treatment of Substance Abuse program. Cause: The employer portion of employee benefit premiums are preloaded into the accounting system each year to be allocated to the different business units/programs at ABHS. ABHS does not have a process in place to subsequently reconcile these expenditures to the employer benefits provider premium invoices and/or employee benefit election forms. There was also a lack of review of approved pay rates and leave requests during 2023. Effect: ABHS may not be able to demonstrate that the costs charged to federal programs are allowable. Auditor’s Recommendations: ABHS should implement a reconciliation process to ensure that employee benefit expenditures charged to federal programs agree with employee benefit provider premiums invoices and/or employee benefit election forms.41 Management’s Response: ABHS acknowledges the finding related to employer benefits. As a corrective measure, we have initiated a comprehensive review of our current systems and identified key areas that require immediate upgrades. With the adoption of these upgrades, ABHS will perform an interim review of the expenditures recorded in the accounting system compared to the invoices.
Finding 2023-002 Significant deficiency in internal controls over compliance related to period of performance. Federal Agency: Department of Health and Human Services Program Title: Unaccompanied Alien Children Program Assistance Listing Number: 93.676 Award Numbers: 90ZU0339/03 and 90ZU0587/01 Project Period: February 1, 2022 - October 31, 2023 and November 1, 2023 - October 31, 2024 Criteria A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance. Any costs incurred before the federal awarding agency or pass-through entity made the federal award, must be authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). Condition/Context for Evaluation During the audit for the year ending December 31, 2023, we noted four instances out of 40 where the Organization charged costs to the grant that were outside of the period of performance for the related award. Questioned Costs 90ZU0339/03 - $995 90ZU0587/01 - $408 Cause The Organization’s internal controls were not sufficient to ensure proper cutoff of grant expenditures and the allocation to the related award. Effect or Potential Effect Unallowable costs were charged to the grant. Repeat Finding Not Applicable. Recommendation We recommend that management develop internal controls for appropriate cutoff of grant expenditures and review to ensure the appropriate costs were charged to the budgeted period to the grant. Views of Responsible Officials of Auditee Management concurs with the finding and has provided the accompanying management corrective action.
Finding 2023-002 Significant deficiency in internal controls over compliance related to period of performance. Federal Agency: Department of Health and Human Services Program Title: Unaccompanied Alien Children Program Assistance Listing Number: 93.676 Award Numbers: 90ZU0339/03 and 90ZU0587/01 Project Period: February 1, 2022 - October 31, 2023 and November 1, 2023 - October 31, 2024 Criteria A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance. Any costs incurred before the federal awarding agency or pass-through entity made the federal award, must be authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). Condition/Context for Evaluation During the audit for the year ending December 31, 2023, we noted four instances out of 40 where the Organization charged costs to the grant that were outside of the period of performance for the related award. Questioned Costs 90ZU0339/03 - $995 90ZU0587/01 - $408 Cause The Organization’s internal controls were not sufficient to ensure proper cutoff of grant expenditures and the allocation to the related award. Effect or Potential Effect Unallowable costs were charged to the grant. Repeat Finding Not Applicable. Recommendation We recommend that management develop internal controls for appropriate cutoff of grant expenditures and review to ensure the appropriate costs were charged to the budgeted period to the grant. Views of Responsible Officials of Auditee Management concurs with the finding and has provided the accompanying management corrective action.
Finding Number: 2023-009 Repeat Finding: No Type of Finding: Significant Deficiency in Internal Control and Nonmaterial Noncompliance Description: Supporting Documentation for Expenses Incurred During the Year Major Programs: AL#93.788 – Opioid STR – Direct Award (DHHS) – Award numbers: 1H79TI083088-01, 5H79TI083088-02, 6H79TI085684-01M003 and CD9-23-4425 AL#93.859 – Biomedical Research and Research Training – Direct Award (DHHS) – Award numbers: 5S06GM142115-02 and 5S06GM142115-03 Questioned Costs: AL#93.788 – $1,000 AL#93.859 - $364, based on the error the questioned costs could exceed $25,000 How the questioned costs were computed: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs, Cost Principles Condition: During testing of cash disbursements there were expenditures for which supporting documentation could not be located. Criteria: Under 2 CFR Part 200.403 (a) costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles and (g) costs must be adequately documented in order to be allowable under Federal awards. Cause: The Organization misplaced the invoices. Effect: The Organization was unable to provide the auditors with proper supporting documentation for testing and therefore it could not be determined whether the expenses were reasonable and necessary to be charged to the programs. Recommendation: We recommend the Organization create processes and procedures whereby all invoices and other pertinent supporting documentation is saved and filed either in paper or electronic form to support the expense charged to the federal award and ensure the expense is allowable. Views of Responsible Officials: Management agrees with the finding and has committed to a corrective action plan.
Finding Number: 2023-009 Repeat Finding: No Type of Finding: Significant Deficiency in Internal Control and Nonmaterial Noncompliance Description: Supporting Documentation for Expenses Incurred During the Year Major Programs: AL#93.788 – Opioid STR – Direct Award (DHHS) – Award numbers: 1H79TI083088-01, 5H79TI083088-02, 6H79TI085684-01M003 and CD9-23-4425 AL#93.859 – Biomedical Research and Research Training – Direct Award (DHHS) – Award numbers: 5S06GM142115-02 and 5S06GM142115-03 Questioned Costs: AL#93.788 – $1,000 AL#93.859 - $364, based on the error the questioned costs could exceed $25,000 How the questioned costs were computed: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs, Cost Principles Condition: During testing of cash disbursements there were expenditures for which supporting documentation could not be located. Criteria: Under 2 CFR Part 200.403 (a) costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles and (g) costs must be adequately documented in order to be allowable under Federal awards. Cause: The Organization misplaced the invoices. Effect: The Organization was unable to provide the auditors with proper supporting documentation for testing and therefore it could not be determined whether the expenses were reasonable and necessary to be charged to the programs. Recommendation: We recommend the Organization create processes and procedures whereby all invoices and other pertinent supporting documentation is saved and filed either in paper or electronic form to support the expense charged to the federal award and ensure the expense is allowable. Views of Responsible Officials: Management agrees with the finding and has committed to a corrective action plan.
Finding Number: 2023-009 Repeat Finding: No Type of Finding: Significant Deficiency in Internal Control and Nonmaterial Noncompliance Description: Supporting Documentation for Expenses Incurred During the Year Major Programs: AL#93.788 – Opioid STR – Direct Award (DHHS) – Award numbers: 1H79TI083088-01, 5H79TI083088-02, 6H79TI085684-01M003 and CD9-23-4425 AL#93.859 – Biomedical Research and Research Training – Direct Award (DHHS) – Award numbers: 5S06GM142115-02 and 5S06GM142115-03 Questioned Costs: AL#93.788 – $1,000 AL#93.859 - $364, based on the error the questioned costs could exceed $25,000 How the questioned costs were computed: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs, Cost Principles Condition: During testing of cash disbursements there were expenditures for which supporting documentation could not be located. Criteria: Under 2 CFR Part 200.403 (a) costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles and (g) costs must be adequately documented in order to be allowable under Federal awards. Cause: The Organization misplaced the invoices. Effect: The Organization was unable to provide the auditors with proper supporting documentation for testing and therefore it could not be determined whether the expenses were reasonable and necessary to be charged to the programs. Recommendation: We recommend the Organization create processes and procedures whereby all invoices and other pertinent supporting documentation is saved and filed either in paper or electronic form to support the expense charged to the federal award and ensure the expense is allowable. Views of Responsible Officials: Management agrees with the finding and has committed to a corrective action plan.
Criteria: 2 CFR 200.403(g) indicates costs must be adequately documented in order to be considered allowable. Condition and Context: We selected 40 disbursements for testing during the audit and noted one expense to replenish petty cash which lacked adequate documentation. We tested 40 expenses for a total of $14,423 of claimed disbursements and identified known questioned costs of $650 which resulted in likely questioned costs of $9,742 using an error rate of 5% over total disbursements for 2023 of $216,163. Total likely questioned costs were 4% of overall ESG expenditures for 2022. Our sample was not considered to be a statistically valid sample. Cause and Effect: The lack of adequate documentation to support time charged to the federal award combined with the finding 2023-002 resulted in material noncompliance to the referenced compliance requirements and to the program as a whole. Recommendation: We recommend the Association implement procedures to ensure that the Association's policies and procedures requiring the maintenance of documentation to support expenditures claimed under federal awards be followed consistently for all claimed expenditures. Views of Responsible Officials and Planned Corrective Actions: The Association agrees with the finding and plans to implement their corrective action during October 2024.
AL number and title: WIOA Cluster - 17.258, 17.259 and 17.278 Coronavirus State and Local Fiscal Recovery Funds - 21.027 VA Supportive Services for Veteran Families Program - 64.033 Refugee and Entrant Assistance State/Replacement Designee Administered Programs - 93.566 Federal award identification number and year: N/A Name of federal agency: U.S. Departments of Labor, Treasury, Veteran's Affairs and Health and Human Services Name of pass-through entities: State of California Employment Development Department; County of Los Angeles Workforce Development, Aging, and Community Services Department; City of Los Angeles Economic and Workforce Development Department; Catholic Charities of Los Angeles Repeat finding: Yes. 2022-007 Criteria: Under the Uniform Guidance, specifically 2 CFR 200.403(g), charges to Federal awards must be documented and supported by a system of internal controls, including documentation of approval of expenses. Condition: Documentation for certain expenses was unavailable or incomplete. Cause: Management currently lacks sufficient resources to locate all supporting documentation. The work from home environment has impacted existing processes and retention of information, along with turnover in the accounting department. Effect or potential effect: Original calculations of certain cost allocations were not retained and could not be reperformed. The amounts we noted were not material, but this is a repeat finding that has not been fully remediated. Questioned costs: None to be reported. Context: During 2023, the documentation for allocation of certain shared costs, such as rent, were not fully retained. Recommendation: Management should revise its transaction documentation system to allow for centralized and accessible storage of support for programmatic costs by all appropriate personnel who interact with external auditors, including local funding sources. Management should retain journal entry documentation for all types of journal entries impacting Federal contracts. View of Responsible Official: We agree and the lack of implementation is a direct result of turnover (resignation of newly hired Director of Budgeting and Compliance ). A new search is currently underway. Once a new Director is hired, process documentation and a central database repository will be fully addressed.
AL number and title: WIOA Cluster - 17.258, 17.259 and 17.278 Coronavirus State and Local Fiscal Recovery Funds - 21.027 VA Supportive Services for Veteran Families Program - 64.033 Refugee and Entrant Assistance State/Replacement Designee Administered Programs - 93.566 Federal award identification number and year: N/A Name of federal agency: U.S. Departments of Labor, Treasury, Veteran's Affairs and Health and Human Services Name of pass-through entities: State of California Employment Development Department; County of Los Angeles Workforce Development, Aging, and Community Services Department; City of Los Angeles Economic and Workforce Development Department; Catholic Charities of Los Angeles Repeat finding: Yes. 2022-007 Criteria: Under the Uniform Guidance, specifically 2 CFR 200.403(g), charges to Federal awards must be documented and supported by a system of internal controls, including documentation of approval of expenses. Condition: Documentation for certain expenses was unavailable or incomplete. Cause: Management currently lacks sufficient resources to locate all supporting documentation. The work from home environment has impacted existing processes and retention of information, along with turnover in the accounting department. Effect or potential effect: Original calculations of certain cost allocations were not retained and could not be reperformed. The amounts we noted were not material, but this is a repeat finding that has not been fully remediated. Questioned costs: None to be reported. Context: During 2023, the documentation for allocation of certain shared costs, such as rent, were not fully retained. Recommendation: Management should revise its transaction documentation system to allow for centralized and accessible storage of support for programmatic costs by all appropriate personnel who interact with external auditors, including local funding sources. Management should retain journal entry documentation for all types of journal entries impacting Federal contracts. View of Responsible Official: We agree and the lack of implementation is a direct result of turnover (resignation of newly hired Director of Budgeting and Compliance ). A new search is currently underway. Once a new Director is hired, process documentation and a central database repository will be fully addressed.
