Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.
Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.
Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.
Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.
Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.
Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.
Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.
Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.
Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.
Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.
Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.
Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.
Criteria 2 CFR Sections 200.403 and 200.412–415 require non-federal entities to utilize consistent and equitable methods for allocating indirect costs to federal programs. Condition The Organization was unable to provide adequate support to substantiate its allocation of indirect costs to federal award programs. Cause The Organization does not have formal policies and procedures over procurement which requires the retention of evidence of quotes and bids. Effect Without a formal policy, there is an increased risk of inconsistent or noncompliant cost allocation practices, which may lead to questioned costs, audit findings, or disallowed reimbursements by federal awarding agencies. Questioned Costs None Context The Organization does not have procedures in place to allocate indirect costs to contracts. Auditor allocated costs based on allowed percentages as part of testing. Recommendation We recommend that management develop and implement a comprehensive indirect cost allocation policy that aligns with Uniform Guidance requirements. The policy should clearly define the methodology for calculating, allocating, and applying indirect costs to federal awards and be communicated to all relevant personnel. Views of Responsible Officials See the accompanying Corrective Action Plan.
Criteria 2 CFR Section 200.403 and Section 200.430 requires all costs charged to federal awards by nonfederal entities to be allowable, allocable, and adequately documented. Specifically, payroll costs must reflect actual time worked and be supported by appropriate review and approval processes. Condition The Organization was unable to provide documentary evidence that costs were charged to federal awards in compliance with the requirements of the Uniform Guidance. We identified multiple instances in which expenditures were charged to federal award programs for costs that were not allowable or documentation provided by the Organization lacked documentary evidence of review by appropriate individuals. Cause The supporting documentation for charging costs to federal awards provided by the Organization was not consistently reviewed on a timely basis by supervisory personnel. Effect Key controls over the Organization’s compliance with allowable cost requirements for federal award programs were not functioning as designed. Questioned Costs $12,814 Context There were six instances in which the Organization’s payroll hours charged to federal awards exceeded the 80-hour limit per individual per pay period and were not detected by employees. In addition, there were four instances in which the Organization was unable to provide any documentary evidence of review by supervisory personnel. The extrapolation of unallowable costs identified during sample testing to the related population resulted in projected likely questioned costs of $256,199 from a total population of approximately $10.1 million of related costs. Recommendation The Organization should adhere to its policies and procedures regarding supervisory review of documentation to support the allowability of costs charged to federal awards. Furthermore, we recommend that the personnel reviewing support for allowable costs initial or sign off on such support to provide evidence of their actions. In addition, the Organization should review, and possibly revise, its policies and procedures for preventing or detecting and correcting unallowable costs charged to federal awards to ensure consistent application of those policies and procedures to all costs charged to federal awards. Views of Responsible Officials See the accompanying Corrective Action Plan.
Finding 2023-005Period of Performance Significant Deficiency in Internal Controls over Compliance and Compliance Identification of the federal program(s): Assistance Listings program titles and numbers: 14.228 Community Block Development Grant (CBDG-CV) Federal award identification number: 14.228: Ohio Department of Development (B-D-22-1AE-4) Name of the federal agencies: 14.228 Department of Housing and Urban Development Name of the applicable pass-through entities: 14.228: Ohio Department of Development Criteria or specific requirement (including statutory, regulatory, or other citation): The 2 CFR 200.403 of the Uniform Guidance requires that costs must be incurred during the approved period of performance to be allowable under a federal award. Expenses incurred outside this period are not compliant with federal regulations and the terms of the award. Condition: During our audit, we noted six transactions with charges not within the fiscal year 2023. Cause: This error is due to the mishandling by previous personnel. Effect or potential effect: The absence of proper period of performance controls increases the risk of unallowable costs being charged to the federal award, which could result in potential disallowance of these expenses by federal award agencies. Questioned costs: $2,687 Context: SAOP’s policies and procedures do not require monitoring of the proper period of performance. Identification as a repeat finding, if applicable: Not applicable Recommendation: We recommend that SAOP establish more robust internal controls to guarantee that all non-payroll charges are incurred within the authorized period of performance. This should involve consistent monitoring of grant periods, providing staff training on the period of performance requirements, and conducting periodic reviews of expenditure documentation. Views of responsible officials: Management agrees with the finding and recommendation.