AL number and title: WIOA Cluster - 17.258, 17.259 and 17.278 Coronavirus State and Local Fiscal Recovery Funds - 21.027 VA Supportive Services for Veteran Families Program - 64.033 Refugee and Entrant Assistance State/Replacement Designee Administered Programs - 93.566 Federal award identification number and year: N/A Name of federal agency: U.S. Departments of Labor, Treasury, Veteran's Affairs and Health and Human Services Name of pass-through entities: State of California Employment Development Department; County of Los Angeles Workforce Development, Aging, and Community Services Department; City of Los Angeles Economic and Workforce Development Department; Catholic Charities of Los Angeles Repeat finding: Yes. 2022-007 Criteria: Under the Uniform Guidance, specifically 2 CFR 200.403(g), charges to Federal awards must be documented and supported by a system of internal controls, including documentation of approval of expenses. Condition: Documentation for certain expenses was unavailable or incomplete. Cause: Management currently lacks sufficient resources to locate all supporting documentation. The work from home environment has impacted existing processes and retention of information, along with turnover in the accounting department. Effect or potential effect: Original calculations of certain cost allocations were not retained and could not be reperformed. The amounts we noted were not material, but this is a repeat finding that has not been fully remediated. Questioned costs: None to be reported. Context: During 2023, the documentation for allocation of certain shared costs, such as rent, were not fully retained. Recommendation: Management should revise its transaction documentation system to allow for centralized and accessible storage of support for programmatic costs by all appropriate personnel who interact with external auditors, including local funding sources. Management should retain journal entry documentation for all types of journal entries impacting Federal contracts. View of Responsible Official: We agree and the lack of implementation is a direct result of turnover (resignation of newly hired Director of Budgeting and Compliance ). A new search is currently underway. Once a new Director is hired, process documentation and a central database repository will be fully addressed.
AL number and title: WIOA Cluster - 17.258, 17.259 and 17.278 Coronavirus State and Local Fiscal Recovery Funds - 21.027 VA Supportive Services for Veteran Families Program - 64.033 Refugee and Entrant Assistance State/Replacement Designee Administered Programs - 93.566 Federal award identification number and year: N/A Name of federal agency: U.S. Departments of Labor, Treasury, Veteran's Affairs and Health and Human Services Name of pass-through entities: State of California Employment Development Department; County of Los Angeles Workforce Development, Aging, and Community Services Department; City of Los Angeles Economic and Workforce Development Department; Catholic Charities of Los Angeles Repeat finding: Yes. 2022-007 Criteria: Under the Uniform Guidance, specifically 2 CFR 200.403(g), charges to Federal awards must be documented and supported by a system of internal controls, including documentation of approval of expenses. Condition: Documentation for certain expenses was unavailable or incomplete. Cause: Management currently lacks sufficient resources to locate all supporting documentation. The work from home environment has impacted existing processes and retention of information, along with turnover in the accounting department. Effect or potential effect: Original calculations of certain cost allocations were not retained and could not be reperformed. The amounts we noted were not material, but this is a repeat finding that has not been fully remediated. Questioned costs: None to be reported. Context: During 2023, the documentation for allocation of certain shared costs, such as rent, were not fully retained. Recommendation: Management should revise its transaction documentation system to allow for centralized and accessible storage of support for programmatic costs by all appropriate personnel who interact with external auditors, including local funding sources. Management should retain journal entry documentation for all types of journal entries impacting Federal contracts. View of Responsible Official: We agree and the lack of implementation is a direct result of turnover (resignation of newly hired Director of Budgeting and Compliance ). A new search is currently underway. Once a new Director is hired, process documentation and a central database repository will be fully addressed.
2023-008 – Allowable Costs Federal agency: U.S. Department of Health and Human Services Federal program title: Health Centers Cluster Assistance Listing Number: 93.224/93.527 Pass-Through Agency: n/a Pass-Through Number(s): n/a Award Period: 9/1/23-8/31/25; 4/1/21-3/31/23; 6/1/19-5/31/23; 6/1/23-5/31/26; 12/1/22-5/31/23 Type of Finding: Immaterial Noncompliance and Significant Deficiency in internal control over compliance Criteria or Specific Requirement: Code of Federal Regulations (CFR) § 200.403(h) states that costs must be incurred during the approved budget period. Condition: The Organization charged expenses incurred in fiscal year 2022 to the grant in fiscal year 2023. Questioned Costs: $10,402. Context: The Organization charged subscription costs for the period June 2022 - December 2022 to the grant in fiscal year 2023. Cause: Management turnover. Effect: The Organization is requesting reimbursement for costs not incurred during the fiscal year. Repeat Finding: No. Recommendation: We recommend that subscription costs spanning multiple fiscal years be tracked carefully and charged to the grant in the appropriate year. Views of Responsible Officials: There is no disagreement with the audit finding.
2 CFR § 2400.101 provides that unless excepted under 24 CFR chapter I through IX, the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, set forth in 2 CFR part 200, shall apply to Federal Awards made by the Department of Housing and Urban Development to non-Federal entities. 2 CFR § 200.403 factors affecting allowability of costs which states, in part except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles…and (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. 24 CFR § 982.161(a)(2) provides that neither the Public Housing Authority nor any of its contractors or subcontractors may enter into any contract or arrangement in connection with the Housing Choice Voucher program in which any of the following classes of persons has any interest, direct or indirect, during tenure or for one year thereafter: Any employee of the PHA, or any contractor, subcontractor or agent of the PHA, who formulates policy or who influences decisions with respect to the programs. The Ashtabula Metropolitan Housing Authority’s Administrative Plan for its Housing Choice Voucher program provides in section 3.4 that the Executive Director or designated representative reviews and provides decisions regarding grievances for a tenant’s request for an auxiliary aid or services, provides in section 5.1.3 that the Executive Director, Resident Coordinator, or designated appointee will perform an informal review if an applicant is determined ineligible, and provides in section 9.3 that applicants being denied housing for abusive behavior must be reviewed and approved by the Executive Director. The Administrative Plan further provides in section 10.11 that only the Executive Director or his/her designee can grant an additional extension beyond suspension time for the term of a voucher, provides in section 11.3 that if the Resident Coordinator is not available or conflicted, the Executive Director will serve as the hearing officer and may also overturn or modify a decision in light of certain circumstances, and provides in section 18.1.4 that the Executive Director or his designee will perform quality control inspections on the number of participant files required by the Section 8 Management Assessment Program. Additionally, the Administrative Plan provides in section 18.1.6 that the Executive Director or his designee may approve an extension beyond thirty days for major repairs, provides in section 21.1.1 that the Executive Director or his/her designee may approve any terms allowing more time for repayment or for a lower down payment, provides in section 21.1.3 that if a family owes $10,000.00 or more, the Executive Director and the Board of Commissioners may refer the case for criminal prosecution, and lastly provides that complaints from members of the public may file complaints against owners, tenants, and employees of the Authority to the Executive Director. The following was noted for the year ended December 31, 2023: • For 2 of 40 (5%) transactions tested totaling $10,993, the Executive Director, Sean Adams approved/authorized payments for processing relating to housing owned by the Executive Director. Upon further review it was noted that a total of $36,875 was paid to the Executive Director through the Housing Voucher Cluster Program; therefore, we consider the payments to the Executive Director in the amount of $36,875 to be questioned costs. The Executive Director influences decisions with regards to the Housing Choice Voucher program pursuant to the Ashtabula Metropolitan Housing Authority’s Administrative Plan. The above payments to the Executive Director do not meet the criteria of being reasonable. In addition, with the Executive Director approving the payments, the control environment and processes for allowable costs are ineffective in preventing or detecting the above noncompliance and other potential noncompliance with the payments that are made through the program by the Authority. Failure to have alternative controls in place for approval and failure to adhere to the Authority's policies on such transactions could result in additional questioned costs, and further referrals to the Ohio Ethics Commission. The Authority should establish alternative control procedures for approval of such payments, review the Authority's Administrative Plan, and develop a conflicts of interest policy for all actions, including nonprocurement actions. HUD provided a sample non-procurement conflict of interest policy at https://files.hudexchange.info/resources/documents/Financial-Management-PHAs-Resource-09-Conflictof- Interest.docx. The Authority should develop a formal policy regarding related party transactions to govern transactions in which employees of the Authority may have a personal interest and ensure they consul with legal counsel, Ohio Ethics Commission, and the Department of Housing and Urban Development when a potential conflict is identified.
2 CFR § 2400.101 provides that unless excepted under 24 CFR chapter I through IX, the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, set forth in 2 CFR part 200, shall apply to Federal Awards made by the Department of Housing and Urban Development to non-Federal entities. 2 CFR § 200.403 factors affecting allowability of costs which states, in part except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles…and (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. 24 CFR § 982.161(a)(2) provides that neither the Public Housing Authority nor any of its contractors or subcontractors may enter into any contract or arrangement in connection with the Housing Choice Voucher program in which any of the following classes of persons has any interest, direct or indirect, during tenure or for one year thereafter: Any employee of the PHA, or any contractor, subcontractor or agent of the PHA, who formulates policy or who influences decisions with respect to the programs. The Ashtabula Metropolitan Housing Authority’s Administrative Plan for its Housing Choice Voucher program provides in section 3.4 that the Executive Director or designated representative reviews and provides decisions regarding grievances for a tenant’s request for an auxiliary aid or services, provides in section 5.1.3 that the Executive Director, Resident Coordinator, or designated appointee will perform an informal review if an applicant is determined ineligible, and provides in section 9.3 that applicants being denied housing for abusive behavior must be reviewed and approved by the Executive Director. The Administrative Plan further provides in section 10.11 that only the Executive Director or his/her designee can grant an additional extension beyond suspension time for the term of a voucher, provides in section 11.3 that if the Resident Coordinator is not available or conflicted, the Executive Director will serve as the hearing officer and may also overturn or modify a decision in light of certain circumstances, and provides in section 18.1.4 that the Executive Director or his designee will perform quality control inspections on the number of participant files required by the Section 8 Management Assessment Program. Additionally, the Administrative Plan provides in section 18.1.6 that the Executive Director or his designee may approve an extension beyond thirty days for major repairs, provides in section 21.1.1 that the Executive Director or his/her designee may approve any terms allowing more time for repayment or for a lower down payment, provides in section 21.1.3 that if a family owes $10,000.00 or more, the Executive Director and the Board of Commissioners may refer the case for criminal prosecution, and lastly provides that complaints from members of the public may file complaints against owners, tenants, and employees of the Authority to the Executive Director. The following was noted for the year ended December 31, 2023: • For 2 of 40 (5%) transactions tested totaling $10,993, the Executive Director, Sean Adams approved/authorized payments for processing relating to housing owned by the Executive Director. Upon further review it was noted that a total of $36,875 was paid to the Executive Director through the Housing Voucher Cluster Program; therefore, we consider the payments to the Executive Director in the amount of $36,875 to be questioned costs. The Executive Director influences decisions with regards to the Housing Choice Voucher program pursuant to the Ashtabula Metropolitan Housing Authority’s Administrative Plan. The above payments to the Executive Director do not meet the criteria of being reasonable. In addition, with the Executive Director approving the payments, the control environment and processes for allowable costs are ineffective in preventing or detecting the above noncompliance and other potential noncompliance with the payments that are made through the program by the Authority. Failure to have alternative controls in place for approval and failure to adhere to the Authority's policies on such transactions could result in additional questioned costs, and further referrals to the Ohio Ethics Commission. The Authority should establish alternative control procedures for approval of such payments, review the Authority's Administrative Plan, and develop a conflicts of interest policy for all actions, including nonprocurement actions. HUD provided a sample non-procurement conflict of interest policy at https://files.hudexchange.info/resources/documents/Financial-Management-PHAs-Resource-09-Conflictof- Interest.docx. The Authority should develop a formal policy regarding related party transactions to govern transactions in which employees of the Authority may have a personal interest and ensure they consul with legal counsel, Ohio Ethics Commission, and the Department of Housing and Urban Development when a potential conflict is identified.
2 CFR § 2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR § 200.303(a) which requires that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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 § 2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR § 200.403 which states 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). State ex rel. McClure v. Hagerman, 155 Ohio St. 320 (1951) provides that expenditures made by a governmental unit should serve a public purpose. Typically, the determination of what constitutes a “proper public purpose” rests with the judgment of the governmental entity, unless such determination is arbitrary or unreasonable. Even if a purchase is reasonable, Ohio Attorney General Opinion 82-006 indicates that it must be memorialized by a duly enacted ordinance or resolution and may have a prospective effect only. Auditor of State Bulletin 2003-005 Expenditure of Public Funds/Proper “Public Purpose” states, in part, the Auditor of State’s Office will only question expenditures where the legislative determination of a public purpose is manifestly arbitrary and incorrect. The Lima-Allen County Regional Planning Commission, administrator of the Community Housing Impact and Preservation Program - CHIP (#B-C-21-1AB-1) for Allen County, incurred a charge of $4,386 for Admin January 2023 charges on invoice #106558 dated February 7, 2023 from the Great Lakes Community Action Partnership. On July 6, 2023, check number 7330652 was issued by Allen County which included payment of $4,386 on invoice number 106558. On August 3, 2023, check number 7332670 was issued by Allen County which included payment of $4,386 on invoice number 106558 which was approved by Tara Bales, Executive Director of the Lima-Allen County Regional Planning Commission. As a result, possibly due to the failure of an existing control or procedure, invoice number 106558 was paid twice resulting an overpayment of $4,386. On October 2, 2024, the Great Lakes Community Action Partnership refunded the overpayment with check number 20765 in the amount of $4,386. This refund was recorded in the Community Development Grant Fund (2414). The Lima-Allen County Regional Planning Commission should implement an additional control(s) and/or procedure(s) to prevent the duplicate payment of invoices.
Finding 2023-002 – Internal Control Deficiency and Noncompliance over Activities Allowed/Allowable Costs Principles, Period of Performance Identification of the federal program: Federal grantor: United States Department of Health and Human Services Assistance Listing No.: 93.048 Program name: Special Programs for the Aging, Title IV, and Title II, Discretionary Projects Criteria or specific requirement (including statutory, regulatory, or other citation): Section 200.303 of the Uniform Guidance states the following regarding internal control: “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).” In order for expenditures to be allowable under federal awards, 2 CFR 200.403(a) provides that costs must be necessary and reasonable for the performance of the federal award and be allocable thereto under the cost principles. 2 CFR 200.403(g) further provides that costs must be adequately documented. Condition: Management did not have adequately designed internal controls throughout the year over expenses charged to the federal program. Management also did not consistently retain evidence to support the existence of certain expenditures and thus the expenses were not adequately documented. Section III – Federal Award Findings and Questioned Costs (continued) Cause: Due to the timing of identifying the internal control finding during the 2022 audit, management was not able to timely implement effective internal controls for the entire period under audit for 2023. For certain expenditures, management did not adequately retain invoice or receipt support for non-payroll direct expenditures. Effect or potential effect: Ineffective internal controls could result in expenses being charged to the federal program that are not allowed or are outside the period of performance. Questioned costs: $610. Questioned costs were calculated as the costs without support for the expenditure. Context: Prior to October 15, 2023, payroll controls were designed where the Executive Director reviewed time sheets of the employees working on the program; however, no one reviewed the time submitted by the Executive Director, and if the Executive Director was not available to review the employees’ time sheets, a third-party payroll servicer approved the time. The third-party servicer did not have firsthand knowledge of the activities of each employee. Because the internal controls prior to October 15, 2023, were not designed effectively, we did not test controls over payroll expenditures as they were not in place throughout the audit period. For direct expenses, internal requisitions are to be approved by either the Executive Director or the Assistant Program Director if under $5,000 and by the Executive Director if over $5,000 prior to AdviseWell, Inc. entering into a transaction. Because the internal controls were not implemented timely, we did not test controls surrounding direct expenses. We selected 40 nonpayroll expenditures totaling $13,590 from total nonpayroll expenditures of $590,516 to test allowability, noting that for three selections totaling $610, documentation was not retained to evidence the existence and allowability of the expenditure. For indirect expenses and fringe benefits, the Executive Director calculates the amount and requests reimbursement from the federal program. There was no independent review of the Executive Director’s calculations prior to submitting the request for reimbursement throughout the period under audit. Management asserts that it has internal controls in place to ensure that allowable expenditures are charged to the federal programs within the period of performance. Management did not retain documentation to evidence the internal controls over its review of expenditures to ensure they were within the period of performance. Because evidence of the controls was not retained for the period of performance throughout the entire audit period, we did not test internal controls. Identification as a repeat finding, if applicable: This is a repeat finding – Finding 2022-001. Recommendation: AdviseWell, Inc. should develop and implement effective internal controls to ensure expenses charged to the federal program are appropriately reviewed and approved by an individual knowledgeable of the program requirements, reviewed prior to entering into the expenditure, and charged within the period of performance. Management should maintain effective segregation of duties. Management should retain invoice or receipt support for all expenditures. View of responsible officials: Management agrees with the finding. Internal controls were enhanced in October 2023 to begin retaining documentation to evidence the controls. Additionally, management will implement internal controls surrounding retaining evidence of expenditures.
Assistance Listing Number: 10.728 Name of Federal Program: Inflation Reduction Act Hazardous Fuels Transportation Assistance Name of Federal Agency: Department of Agriculture Award Period: January 1, 2023 – December 31, 2023 Criteria or Specific Requirement: 2 CFR section 200.403 establishes criteria that must be met for costs to be allowable under federal awards. According to these criteria, costs charged to federal awards must be determined in accordance with generally accepted accounting principles and be adequately documented. Condition: Organization does have adequate segregation of duties between the individual reviewing, approving, and recording costs charged to federal awards. Cause: The Organization has not developed policies and procedures to ensure costs have been reviewed for allowability by appropriate personnel prior to charging them to federal awards. Effect or Potential Effect: An expense charged to the federal program could be disallowed. Repeat Finding: No Recommendation: We recommend that management implement policies and procedures to review and approve all costs by appropriate personnel prior to charging them to federal awards. Views of Responsible Officials: Management agrees with the finding and noted that they will implement our recommendations.
2023-002- Activities Allowed and Allowable Costs Federal Assistance Listing Number: 84.287C Name of Program or Cluster: Twenty-First Century Community Learning Centers Agency: U.S. Department of Education Name of Passed-Through Entity: State of New Jersey Department of Education Criteria: According to the 21 CCLC grant agreement’s terms and conditions, a grantee is required to maintain a financial management system that includes the following: (1) accurate, current and complete disclosure of all financial activities related to 21 CCLC’s grant agreement in accordance with generally accepted accounting principles (“GAAP”), (2) records clearly identify the source and application of all funds used for the purposes described in the approved grant application, (3) effective internal and accounting controls over all funds, property and other assets. The grantee shall have in place a system for safeguarding all such assets and shall ensure that they are used solely for authorized purposes. (4) a comparison of actual outlays with budgeted amounts. Financial information shall be correlated with performance and productivity data and shall result in unit cost information. (5) accounting records that are supported by source documentation, and (6) procedures for determining the reasonableness and allowability of costs in a manner that is consistent with the Uniform Guidance. Activities Allowed and Allowable Costs compliance requirements applicable to 21 CCLC include: (1) Expenditures must be allowable under 2 CFR §200.403 (federal cost principles) and align with the grant’s specific terms and objectives and (2) Documentation of expenditures must meet the standards outlined in 2 CFR §200.302 (financial management and internal controls). Condition: In September 2024, legal counsel conducted a formal investigation and identified a potential misappropriation of funds regarding a vendor who submitted twelve invoices for goods and services to be used by children in the after-school programs across three Paterson schools amounting to $94,560 during a nine-month period covering May 2023 through February 2024. According to the formal investigation, there was insufficient evidence that the Organizations actually received the goods and services purchased from this vendor as shipping receipts, purchase orders or other verification support were not provided. Payments were made to the vendor with only an approved invoice. Cause: The lack of proper support documentation stems from insufficient internal controls over compliance due to inadequate segregation of duties, training and understanding of federal grant compliance requirements by staff responsible for grant administration as well as weak management oversight. The Organizations’ grant program administrators lack proper segregation of duties. There should be different individuals responsible for initiating purchase orders, receiving goods, approving invoices, and processing payments. There is no consistent oversight over expense/vendor verification and proper documentation processes, which include purchase orders and receiving reports that must be attached to invoices for verification. Effect: The Organizations’ 21 CCLC grant program was not in compliance with the federal grant terms and conditions, which can result in a potential repayment or “clawback” of misused grant funds by the grantor due to unverified expenditures and also lead to audit penalties or loss of future funding. Questioned Costs: $94,560. Repeat Finding: No. Recommendations: We recommend that the Organizations implement policies and procedures to comply with the federal grant terms and conditions in an effort to provide proper support documentation for verification of the existence that goods were received and services performed. These policies include the following: Recommendation #1 – A policy implemented for deliveries that arrive at the Organizations and that are made directly to the schools (“Units”). The arrival of a delivery must be documented at the Organizations and any deliveries made to the Units must be documented by the Unit Director and/or the individual who is making the delivery. All receiving reports and receipts should be matched to an invoice. Recommendation #2 – The Organizations must renew and enforce its policies regarding documentation the Units are responsible for submitting to the Program Director and/or the Organizations to ensure supplies and materials are received as well as activities and events provided by grant funds are properly documented and maintained. (1) There must be a policy related to the use of daily reports (known as “End of Day Reports”) that Unit Directors submit to the Program Director. The reports should be a template created by the Organizations or Program Director that the Unit Directors have available to them, which must identify what activities occurred on that day, whether parents were provided with anything at drop off or given out to the children and whether the Units accepted any deliveries and from whom. (2) The Unit Directors must also maintain "sign-in sheets". A policy must also be implemented regarding the use of sign-in sheets at the Units. The policy should have a clear mandate, purpose and outline the significance of maintaining these sign-in sheets as it relates to the grant program. The sign-in sheets must contain the number of the Unit, the name of the Director and Assistant Director, the name and a description of the correlating activity or event, whether any items, supplies, materials or kits were given to the children during the activity or event or provided at pickup time for the children to use at home, the number of children that participated in the activity or event, as well as the date and approximate time. The sign-in sheets should be emailed to the Program Director who will need to save these sheets in an online file. These files must be kept separately in a repository for each specific Unit by grant year. Other documentation that should be kept on file to further support the events and activities that occurred includes pictures of the children using the materials or participating in the activity or event. Unit Directors must be required to submit these files to the Program Director within a specified amount of time following an event or activity. Views of Responsible Officials: See corrective action plan attached.
2023-002- Activities Allowed and Allowable Costs Federal Assistance Listing Number: 84.287C Name of Program or Cluster: Twenty-First Century Community Learning Centers Agency: U.S. Department of Education Name of Passed-Through Entity: State of New Jersey Department of Education Criteria: According to the 21 CCLC grant agreement’s terms and conditions, a grantee is required to maintain a financial management system that includes the following: (1) accurate, current and complete disclosure of all financial activities related to 21 CCLC’s grant agreement in accordance with generally accepted accounting principles (“GAAP”), (2) records clearly identify the source and application of all funds used for the purposes described in the approved grant application, (3) effective internal and accounting controls over all funds, property and other assets. The grantee shall have in place a system for safeguarding all such assets and shall ensure that they are used solely for authorized purposes. (4) a comparison of actual outlays with budgeted amounts. Financial information shall be correlated with performance and productivity data and shall result in unit cost information. (5) accounting records that are supported by source documentation, and (6) procedures for determining the reasonableness and allowability of costs in a manner that is consistent with the Uniform Guidance. Activities Allowed and Allowable Costs compliance requirements applicable to 21 CCLC include: (1) Expenditures must be allowable under 2 CFR §200.403 (federal cost principles) and align with the grant’s specific terms and objectives and (2) Documentation of expenditures must meet the standards outlined in 2 CFR §200.302 (financial management and internal controls). Condition: In September 2024, legal counsel conducted a formal investigation and identified a potential misappropriation of funds regarding a vendor who submitted twelve invoices for goods and services to be used by children in the after-school programs across three Paterson schools amounting to $94,560 during a nine-month period covering May 2023 through February 2024. According to the formal investigation, there was insufficient evidence that the Organizations actually received the goods and services purchased from this vendor as shipping receipts, purchase orders or other verification support were not provided. Payments were made to the vendor with only an approved invoice. Cause: The lack of proper support documentation stems from insufficient internal controls over compliance due to inadequate segregation of duties, training and understanding of federal grant compliance requirements by staff responsible for grant administration as well as weak management oversight. The Organizations’ grant program administrators lack proper segregation of duties. There should be different individuals responsible for initiating purchase orders, receiving goods, approving invoices, and processing payments. There is no consistent oversight over expense/vendor verification and proper documentation processes, which include purchase orders and receiving reports that must be attached to invoices for verification. Effect: The Organizations’ 21 CCLC grant program was not in compliance with the federal grant terms and conditions, which can result in a potential repayment or “clawback” of misused grant funds by the grantor due to unverified expenditures and also lead to audit penalties or loss of future funding. Questioned Costs: $94,560. Repeat Finding: No. Recommendations: We recommend that the Organizations implement policies and procedures to comply with the federal grant terms and conditions in an effort to provide proper support documentation for verification of the existence that goods were received and services performed. These policies include the following: Recommendation #1 – A policy implemented for deliveries that arrive at the Organizations and that are made directly to the schools (“Units”). The arrival of a delivery must be documented at the Organizations and any deliveries made to the Units must be documented by the Unit Director and/or the individual who is making the delivery. All receiving reports and receipts should be matched to an invoice. Recommendation #2 – The Organizations must renew and enforce its policies regarding documentation the Units are responsible for submitting to the Program Director and/or the Organizations to ensure supplies and materials are received as well as activities and events provided by grant funds are properly documented and maintained. (1) There must be a policy related to the use of daily reports (known as “End of Day Reports”) that Unit Directors submit to the Program Director. The reports should be a template created by the Organizations or Program Director that the Unit Directors have available to them, which must identify what activities occurred on that day, whether parents were provided with anything at drop off or given out to the children and whether the Units accepted any deliveries and from whom. (2) The Unit Directors must also maintain "sign-in sheets". A policy must also be implemented regarding the use of sign-in sheets at the Units. The policy should have a clear mandate, purpose and outline the significance of maintaining these sign-in sheets as it relates to the grant program. The sign-in sheets must contain the number of the Unit, the name of the Director and Assistant Director, the name and a description of the correlating activity or event, whether any items, supplies, materials or kits were given to the children during the activity or event or provided at pickup time for the children to use at home, the number of children that participated in the activity or event, as well as the date and approximate time. The sign-in sheets should be emailed to the Program Director who will need to save these sheets in an online file. These files must be kept separately in a repository for each specific Unit by grant year. Other documentation that should be kept on file to further support the events and activities that occurred includes pictures of the children using the materials or participating in the activity or event. Unit Directors must be required to submit these files to the Program Director within a specified amount of time following an event or activity. Views of Responsible Officials: See corrective action plan attached.
Assistance Listing Number(s): 10.912 Name of Federal Program or Cluster: Environmental Quality Incentives Program Name of Federal Agency: Department of Agriculture Award Periods: September 3, 2019 through July 31, 2024 and September 30, 2020 through September 30, 2025 Assistance Listing Number(s): 10.924 Name of Federal Program or Cluster: Conservation Stewardship Program Name of Federal Agency: Department of Agriculture Award Periods: September 3, 2019 through July 31, 2024 and September 30, 2020 through September 30, 2025 Criteria or Specific Requirement: 2 CFR Section 200.403 states the factors that determine allowability of costs charged to federal awards and requires costs to be determined in accordance with generally accepted accounting principles. Condition: We identified costs incurred in 2022 that were incorrectly recorded as 2023 costs and charged to federal awards. Cause: Management has not designed and implemented sufficient internal controls to ensure costs are recorded in accordance with generally accepted accounting principles to be allowable for federal awards. Effect or Potential Effect: An unallowable cost could be charged to the federal program. Context and Questioned Costs: During our testing of grants for appropriate accounting period cutoff, we identified 2022 costs that were charged to grants in 2023. Thus, we selected all grant transactions charged to the major program that were recorded in January 2023, and grant transactions over $2,500 for the period February 1, 2023 through June 30, 2023 to test for recognition in the proper period. The amount tested totaled $243,311, which included $12,726 of costs recorded in the wrong period. Other than not being recorded in accordance with generally accepted accounting principles, these costs were otherwise allowable and recorded in the proper period of performance. Repeat Finding: No Recommendation: We recommend management design and implement sufficient internal controls to ensure costs are recorded in accordance with generally accepted accounting principles to be allowable for federal awards. Views of Responsible Officials: Management agrees with the finding and they will evaluate our findings to determine an appropriate corrective action.
Assistance Listing Number(s): 10.912 Name of Federal Program or Cluster: Environmental Quality Incentives Program Name of Federal Agency: Department of Agriculture Award Periods: September 3, 2019 through July 31, 2024 and September 30, 2020 through September 30, 2025 Assistance Listing Number(s): 10.924 Name of Federal Program or Cluster: Conservation Stewardship Program Name of Federal Agency: Department of Agriculture Award Periods: September 3, 2019 through July 31, 2024 and September 30, 2020 through September 30, 2025 Criteria or Specific Requirement: 2 CFR Section 200.403 states the factors that determine allowability of costs charged to federal awards and requires costs to be determined in accordance with generally accepted accounting principles. Condition: We identified costs incurred in 2022 that were incorrectly recorded as 2023 costs and charged to federal awards. Cause: Management has not designed and implemented sufficient internal controls to ensure costs are recorded in accordance with generally accepted accounting principles to be allowable for federal awards. Effect or Potential Effect: An unallowable cost could be charged to the federal program. Context and Questioned Costs: During our testing of grants for appropriate accounting period cutoff, we identified 2022 costs that were charged to grants in 2023. Thus, we selected all grant transactions charged to the major program that were recorded in January 2023, and grant transactions over $2,500 for the period February 1, 2023 through June 30, 2023 to test for recognition in the proper period. The amount tested totaled $243,311, which included $12,726 of costs recorded in the wrong period. Other than not being recorded in accordance with generally accepted accounting principles, these costs were otherwise allowable and recorded in the proper period of performance. Repeat Finding: No Recommendation: We recommend management design and implement sufficient internal controls to ensure costs are recorded in accordance with generally accepted accounting principles to be allowable for federal awards. Views of Responsible Officials: Management agrees with the finding and they will evaluate our findings to determine an appropriate corrective action.
2023-004 Allowable Costs (Material Weakness) U.S. Department of Treasury 21.027 Coronavirus State and Local Fiscal Recovery Funds Criteria: The Uniform Guidance sets forth factors affecting allowability of costs. Except where otherwise authorized by statute, costs must meet the certain criteria to be allowable under federal awards. CFR 200.403 (c) states that costs must be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the recipient or subrecipient. CFR200.403(g) states that the cost must be adequately documented Condition: There were multiple amounts paid for which the Organization was unable to supply appropriate documentation and invoices or receipts for which the Organization did not follow their policy for reviewing the invoices/receipts prior to payment. Cause: The Organization uses Bill.com to make most payments. The payments made directly via an ACH with the bank do not have appropriate documentation maintained. There were also other payments for which the client was unable to locate the documents. There were also invoices/receipts that were not signed off prior to payment. Effect: The Organization has policies in place for amounts paid through Bill.com, but these policies are not being used with other forms of payments. Questioned Costs: $342.34. Questioned costs are made up of the total of all invoices tested that did not have appropriate documentation. Recommendation: Organization should update policy and ensure that all payments made in any form have appropriate documentation. Also, the Organization should follow their stated policy on review of invoices prior to payment. Views of Responsible Officials and Planned Corrective Actions: The Organization will update policy to ensure that all payments made in any form have appropriate documentation. Additionally, policy on review of invoices prior to payment will be reviewed by Executive Director and Business Manager. Monique Johnson, Executive Director of Allen County Drug & Alcohol Consortium, is responsible for this corrective action. The anticipated completion date is May 31, 2025.
2 C.F.R. § 1000.10 gives regulatory effect to the Department of the Treasurer for 2 C.F.R. § 200.403(a), which requires that costs be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. 2 C.F.R. § 200.403(c) documents that costs must be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. State ex rel. McClure v. Hagerman, 155 Ohio St. 320 (1951) provides that expenditures made by a governmental unit should serve a public purpose. Typically, the determination of what constitutes a “proper public purpose” rests with the judgment of the governmental entity, unless such determination is arbitrary or unreasonable. Even if a purchase is reasonable, Ohio Attorney General Opinion 82-006 indicates that it must be memorialized by a duly enacted ordinance or resolution and may have a prospective effect only. Auditor of State Bulletin 2003-005 Expenditure of Public Funds/Proper “Public Purpose” states, in part, the Auditor of State’s Office will only question expenditures where the legislative determination of a public purpose is manifestly arbitrary and incorrect. The Sheriff's Department was awarded the American Rescue Plan Funding for the Community Violence Intervention program to offer employee incentive and retention funds of $72,159 on October 14, 2022. The Sheriff's department completed the request for proposal for the grant based on May 2022 wages with an original grant period being April 2022 through April 2024. However, funding wasn't received until April 2023 and the Sheriff's Department received a grant extension through October 2024. The Sheriff's Clerk prepared a spreadsheet to base the retention and incentive payments on 10% of the annual salaries for dispatchers and deputies using their pay rates as of May 2022. This 10% annual amount was then to be paid over 24 months. There were to be bi-monthly payments for the period May 2022 through April 2024 for employee retention of deputies and dispatchers. Due to the delay of the grant start date, the first payment was made in 2023 and was a single payment to cover missed payments from May to December 2022 using the 2022 pay rates noted in the initial grant award calculation. Payment 1 in 2023 was for the four bi-monthly payments missed in 2022 (8 months) and payment 2 was for two bi-monthly payments (4 months) for January to April 2023. After these two payments, the Clerk changed the amounts being paid as the 10% limit would also need to cover the related county paid benefits on these retention and incentive payments which were not previously considered in the 10% maximum calculation. The Clerk recalculated the totals to be paid as salary payments by subtracting the related benefit total from the salary maximum previously calculated and dividing that amount over the remaining payments. She started paying lesser amounts for the subsequent bi-monthly payments, but we could not agree those amounts to support as calculations were not retained. Additionally, when the grant was finally received in 2023, there were employees that had been used in the initial calculation as of May 2022 that were no longer employed by the County. Since those employees did not receive any payments, the Clerk used the funding that was freed up from those employees to add newly hired employees to the retention and incentive payments. There was no supporting documentation on file for how new employees were added to the grant or how the amount allocated for new employees was calculated. While these payments were allowable for the purpose of retention of employees there were not sufficient internal controls in place for the calculation of the payments made over the life of the grant as the calculations changed throughout the year as employees left and were replaced. For most new employees, a bi-monthly flat rate not related to a percentage of their salary was paid. These flat rates were not approved by the Sheriff to be used in place of the 10% annual max calculations. Due to the lack of supporting documentation on file to determine how the Sheriff's Clerk calculated the retention payments to employees, we calculated a maximum of 10% annual salary per employee using 2022 hourly rates for those employed in 2022 and 2023 hourly rates for new employees in 2023. We then divided that amount by 24 months as the one year annual amount was to be paid across two years to get a monthly incentive amount and then multiplied the monthly amount by the number of months actually employed during the grant period. We compared our recalculated amounts to amounts actually paid through the final payment in 2024 to determine if there were any over payments over the life of the grant. We noted two of the twenty-three employees receiving retention and incentive payments in 2023 exceeded the 10% maximum. These employees were overpaid $192.53 and $261.03, respectively including salaries and related benefits. Both of these employees left employment in 2023 so they did not receive any further payments in 2024. These overpayments do not represent a proper public purpose. We further noted that amounts paid to employees from Payment 3 through Payment 6 covering May through December 2023 were not adequately documented as we could not recalculate the bi-monthly payments totaling $15,284 in salaries and $2,773 in related benefits. The Sheriff's office should implement procedures to ensure all supporting documentation for grant payments are maintained. Actual amounts paid by grant funds to employees should be supported by calculations and changes to the calculations should be approved.
2 C.F.R. § 1000.10 gives regulatory effect to the Department of the Treasurer for 2 C.F.R. § 200.403(a), which requires that costs be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. 2 C.F.R. § 200.403(c) documents that costs must be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. State ex rel. McClure v. Hagerman, 155 Ohio St. 320 (1951) provides that expenditures made by a governmental unit should serve a public purpose. Typically, the determination of what constitutes a “proper public purpose” rests with the judgment of the governmental entity, unless such determination is arbitrary or unreasonable. Even if a purchase is reasonable, Ohio Attorney General Opinion 82-006 indicates that it must be memorialized by a duly enacted ordinance or resolution and may have a prospective effect only. Auditor of State Bulletin 2003-005 Expenditure of Public Funds/Proper “Public Purpose” states, in part, the Auditor of State’s Office will only question expenditures where the legislative determination of a public purpose is manifestly arbitrary and incorrect. The Sheriff's Department was awarded the American Rescue Plan Funding for the Community Violence Intervention program to offer employee incentive and retention funds of $72,159 on October 14, 2022. The Sheriff's department completed the request for proposal for the grant based on May 2022 wages with an original grant period being April 2022 through April 2024. However, funding wasn't received until April 2023 and the Sheriff's Department received a grant extension through October 2024. The Sheriff's Clerk prepared a spreadsheet to base the retention and incentive payments on 10% of the annual salaries for dispatchers and deputies using their pay rates as of May 2022. This 10% annual amount was then to be paid over 24 months. There were to be bi-monthly payments for the period May 2022 through April 2024 for employee retention of deputies and dispatchers. Due to the delay of the grant start date, the first payment was made in 2023 and was a single payment to cover missed payments from May to December 2022 using the 2022 pay rates noted in the initial grant award calculation. Payment 1 in 2023 was for the four bi-monthly payments missed in 2022 (8 months) and payment 2 was for two bi-monthly payments (4 months) for January to April 2023. After these two payments, the Clerk changed the amounts being paid as the 10% limit would also need to cover the related county paid benefits on these retention and incentive payments which were not previously considered in the 10% maximum calculation. The Clerk recalculated the totals to be paid as salary payments by subtracting the related benefit total from the salary maximum previously calculated and dividing that amount over the remaining payments. She started paying lesser amounts for the subsequent bi-monthly payments, but we could not agree those amounts to support as calculations were not retained. Additionally, when the grant was finally received in 2023, there were employees that had been used in the initial calculation as of May 2022 that were no longer employed by the County. Since those employees did not receive any payments, the Clerk used the funding that was freed up from those employees to add newly hired employees to the retention and incentive payments. There was no supporting documentation on file for how new employees were added to the grant or how the amount allocated for new employees was calculated. While these payments were allowable for the purpose of retention of employees there were not sufficient internal controls in place for the calculation of the payments made over the life of the grant as the calculations changed throughout the year as employees left and were replaced. For most new employees, a bi-monthly flat rate not related to a percentage of their salary was paid. These flat rates were not approved by the Sheriff to be used in place of the 10% annual max calculations. Due to the lack of supporting documentation on file to determine how the Sheriff's Clerk calculated the retention payments to employees, we calculated a maximum of 10% annual salary per employee using 2022 hourly rates for those employed in 2022 and 2023 hourly rates for new employees in 2023. We then divided that amount by 24 months as the one year annual amount was to be paid across two years to get a monthly incentive amount and then multiplied the monthly amount by the number of months actually employed during the grant period. We compared our recalculated amounts to amounts actually paid through the final payment in 2024 to determine if there were any over payments over the life of the grant. We noted two of the twenty-three employees receiving retention and incentive payments in 2023 exceeded the 10% maximum. These employees were overpaid $192.53 and $261.03, respectively including salaries and related benefits. Both of these employees left employment in 2023 so they did not receive any further payments in 2024. These overpayments do not represent a proper public purpose. We further noted that amounts paid to employees from Payment 3 through Payment 6 covering May through December 2023 were not adequately documented as we could not recalculate the bi-monthly payments totaling $15,284 in salaries and $2,773 in related benefits. The Sheriff's office should implement procedures to ensure all supporting documentation for grant payments are maintained. Actual amounts paid by grant funds to employees should be supported by calculations and changes to the calculations should be approved.
2 C.F.R. § 1000.10 gives regulatory effect to the Department of the Treasurer for 2 C.F.R. § 200.403(a), which requires that costs be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. 2 C.F.R. § 200.403(c) documents that costs must be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. State ex rel. McClure v. Hagerman, 155 Ohio St. 320 (1951) provides that expenditures made by a governmental unit should serve a public purpose. Typically, the determination of what constitutes a “proper public purpose” rests with the judgment of the governmental entity, unless such determination is arbitrary or unreasonable. Even if a purchase is reasonable, Ohio Attorney General Opinion 82-006 indicates that it must be memorialized by a duly enacted ordinance or resolution and may have a prospective effect only. Auditor of State Bulletin 2003-005 Expenditure of Public Funds/Proper “Public Purpose” states, in part, the Auditor of State’s Office will only question expenditures where the legislative determination of a public purpose is manifestly arbitrary and incorrect. The Sheriff's Department was awarded the American Rescue Plan Funding for the Community Violence Intervention program to offer employee incentive and retention funds of $72,159 on October 14, 2022. The Sheriff's department completed the request for proposal for the grant based on May 2022 wages with an original grant period being April 2022 through April 2024. However, funding wasn't received until April 2023 and the Sheriff's Department received a grant extension through October 2024. The Sheriff's Clerk prepared a spreadsheet to base the retention and incentive payments on 10% of the annual salaries for dispatchers and deputies using their pay rates as of May 2022. This 10% annual amount was then to be paid over 24 months. There were to be bi-monthly payments for the period May 2022 through April 2024 for employee retention of deputies and dispatchers. Due to the delay of the grant start date, the first payment was made in 2023 and was a single payment to cover missed payments from May to December 2022 using the 2022 pay rates noted in the initial grant award calculation. Payment 1 in 2023 was for the four bi-monthly payments missed in 2022 (8 months) and payment 2 was for two bi-monthly payments (4 months) for January to April 2023. After these two payments, the Clerk changed the amounts being paid as the 10% limit would also need to cover the related county paid benefits on these retention and incentive payments which were not previously considered in the 10% maximum calculation. The Clerk recalculated the totals to be paid as salary payments by subtracting the related benefit total from the salary maximum previously calculated and dividing that amount over the remaining payments. She started paying lesser amounts for the subsequent bi-monthly payments, but we could not agree those amounts to support as calculations were not retained. Additionally, when the grant was finally received in 2023, there were employees that had been used in the initial calculation as of May 2022 that were no longer employed by the County. Since those employees did not receive any payments, the Clerk used the funding that was freed up from those employees to add newly hired employees to the retention and incentive payments. There was no supporting documentation on file for how new employees were added to the grant or how the amount allocated for new employees was calculated. While these payments were allowable for the purpose of retention of employees there were not sufficient internal controls in place for the calculation of the payments made over the life of the grant as the calculations changed throughout the year as employees left and were replaced. For most new employees, a bi-monthly flat rate not related to a percentage of their salary was paid. These flat rates were not approved by the Sheriff to be used in place of the 10% annual max calculations. Due to the lack of supporting documentation on file to determine how the Sheriff's Clerk calculated the retention payments to employees, we calculated a maximum of 10% annual salary per employee using 2022 hourly rates for those employed in 2022 and 2023 hourly rates for new employees in 2023. We then divided that amount by 24 months as the one year annual amount was to be paid across two years to get a monthly incentive amount and then multiplied the monthly amount by the number of months actually employed during the grant period. We compared our recalculated amounts to amounts actually paid through the final payment in 2024 to determine if there were any over payments over the life of the grant. We noted two of the twenty-three employees receiving retention and incentive payments in 2023 exceeded the 10% maximum. These employees were overpaid $192.53 and $261.03, respectively including salaries and related benefits. Both of these employees left employment in 2023 so they did not receive any further payments in 2024. These overpayments do not represent a proper public purpose. We further noted that amounts paid to employees from Payment 3 through Payment 6 covering May through December 2023 were not adequately documented as we could not recalculate the bi-monthly payments totaling $15,284 in salaries and $2,773 in related benefits. The Sheriff's office should implement procedures to ensure all supporting documentation for grant payments are maintained. Actual amounts paid by grant funds to employees should be supported by calculations and changes to the calculations should be approved.
2 C.F.R. § 1000.10 gives regulatory effect to the Department of the Treasurer for 2 C.F.R. § 200.403(a), which requires that costs be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. 2 C.F.R. § 200.403(c) documents that costs must be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. State ex rel. McClure v. Hagerman, 155 Ohio St. 320 (1951) provides that expenditures made by a governmental unit should serve a public purpose. Typically, the determination of what constitutes a “proper public purpose” rests with the judgment of the governmental entity, unless such determination is arbitrary or unreasonable. Even if a purchase is reasonable, Ohio Attorney General Opinion 82-006 indicates that it must be memorialized by a duly enacted ordinance or resolution and may have a prospective effect only. Auditor of State Bulletin 2003-005 Expenditure of Public Funds/Proper “Public Purpose” states, in part, the Auditor of State’s Office will only question expenditures where the legislative determination of a public purpose is manifestly arbitrary and incorrect. The Sheriff's Department was awarded the American Rescue Plan Funding for the Community Violence Intervention program to offer employee incentive and retention funds of $72,159 on October 14, 2022. The Sheriff's department completed the request for proposal for the grant based on May 2022 wages with an original grant period being April 2022 through April 2024. However, funding wasn't received until April 2023 and the Sheriff's Department received a grant extension through October 2024. The Sheriff's Clerk prepared a spreadsheet to base the retention and incentive payments on 10% of the annual salaries for dispatchers and deputies using their pay rates as of May 2022. This 10% annual amount was then to be paid over 24 months. There were to be bi-monthly payments for the period May 2022 through April 2024 for employee retention of deputies and dispatchers. Due to the delay of the grant start date, the first payment was made in 2023 and was a single payment to cover missed payments from May to December 2022 using the 2022 pay rates noted in the initial grant award calculation. Payment 1 in 2023 was for the four bi-monthly payments missed in 2022 (8 months) and payment 2 was for two bi-monthly payments (4 months) for January to April 2023. After these two payments, the Clerk changed the amounts being paid as the 10% limit would also need to cover the related county paid benefits on these retention and incentive payments which were not previously considered in the 10% maximum calculation. The Clerk recalculated the totals to be paid as salary payments by subtracting the related benefit total from the salary maximum previously calculated and dividing that amount over the remaining payments. She started paying lesser amounts for the subsequent bi-monthly payments, but we could not agree those amounts to support as calculations were not retained. Additionally, when the grant was finally received in 2023, there were employees that had been used in the initial calculation as of May 2022 that were no longer employed by the County. Since those employees did not receive any payments, the Clerk used the funding that was freed up from those employees to add newly hired employees to the retention and incentive payments. There was no supporting documentation on file for how new employees were added to the grant or how the amount allocated for new employees was calculated. While these payments were allowable for the purpose of retention of employees there were not sufficient internal controls in place for the calculation of the payments made over the life of the grant as the calculations changed throughout the year as employees left and were replaced. For most new employees, a bi-monthly flat rate not related to a percentage of their salary was paid. These flat rates were not approved by the Sheriff to be used in place of the 10% annual max calculations. Due to the lack of supporting documentation on file to determine how the Sheriff's Clerk calculated the retention payments to employees, we calculated a maximum of 10% annual salary per employee using 2022 hourly rates for those employed in 2022 and 2023 hourly rates for new employees in 2023. We then divided that amount by 24 months as the one year annual amount was to be paid across two years to get a monthly incentive amount and then multiplied the monthly amount by the number of months actually employed during the grant period. We compared our recalculated amounts to amounts actually paid through the final payment in 2024 to determine if there were any over payments over the life of the grant. We noted two of the twenty-three employees receiving retention and incentive payments in 2023 exceeded the 10% maximum. These employees were overpaid $192.53 and $261.03, respectively including salaries and related benefits. Both of these employees left employment in 2023 so they did not receive any further payments in 2024. These overpayments do not represent a proper public purpose. We further noted that amounts paid to employees from Payment 3 through Payment 6 covering May through December 2023 were not adequately documented as we could not recalculate the bi-monthly payments totaling $15,284 in salaries and $2,773 in related benefits. The Sheriff's office should implement procedures to ensure all supporting documentation for grant payments are maintained. Actual amounts paid by grant funds to employees should be supported by calculations and changes to the calculations should be approved.
Questioned Costs: $44,046 - The overbilled amount has been reclassified to a liability to the funder but has not been repaid or settled. Criteria: In accordance with 2 CFR § 200.403 and 2 CFR § 200.405, costs charged to federal awards must be allowable, allocable, and necessary to the performance of the federal award. Under the terms of a cost-reimbursement federal contract, as governed by 2 CFR § 200.403, § 200.404, and § 200.405, all costs charged to a federal award must be: • Actually incurred, • Allocable to the program, • Allowable under federal cost principles, and • Supported by adequate documentation. Under 2 CFR § 200.414 indirect costs may only be charged based on an approved rate (e.g., NICRA or de minimis), applied to the proper base and only if such costs are actually incurred during the performance period. Billing the full invoice amount of shared costs without allocating based on an approved indirect cost rate is not compliant with Uniform Guidance. Condition: The Organization billed indirect costs totaling $45,096 to a federal cost-reimbursement contract, despite not having incurred qualifying indirect costs during the contract period. The Organization charged entire invoice amounts for shared indirect costs. The billed amounts were based solely on the approved indirect cost rate applied to direct cost invoices, however, there is a maximum of $1,050 in actual indirect expenses for administrative support, or other shared costs incurred or allocated. Cause: The Organization misinterpreted the cost allocation rules and did not have an adequate process for applying the approved indirect cost rate. Billing practices defaulted to charging the entire invoice amount to federal awards when costs benefitted multiple programs. The Organization lacked adequate controls over indirect cost invoicing and did not perform timely reconciliations between budgeted and actual costs incurred. The outside accountant relied on budgeted percentages rather than actual expenses, and there was no final adjustment process in place to reconcile at year-end. Effect: The Organization received $44,046 in federal funds that were not supported by actual indirect costs incurred. These funds represent unallowable costs and are considered questioned costs under the Uniform Guidance. Identification of Repeat Finding ☐ Yes ☑ No Recommendation: We recommend that the Organization: • Implement policies and procedures to reconcile indirect costs billed to actual costs incurred. • Implement a post-invoicing reconciliation process to compare actual indirect costs with amounts billed. • Ensure that all invoicing for federal awards complies with the approved indirect cost rate agreement. • Return the $44,046 of unexpended indirect cost reimbursements to the granting agency. • Provide additional training to accounting and grants management staff on the treatment of indirect costs under 2 CFR Part 200.
Questioned Costs: $88,135 Criteria: In accordance with 2 CFR § 200.403–.405, costs charged to federal awards must be allowable, allocable, and supported by valid documentation. Additionally, under 2 CFR § 200.318–.320, all contracts must be awarded with clear terms and timeframes and must be executed prior to the provision of goods or services. For subawards, 2 CFR § 200.331 requires that subrecipient agreements be in writing and include all legally required terms and conditions. Payments made outside the terms of a written, active contract — particularly beyond expiration dates — may be deemed unallowable due to lack of legal obligation and documentation. Condition: Of the ten contracts selected for testing, seven were expired at the time payments were made. In total, the Organization paid $88,135 for services rendered beyond the contract end dates, including payments to one subrecipient and multiple consultants or contractors. The Organization indicated that all payments were budgeted within the approved federal grant agreements; however, these payments were not supported by amendments, extensions, or new agreements authorizing continued work or compensation. Additionally, in four additional instances, one selected for testing, contracts specified hourly or deliverable rates and defined service periods but contained inaccurate or inconsistent total compensation amounts. One of four contracts made payments under these agreements that exceeded the stated contract total. Overall, the discrepancies created ambiguity about the authorized funding limit and raise concerns about enforceability and allowability of the costs under federal award terms. Cause: The Organization did not have sufficient procedures in place to monitor contract expiration dates or to ensure that updated agreements were executed before authorizing payments. In these cases, services continued based on verbal agreements or historical practice rather than a valid, enforceable contract. Effect: As a result, $88,135 in costs were incurred and charged to the federal grant without a valid contractual basis. Even though the costs were budgeted, the lack of a valid, active contract invalidates the legal obligation required for allowability under 2 CFR § 200.403 and § 200.405. Therefore, the costs are questioned pending resolution with the federal awarding agency. Furthermore, the absence of executed agreements represents a significant internal control deficiency and increases the risk of unauthorized or disputed expenditures. The inconsistencies in contractual rates expose the Organization to the risk of paying amounts not clearly authorized by written agreements and may result in questioned or disallowed costs, especially if contract limits are exceeded. Weaknesses in contract drafting and review also constitute a significant deficiency in internal control over compliance. Identification of Repeat Finding: ☐ Yes ☑ No Recommendation: We recommend that the Organization: • Develop and implement a contract tracking system to monitor start and end dates. • Require that all contracts, extensions, and amendments be executed before services are rendered or payments are issued. • Provide training to program and procurement staff on federal procurement standards and contract management. • Review existing contracts to ensure compliance and take corrective action for any others that may have expired. • Work with the awarding agency to determine whether any portion of the $88,135 must be refunded.
2023-004 Eligibility Prior Year Finding Number: 2022-006 Year of Finding Origination: 2022 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of the Treasury Program: 21.023 COVID-19 – Emergency Rental Assistance Program Pass-Through Agency: N/A - Direct Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The U.S. Department of the Treasury Frequently Asked Questions for Emergency Rental Assistance (ERA), revised July 27, 2022, requires grantees to obtain a current lease that identifies the unit where the applicant resides, to have support that an applicant is at risk of experiencing homelessness with a written attestation from the applicant or evidence of risk as determined by the grantee, have a reasonable basis for determining and redetermining income, and have documentation of the cost of any hotel or motel charged to the grant and the cost of the hotel or motel stay not include expenses incidental to the charge for the room. Title 2 U.S. Code of Federal Regulations § 200.403(g) requires costs to be adequately documented. In addition, the County’s Federal Emergency Program Guide for Tenant Application requires the County to obtain a written attestation if the Household has no qualifying income, or does not have documentation of all current income, and requires the County to use the Homeless Management Information System (HMIS) record when eligibility is based on homelessness. Condition: In a sample of 16 participant’s eligibility documentation tested, the following exceptions were detected: • For one participant, the address indicated on the ERA Request Form did not agree to the address included in the lease agreement. • Three participants did not have documentation to support that they were at risk of experiencing homelessness. • Three participants did not have documentation to support a reasonable basis for determining income. • Two participants did not have documentation to support a redetermination of income. • Three participants had instances where one-time payments, such as security deposits and application fees, were duplicated. • Thirteen participants did not have documentation originating from the hotel or shelter supporting payment amount and that incidental expenses were not included. • Eight participants had inconsistencies in the payment data provided between the participant name noted as the payee and the participant name noted as being applicable to in the transaction description. Questioned Costs: $140,822. Questioned costs are calculated based on payments to sampled participants. The amounts relating to costs that were not supported by adequate documentation at the time of the audit are $138,844, and amounts relating to duplicate payments are $1,978. These questioned costs were provided to a subrecipient that made the direct payments on behalf of participants. Context: The County had 80 total participants for the COVID-19 – Emergency Rental Assistance Program in 2023. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The County is not in compliance with requirements of the U.S. Department of the Treasury and the County’s Program Guide for Tenant Application. Cause: The County informed us that documentation could not be located, and that a number of staff who were involved in the program are no longer a part of the department. In addition, the County informed us that it had a contract in place with a consultant to assist the County in housing participants. However, no documentation was provided supporting detailed hotel expenses. Lastly, the County informed us that the inconsistencies in the payment data appears to have been clerical mistakes. Recommendation: We recommend the County maintain documentation supporting participant eligibility in a location accessible to County staff. In addition, we recommend the County obtain documentation originating from hotels or shelters in sufficient detail as to provide support for costs charged to the grant and verify incidental expenses are not included. View of Responsible Official: Concur
Finding 2023-002: Significant Deficiency – Activities Allowed or Unallowed Assistance Listing Number (ALN): 93.788 Federal Program: Opioid STR Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Minnesota Department of Human Services Federal Award Number: HT79TI083289 and H79TI085729 Federal Award Year: December 31, 2023 Criteria: 2 CFR 200.403(e) and (f) state that charges to federal awards must be determined in accordance with generally accepted accounting principles (GAAP) and be adequately documented. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; and support the distribution of the or costs among specific activities or cost objectives if the expenses supported more than one federal award, or a federal award and non-federal award Condition/Context: Six of the forty non-payroll transactions that were tested did not have evidence of approval for the amount allocated to the federal program, one transaction was recorded in the incorrect period and one transaction did not have evidence of receipt. The Organization experienced an unusually elevated level of turn-over of key personnel in business operations during the period of time that the control procedures lapsed as the individuals replacing those responsible for attaining allocation authorizations were not yet hired or fully trained in their assignments. The sample was not a statistically valid sample. Cause: The Organization's control process for expenditure authorizations was not properly implemented. Effect: Inadequate controls over the allocation of costs could result in unallowable costs being improperly applied to the federal program. Questioned Costs: Not required Recommendation: The Organization should have formal written procedure to ensure that all relevant authorization and reviews have been completed before allocating costs to federal programs. Views of responsible officials: Management agrees with the auditors' finding and will take action to implement controlling procedures over federal programs.
Finding number: 2023-005 Significant Deficiency in Internal Control Over Compliance: Allowable Costs and Activities Federal Program #1 HIV Emergency Relief Project Grants: CFDA Number 93.914 Federal Program #2 HIV Care Formula Grants: CFDA Number 93.917 Federal Program #3 HIV Prevention Activities: CFDA Number: 93.941 Name of federal agency: U.S. Department of Health and Human Services (HHS) Name of pass-through entity: Multiple Repeat finding: No AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Criteria: Under 2 CFR §200.303, recipients of federal funds must establish and maintain effective internal controls to ensure compliance with federal statutes, regulations, and the terms of grant agreements. 2 CFR §200.403 specifies that costs charged to federal programs must be allowable, necessary, reasonable, and allocable to the respective award. Additionally, 2 CFR §200.302 requires financial management systems to provide effective control and accountability over federal funds, including documented approval of expenditures. A best practice for grant compliance is to implement a documented approval process for expenditures charged to federal programs, ensuring that all costs are reviewed and supported by adequate documentation before reimbursement requests are submitted. Condition: The Organization did not have readily-available documented evidence of review and approval for expenditures charged to federal grants during the fiscal year. Specifically: The financial system did not capture or document approval of expenditures before they were charged to federal programs. No formalized system existed to retain evidence of grant-related expenditure reviews. While the prior Chief Financial Officer (CFO) manually reviewed each invoice, there was no indication of approval on the supporting documentation, making it impossible to verify that an appropriate review occurred before costs were charged to the grants. Cause: The issue arose due to the Organization's reliance on a manual review process conducted by the previous CFO, without requiring a formal approval signature or electronic system control to document review. This lack of a structured approval process resulted in insufficient evidence to support compliance with federal allowable cost requirements. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Possible effect: Without a documented approval process, the Organization cannot demonstrate that expenditures charged to the grants were properly reviewed for allowability, reasonableness, and allocability in accordance with federal regulations. This increases the risk that: Unallowable or misclassified expenditures could be charged to the grants without detection. Noncompliance with federal grant requirements could result in questioned costs or additional oversight from funding agencies. Financial statement and grant reporting inaccuracies may occur if expenditures are not properly reviewed and approved. Although no specific unallowable costs were identified during the audit, the lack of documented review represents a significant deficiency in internal control over compliance. Questioned cost: None identified at this time. Recommendation: We recommend that the Organization strengthen its internal controls over grant expenditures by implementing the following measures: 1. Implement a Formal Expenditure Review and Approval Policy – Establish a policy requiring that all expenditures charged to grants be reviewed and approved by an appropriate individual before being recorded in the system. 2. Require Documentation of Review and Approval – Ensure that invoices, payroll allocations, and other cost support documents include a signature, initials, or system-generated approval to confirm review. 3. Utilize System-Based Controls – If possible, configure the financial system to require electronic approval for all grant-related expenditures before costs are recorded. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Views of responsible officials: Management partially agrees with the finding. While we acknowledge that documentation of expenditure approval was not always retrievable, we believe the expenditures reviewed were all appropriate. Finding 2023-005 refers to the auditors' assessment of expenditure review and approval processes that occurred in Calendar Year 2023. During Calendar Year 2023, Prism relied on email routing of expenditures for review and approval. As of this writing, Prism Health North Texas' expenditure review and approval processes already meet or exceed the recommendations above. Action Taken: Expenditure Review – All expenditures charged to grants are reviewed and approved by two qualified individuals. Documentation of Review and Approval – Such review and approval for non-payroll expenditures occur in and are documented in the SAP Concur software before the costs are recorded in the accounting system (Abila). Such review and approval for payroll-related expenditures occur via and are documented via a combination of methods, also before they are recorded in Abila. Employees report their time, including how much time was devoted to grant activities, in the ExponentHR payroll system, and their supervisors approve both the time and the allocation in that system. Programmatic measures that also support grant billing ("units") are calculated from activity documented in the athenaOne electronic health record (EHR). Payroll allocation is calculated by one person, based on the ExponentHR documentation and the units, then reviewed and imported into Abila by a second person. The unposted transactions are reviewed again before posting. Utilize System-Based Controls – In place as above. _________________________________________________________
Finding number: 2023-005 Significant Deficiency in Internal Control Over Compliance: Allowable Costs and Activities Federal Program #1 HIV Emergency Relief Project Grants: CFDA Number 93.914 Federal Program #2 HIV Care Formula Grants: CFDA Number 93.917 Federal Program #3 HIV Prevention Activities: CFDA Number: 93.941 Name of federal agency: U.S. Department of Health and Human Services (HHS) Name of pass-through entity: Multiple Repeat finding: No AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Criteria: Under 2 CFR §200.303, recipients of federal funds must establish and maintain effective internal controls to ensure compliance with federal statutes, regulations, and the terms of grant agreements. 2 CFR §200.403 specifies that costs charged to federal programs must be allowable, necessary, reasonable, and allocable to the respective award. Additionally, 2 CFR §200.302 requires financial management systems to provide effective control and accountability over federal funds, including documented approval of expenditures. A best practice for grant compliance is to implement a documented approval process for expenditures charged to federal programs, ensuring that all costs are reviewed and supported by adequate documentation before reimbursement requests are submitted. Condition: The Organization did not have readily-available documented evidence of review and approval for expenditures charged to federal grants during the fiscal year. Specifically: The financial system did not capture or document approval of expenditures before they were charged to federal programs. No formalized system existed to retain evidence of grant-related expenditure reviews. While the prior Chief Financial Officer (CFO) manually reviewed each invoice, there was no indication of approval on the supporting documentation, making it impossible to verify that an appropriate review occurred before costs were charged to the grants. Cause: The issue arose due to the Organization's reliance on a manual review process conducted by the previous CFO, without requiring a formal approval signature or electronic system control to document review. This lack of a structured approval process resulted in insufficient evidence to support compliance with federal allowable cost requirements. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Possible effect: Without a documented approval process, the Organization cannot demonstrate that expenditures charged to the grants were properly reviewed for allowability, reasonableness, and allocability in accordance with federal regulations. This increases the risk that: Unallowable or misclassified expenditures could be charged to the grants without detection. Noncompliance with federal grant requirements could result in questioned costs or additional oversight from funding agencies. Financial statement and grant reporting inaccuracies may occur if expenditures are not properly reviewed and approved. Although no specific unallowable costs were identified during the audit, the lack of documented review represents a significant deficiency in internal control over compliance. Questioned cost: None identified at this time. Recommendation: We recommend that the Organization strengthen its internal controls over grant expenditures by implementing the following measures: 1. Implement a Formal Expenditure Review and Approval Policy – Establish a policy requiring that all expenditures charged to grants be reviewed and approved by an appropriate individual before being recorded in the system. 2. Require Documentation of Review and Approval – Ensure that invoices, payroll allocations, and other cost support documents include a signature, initials, or system-generated approval to confirm review. 3. Utilize System-Based Controls – If possible, configure the financial system to require electronic approval for all grant-related expenditures before costs are recorded. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Views of responsible officials: Management partially agrees with the finding. While we acknowledge that documentation of expenditure approval was not always retrievable, we believe the expenditures reviewed were all appropriate. Finding 2023-005 refers to the auditors' assessment of expenditure review and approval processes that occurred in Calendar Year 2023. During Calendar Year 2023, Prism relied on email routing of expenditures for review and approval. As of this writing, Prism Health North Texas' expenditure review and approval processes already meet or exceed the recommendations above. Action Taken: Expenditure Review – All expenditures charged to grants are reviewed and approved by two qualified individuals. Documentation of Review and Approval – Such review and approval for non-payroll expenditures occur in and are documented in the SAP Concur software before the costs are recorded in the accounting system (Abila). Such review and approval for payroll-related expenditures occur via and are documented via a combination of methods, also before they are recorded in Abila. Employees report their time, including how much time was devoted to grant activities, in the ExponentHR payroll system, and their supervisors approve both the time and the allocation in that system. Programmatic measures that also support grant billing ("units") are calculated from activity documented in the athenaOne electronic health record (EHR). Payroll allocation is calculated by one person, based on the ExponentHR documentation and the units, then reviewed and imported into Abila by a second person. The unposted transactions are reviewed again before posting. Utilize System-Based Controls – In place as above. _________________________________________________________
Finding number: 2023-005 Significant Deficiency in Internal Control Over Compliance: Allowable Costs and Activities Federal Program #1 HIV Emergency Relief Project Grants: CFDA Number 93.914 Federal Program #2 HIV Care Formula Grants: CFDA Number 93.917 Federal Program #3 HIV Prevention Activities: CFDA Number: 93.941 Name of federal agency: U.S. Department of Health and Human Services (HHS) Name of pass-through entity: Multiple Repeat finding: No AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Criteria: Under 2 CFR §200.303, recipients of federal funds must establish and maintain effective internal controls to ensure compliance with federal statutes, regulations, and the terms of grant agreements. 2 CFR §200.403 specifies that costs charged to federal programs must be allowable, necessary, reasonable, and allocable to the respective award. Additionally, 2 CFR §200.302 requires financial management systems to provide effective control and accountability over federal funds, including documented approval of expenditures. A best practice for grant compliance is to implement a documented approval process for expenditures charged to federal programs, ensuring that all costs are reviewed and supported by adequate documentation before reimbursement requests are submitted. Condition: The Organization did not have readily-available documented evidence of review and approval for expenditures charged to federal grants during the fiscal year. Specifically: The financial system did not capture or document approval of expenditures before they were charged to federal programs. No formalized system existed to retain evidence of grant-related expenditure reviews. While the prior Chief Financial Officer (CFO) manually reviewed each invoice, there was no indication of approval on the supporting documentation, making it impossible to verify that an appropriate review occurred before costs were charged to the grants. Cause: The issue arose due to the Organization's reliance on a manual review process conducted by the previous CFO, without requiring a formal approval signature or electronic system control to document review. This lack of a structured approval process resulted in insufficient evidence to support compliance with federal allowable cost requirements. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Possible effect: Without a documented approval process, the Organization cannot demonstrate that expenditures charged to the grants were properly reviewed for allowability, reasonableness, and allocability in accordance with federal regulations. This increases the risk that: Unallowable or misclassified expenditures could be charged to the grants without detection. Noncompliance with federal grant requirements could result in questioned costs or additional oversight from funding agencies. Financial statement and grant reporting inaccuracies may occur if expenditures are not properly reviewed and approved. Although no specific unallowable costs were identified during the audit, the lack of documented review represents a significant deficiency in internal control over compliance. Questioned cost: None identified at this time. Recommendation: We recommend that the Organization strengthen its internal controls over grant expenditures by implementing the following measures: 1. Implement a Formal Expenditure Review and Approval Policy – Establish a policy requiring that all expenditures charged to grants be reviewed and approved by an appropriate individual before being recorded in the system. 2. Require Documentation of Review and Approval – Ensure that invoices, payroll allocations, and other cost support documents include a signature, initials, or system-generated approval to confirm review. 3. Utilize System-Based Controls – If possible, configure the financial system to require electronic approval for all grant-related expenditures before costs are recorded. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Views of responsible officials: Management partially agrees with the finding. While we acknowledge that documentation of expenditure approval was not always retrievable, we believe the expenditures reviewed were all appropriate. Finding 2023-005 refers to the auditors' assessment of expenditure review and approval processes that occurred in Calendar Year 2023. During Calendar Year 2023, Prism relied on email routing of expenditures for review and approval. As of this writing, Prism Health North Texas' expenditure review and approval processes already meet or exceed the recommendations above. Action Taken: Expenditure Review – All expenditures charged to grants are reviewed and approved by two qualified individuals. Documentation of Review and Approval – Such review and approval for non-payroll expenditures occur in and are documented in the SAP Concur software before the costs are recorded in the accounting system (Abila). Such review and approval for payroll-related expenditures occur via and are documented via a combination of methods, also before they are recorded in Abila. Employees report their time, including how much time was devoted to grant activities, in the ExponentHR payroll system, and their supervisors approve both the time and the allocation in that system. Programmatic measures that also support grant billing ("units") are calculated from activity documented in the athenaOne electronic health record (EHR). Payroll allocation is calculated by one person, based on the ExponentHR documentation and the units, then reviewed and imported into Abila by a second person. The unposted transactions are reviewed again before posting. Utilize System-Based Controls – In place as above. _________________________________________________________
Finding number: 2023-005 Significant Deficiency in Internal Control Over Compliance: Allowable Costs and Activities Federal Program #1 HIV Emergency Relief Project Grants: CFDA Number 93.914 Federal Program #2 HIV Care Formula Grants: CFDA Number 93.917 Federal Program #3 HIV Prevention Activities: CFDA Number: 93.941 Name of federal agency: U.S. Department of Health and Human Services (HHS) Name of pass-through entity: Multiple Repeat finding: No AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Criteria: Under 2 CFR §200.303, recipients of federal funds must establish and maintain effective internal controls to ensure compliance with federal statutes, regulations, and the terms of grant agreements. 2 CFR §200.403 specifies that costs charged to federal programs must be allowable, necessary, reasonable, and allocable to the respective award. Additionally, 2 CFR §200.302 requires financial management systems to provide effective control and accountability over federal funds, including documented approval of expenditures. A best practice for grant compliance is to implement a documented approval process for expenditures charged to federal programs, ensuring that all costs are reviewed and supported by adequate documentation before reimbursement requests are submitted. Condition: The Organization did not have readily-available documented evidence of review and approval for expenditures charged to federal grants during the fiscal year. Specifically: The financial system did not capture or document approval of expenditures before they were charged to federal programs. No formalized system existed to retain evidence of grant-related expenditure reviews. While the prior Chief Financial Officer (CFO) manually reviewed each invoice, there was no indication of approval on the supporting documentation, making it impossible to verify that an appropriate review occurred before costs were charged to the grants. Cause: The issue arose due to the Organization's reliance on a manual review process conducted by the previous CFO, without requiring a formal approval signature or electronic system control to document review. This lack of a structured approval process resulted in insufficient evidence to support compliance with federal allowable cost requirements. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Possible effect: Without a documented approval process, the Organization cannot demonstrate that expenditures charged to the grants were properly reviewed for allowability, reasonableness, and allocability in accordance with federal regulations. This increases the risk that: Unallowable or misclassified expenditures could be charged to the grants without detection. Noncompliance with federal grant requirements could result in questioned costs or additional oversight from funding agencies. Financial statement and grant reporting inaccuracies may occur if expenditures are not properly reviewed and approved. Although no specific unallowable costs were identified during the audit, the lack of documented review represents a significant deficiency in internal control over compliance. Questioned cost: None identified at this time. Recommendation: We recommend that the Organization strengthen its internal controls over grant expenditures by implementing the following measures: 1. Implement a Formal Expenditure Review and Approval Policy – Establish a policy requiring that all expenditures charged to grants be reviewed and approved by an appropriate individual before being recorded in the system. 2. Require Documentation of Review and Approval – Ensure that invoices, payroll allocations, and other cost support documents include a signature, initials, or system-generated approval to confirm review. 3. Utilize System-Based Controls – If possible, configure the financial system to require electronic approval for all grant-related expenditures before costs are recorded. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Views of responsible officials: Management partially agrees with the finding. While we acknowledge that documentation of expenditure approval was not always retrievable, we believe the expenditures reviewed were all appropriate. Finding 2023-005 refers to the auditors' assessment of expenditure review and approval processes that occurred in Calendar Year 2023. During Calendar Year 2023, Prism relied on email routing of expenditures for review and approval. As of this writing, Prism Health North Texas' expenditure review and approval processes already meet or exceed the recommendations above. Action Taken: Expenditure Review – All expenditures charged to grants are reviewed and approved by two qualified individuals. Documentation of Review and Approval – Such review and approval for non-payroll expenditures occur in and are documented in the SAP Concur software before the costs are recorded in the accounting system (Abila). Such review and approval for payroll-related expenditures occur via and are documented via a combination of methods, also before they are recorded in Abila. Employees report their time, including how much time was devoted to grant activities, in the ExponentHR payroll system, and their supervisors approve both the time and the allocation in that system. Programmatic measures that also support grant billing ("units") are calculated from activity documented in the athenaOne electronic health record (EHR). Payroll allocation is calculated by one person, based on the ExponentHR documentation and the units, then reviewed and imported into Abila by a second person. The unposted transactions are reviewed again before posting. Utilize System-Based Controls – In place as above. _________________________________________________________
Finding number: 2023-005 Significant Deficiency in Internal Control Over Compliance: Allowable Costs and Activities Federal Program #1 HIV Emergency Relief Project Grants: CFDA Number 93.914 Federal Program #2 HIV Care Formula Grants: CFDA Number 93.917 Federal Program #3 HIV Prevention Activities: CFDA Number: 93.941 Name of federal agency: U.S. Department of Health and Human Services (HHS) Name of pass-through entity: Multiple Repeat finding: No AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Criteria: Under 2 CFR §200.303, recipients of federal funds must establish and maintain effective internal controls to ensure compliance with federal statutes, regulations, and the terms of grant agreements. 2 CFR §200.403 specifies that costs charged to federal programs must be allowable, necessary, reasonable, and allocable to the respective award. Additionally, 2 CFR §200.302 requires financial management systems to provide effective control and accountability over federal funds, including documented approval of expenditures. A best practice for grant compliance is to implement a documented approval process for expenditures charged to federal programs, ensuring that all costs are reviewed and supported by adequate documentation before reimbursement requests are submitted. Condition: The Organization did not have readily-available documented evidence of review and approval for expenditures charged to federal grants during the fiscal year. Specifically: The financial system did not capture or document approval of expenditures before they were charged to federal programs. No formalized system existed to retain evidence of grant-related expenditure reviews. While the prior Chief Financial Officer (CFO) manually reviewed each invoice, there was no indication of approval on the supporting documentation, making it impossible to verify that an appropriate review occurred before costs were charged to the grants. Cause: The issue arose due to the Organization's reliance on a manual review process conducted by the previous CFO, without requiring a formal approval signature or electronic system control to document review. This lack of a structured approval process resulted in insufficient evidence to support compliance with federal allowable cost requirements. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Possible effect: Without a documented approval process, the Organization cannot demonstrate that expenditures charged to the grants were properly reviewed for allowability, reasonableness, and allocability in accordance with federal regulations. This increases the risk that: Unallowable or misclassified expenditures could be charged to the grants without detection. Noncompliance with federal grant requirements could result in questioned costs or additional oversight from funding agencies. Financial statement and grant reporting inaccuracies may occur if expenditures are not properly reviewed and approved. Although no specific unallowable costs were identified during the audit, the lack of documented review represents a significant deficiency in internal control over compliance. Questioned cost: None identified at this time. Recommendation: We recommend that the Organization strengthen its internal controls over grant expenditures by implementing the following measures: 1. Implement a Formal Expenditure Review and Approval Policy – Establish a policy requiring that all expenditures charged to grants be reviewed and approved by an appropriate individual before being recorded in the system. 2. Require Documentation of Review and Approval – Ensure that invoices, payroll allocations, and other cost support documents include a signature, initials, or system-generated approval to confirm review. 3. Utilize System-Based Controls – If possible, configure the financial system to require electronic approval for all grant-related expenditures before costs are recorded. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Views of responsible officials: Management partially agrees with the finding. While we acknowledge that documentation of expenditure approval was not always retrievable, we believe the expenditures reviewed were all appropriate. Finding 2023-005 refers to the auditors' assessment of expenditure review and approval processes that occurred in Calendar Year 2023. During Calendar Year 2023, Prism relied on email routing of expenditures for review and approval. As of this writing, Prism Health North Texas' expenditure review and approval processes already meet or exceed the recommendations above. Action Taken: Expenditure Review – All expenditures charged to grants are reviewed and approved by two qualified individuals. Documentation of Review and Approval – Such review and approval for non-payroll expenditures occur in and are documented in the SAP Concur software before the costs are recorded in the accounting system (Abila). Such review and approval for payroll-related expenditures occur via and are documented via a combination of methods, also before they are recorded in Abila. Employees report their time, including how much time was devoted to grant activities, in the ExponentHR payroll system, and their supervisors approve both the time and the allocation in that system. Programmatic measures that also support grant billing ("units") are calculated from activity documented in the athenaOne electronic health record (EHR). Payroll allocation is calculated by one person, based on the ExponentHR documentation and the units, then reviewed and imported into Abila by a second person. The unposted transactions are reviewed again before posting. Utilize System-Based Controls – In place as above. _________________________________________________________
Finding number: 2023-005 Significant Deficiency in Internal Control Over Compliance: Allowable Costs and Activities Federal Program #1 HIV Emergency Relief Project Grants: CFDA Number 93.914 Federal Program #2 HIV Care Formula Grants: CFDA Number 93.917 Federal Program #3 HIV Prevention Activities: CFDA Number: 93.941 Name of federal agency: U.S. Department of Health and Human Services (HHS) Name of pass-through entity: Multiple Repeat finding: No AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Criteria: Under 2 CFR §200.303, recipients of federal funds must establish and maintain effective internal controls to ensure compliance with federal statutes, regulations, and the terms of grant agreements. 2 CFR §200.403 specifies that costs charged to federal programs must be allowable, necessary, reasonable, and allocable to the respective award. Additionally, 2 CFR §200.302 requires financial management systems to provide effective control and accountability over federal funds, including documented approval of expenditures. A best practice for grant compliance is to implement a documented approval process for expenditures charged to federal programs, ensuring that all costs are reviewed and supported by adequate documentation before reimbursement requests are submitted. Condition: The Organization did not have readily-available documented evidence of review and approval for expenditures charged to federal grants during the fiscal year. Specifically: The financial system did not capture or document approval of expenditures before they were charged to federal programs. No formalized system existed to retain evidence of grant-related expenditure reviews. While the prior Chief Financial Officer (CFO) manually reviewed each invoice, there was no indication of approval on the supporting documentation, making it impossible to verify that an appropriate review occurred before costs were charged to the grants. Cause: The issue arose due to the Organization's reliance on a manual review process conducted by the previous CFO, without requiring a formal approval signature or electronic system control to document review. This lack of a structured approval process resulted in insufficient evidence to support compliance with federal allowable cost requirements. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Possible effect: Without a documented approval process, the Organization cannot demonstrate that expenditures charged to the grants were properly reviewed for allowability, reasonableness, and allocability in accordance with federal regulations. This increases the risk that: Unallowable or misclassified expenditures could be charged to the grants without detection. Noncompliance with federal grant requirements could result in questioned costs or additional oversight from funding agencies. Financial statement and grant reporting inaccuracies may occur if expenditures are not properly reviewed and approved. Although no specific unallowable costs were identified during the audit, the lack of documented review represents a significant deficiency in internal control over compliance. Questioned cost: None identified at this time. Recommendation: We recommend that the Organization strengthen its internal controls over grant expenditures by implementing the following measures: 1. Implement a Formal Expenditure Review and Approval Policy – Establish a policy requiring that all expenditures charged to grants be reviewed and approved by an appropriate individual before being recorded in the system. 2. Require Documentation of Review and Approval – Ensure that invoices, payroll allocations, and other cost support documents include a signature, initials, or system-generated approval to confirm review. 3. Utilize System-Based Controls – If possible, configure the financial system to require electronic approval for all grant-related expenditures before costs are recorded. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Views of responsible officials: Management partially agrees with the finding. While we acknowledge that documentation of expenditure approval was not always retrievable, we believe the expenditures reviewed were all appropriate. Finding 2023-005 refers to the auditors' assessment of expenditure review and approval processes that occurred in Calendar Year 2023. During Calendar Year 2023, Prism relied on email routing of expenditures for review and approval. As of this writing, Prism Health North Texas' expenditure review and approval processes already meet or exceed the recommendations above. Action Taken: Expenditure Review – All expenditures charged to grants are reviewed and approved by two qualified individuals. Documentation of Review and Approval – Such review and approval for non-payroll expenditures occur in and are documented in the SAP Concur software before the costs are recorded in the accounting system (Abila). Such review and approval for payroll-related expenditures occur via and are documented via a combination of methods, also before they are recorded in Abila. Employees report their time, including how much time was devoted to grant activities, in the ExponentHR payroll system, and their supervisors approve both the time and the allocation in that system. Programmatic measures that also support grant billing ("units") are calculated from activity documented in the athenaOne electronic health record (EHR). Payroll allocation is calculated by one person, based on the ExponentHR documentation and the units, then reviewed and imported into Abila by a second person. The unposted transactions are reviewed again before posting. Utilize System-Based Controls – In place as above. _________________________________________________________
Finding number: 2023-005 Significant Deficiency in Internal Control Over Compliance: Allowable Costs and Activities Federal Program #1 HIV Emergency Relief Project Grants: CFDA Number 93.914 Federal Program #2 HIV Care Formula Grants: CFDA Number 93.917 Federal Program #3 HIV Prevention Activities: CFDA Number: 93.941 Name of federal agency: U.S. Department of Health and Human Services (HHS) Name of pass-through entity: Multiple Repeat finding: No AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Criteria: Under 2 CFR §200.303, recipients of federal funds must establish and maintain effective internal controls to ensure compliance with federal statutes, regulations, and the terms of grant agreements. 2 CFR §200.403 specifies that costs charged to federal programs must be allowable, necessary, reasonable, and allocable to the respective award. Additionally, 2 CFR §200.302 requires financial management systems to provide effective control and accountability over federal funds, including documented approval of expenditures. A best practice for grant compliance is to implement a documented approval process for expenditures charged to federal programs, ensuring that all costs are reviewed and supported by adequate documentation before reimbursement requests are submitted. Condition: The Organization did not have readily-available documented evidence of review and approval for expenditures charged to federal grants during the fiscal year. Specifically: The financial system did not capture or document approval of expenditures before they were charged to federal programs. No formalized system existed to retain evidence of grant-related expenditure reviews. While the prior Chief Financial Officer (CFO) manually reviewed each invoice, there was no indication of approval on the supporting documentation, making it impossible to verify that an appropriate review occurred before costs were charged to the grants. Cause: The issue arose due to the Organization's reliance on a manual review process conducted by the previous CFO, without requiring a formal approval signature or electronic system control to document review. This lack of a structured approval process resulted in insufficient evidence to support compliance with federal allowable cost requirements. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Possible effect: Without a documented approval process, the Organization cannot demonstrate that expenditures charged to the grants were properly reviewed for allowability, reasonableness, and allocability in accordance with federal regulations. This increases the risk that: Unallowable or misclassified expenditures could be charged to the grants without detection. Noncompliance with federal grant requirements could result in questioned costs or additional oversight from funding agencies. Financial statement and grant reporting inaccuracies may occur if expenditures are not properly reviewed and approved. Although no specific unallowable costs were identified during the audit, the lack of documented review represents a significant deficiency in internal control over compliance. Questioned cost: None identified at this time. Recommendation: We recommend that the Organization strengthen its internal controls over grant expenditures by implementing the following measures: 1. Implement a Formal Expenditure Review and Approval Policy – Establish a policy requiring that all expenditures charged to grants be reviewed and approved by an appropriate individual before being recorded in the system. 2. Require Documentation of Review and Approval – Ensure that invoices, payroll allocations, and other cost support documents include a signature, initials, or system-generated approval to confirm review. 3. Utilize System-Based Controls – If possible, configure the financial system to require electronic approval for all grant-related expenditures before costs are recorded. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Views of responsible officials: Management partially agrees with the finding. While we acknowledge that documentation of expenditure approval was not always retrievable, we believe the expenditures reviewed were all appropriate. Finding 2023-005 refers to the auditors' assessment of expenditure review and approval processes that occurred in Calendar Year 2023. During Calendar Year 2023, Prism relied on email routing of expenditures for review and approval. As of this writing, Prism Health North Texas' expenditure review and approval processes already meet or exceed the recommendations above. Action Taken: Expenditure Review – All expenditures charged to grants are reviewed and approved by two qualified individuals. Documentation of Review and Approval – Such review and approval for non-payroll expenditures occur in and are documented in the SAP Concur software before the costs are recorded in the accounting system (Abila). Such review and approval for payroll-related expenditures occur via and are documented via a combination of methods, also before they are recorded in Abila. Employees report their time, including how much time was devoted to grant activities, in the ExponentHR payroll system, and their supervisors approve both the time and the allocation in that system. Programmatic measures that also support grant billing ("units") are calculated from activity documented in the athenaOne electronic health record (EHR). Payroll allocation is calculated by one person, based on the ExponentHR documentation and the units, then reviewed and imported into Abila by a second person. The unposted transactions are reviewed again before posting. Utilize System-Based Controls – In place as above. _________________________________________________________