AAIHB distributed gift cards to both salaried employees and independent contractors as a gesture of appreciation for working extended hours related to COVID-19 contact tracing efforts. The total value of the gift cards was approximately $4,125 and was charged to the COVID-19: Epidemiology and Laboratory Capacity grant (AL #93.231). For contractors, these gift cards were provided in addition to their regular compensation. The gift card disbursements were not processed through payroll nor formalized in contract terms, and there is no documentation indicating the entity obtained approval from the awarding agency. In accordance with 2 CFR § 200.403, costs charged to federal awards must be necessary, reasonable, allocable, and conform to limitations set forth in federal regulations. Per 2 CFR § 200.421(e)(3), the cost of gifts—including cash or cash equivalents such as gift cards—is generally unallowable. Compensation for employees must comply with 2 CFR § 200.430, including support through written policies and documentation of time and effort. Contractor payments must align with procurement standards in 2 CFR § 200.318–200.324 and be governed by written contracts. The use of federal funds to provide gift cards constitutes an unallowable cost under Uniform Guidance. The questioned amount may be subject to repayment to the awarding agency or passthrough entity. The auditee sought to recognize the extraordinary efforts of personnel during the COVID-19 public health response. However, they were unaware that the use of gift cards for this purpose was inconsistent with Uniform Guidance and lacked prior approval or supporting policy. We recommend the auditee discontinue the use of federal funds for gift card distributions. All compensation for employees should be processed through payroll, supported by appropriate documentation and internal policies. Payments to contractors should be governed by written contracts and comply with applicable procurement standards. If the auditee believes these costs are justifiable, they should consult the awarding agency for a determination and, if necessary, reimburse the federal award.
Finding Number: 2023-019 Prior Year Finding Number: 2022-020 Compliance Requirement: Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of Agriculture Government Department/Agency: Department of Human Services (DHS) Supplemental Nutrition Assistance Program Cluster (SNAP) ALN: 10.551, 10.561 Award #: Various Award Period: 10/01/21 - 09/30/22 10/01/22 – 09/30/23 Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires the non-federal entities receiving Federal awards (1.e., auditee management) establish and maintain internal control designed to reasonable ensure compliance with Federal statutes, regulations, and other terms and conditions of the Federal Award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its activities allowed or unallowed, allowable cost/cost principal process. CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records. - Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and - Support the distribution of employee salary across multiple activities or cost objectives. Condition – During our testing of allowable costs for payroll expenditures incurred throughout the year, we sampled and selected 60 of 1,798 payroll disbursements and noted the following: - 34 instances in which DHS did not consistently apply the funding allocation. The hours that should have been split 50/50 between federal and local were charged 100% to the program. - 5 instances in which the hours recorded on the employees’ timesheets did not agree with the hours recorded per the payroll register. - 1 instance in which the employee timesheet was not provided for the pay cycle tested. - 1 instance in which the employee timesheet was not approved by personnel authorized to do so. - 4 instances in which COVID-19 telework hours were not split 50/50 as required by the employees’ funding allocation and charged 100% to the program. Further, we noted that internal controls identified did not appear to be operating at a level of precision to ensure compliance with the above-mentioned requirements. Questioned Costs – Not Determinable. Context – This is a condition identified per review of DHS’ compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to the program in fiscal year 2023 were $3,942,422. The amount sampled is $168,409. The known amount of inconsistencies noted is $53,501. Effect – An ineffective control system related to review of transactions to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major programs. Cause – DHS does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles and ensure that an appropriate level of review and approval was completed prior to charging costs to a federal program. Recommendation – We recommend that DHS reevaluate and improve internal controls to ensure adherence to federal regulations related to the fiscal administrative requirement for expending and accounting for payroll and to ensure proper and accurate funding allocation of payroll cost. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. The Department of Human Services (DHS) adopted the electronic Timeforce (STATS) system for payroll, replacing manual processes. Time and attendance are approved through management levels, with payroll based on Notice of Personnel Action (NOPA) cost centers. Financial Analysts reconcile payroll, and a workflow ensures accurate NOPA listings for payroll purposes. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2023-022 Prior Year Finding Number: 2022-023 Compliance Requirement: Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of Agriculture Government Department/Agency: Department of Education (VIDE) Child Nutrition Cluster ALN: 10.555, 10.559, 10.582 Award #: 1VI300308, 4VI300308, 4VI308908 Award Period: 10/01/2021 – 09/30/2022 10/01/2022 – 09/30/2023 10/01/2022 – 09/30/2024 Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires the nonfederal entities receiving Federal awards (1.e., auditee management) establish and maintain internal control designed to reasonable ensure compliance with Federal statutes, regulations, and other terms and conditions of the Federal Award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its activities allowed or unallowed, allowable cost/cost principal process. CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records. - Reasonably reflect the total activity for which the employee is compensated across all grantrelated and non-grant related activities (100%); and - Support the distribution of employee salary across multiple activities or cost objectives. Condition – During our testing of allowable costs for payroll expenditures incurred throughout the year, we sampled and selected 20 of 196 payroll disbursements and noted the following: - 11 instances where the approved timesheet for the pay period selected was not available for review. - 20 instances where VIDE did not provide support that time and effort is charged in accordance with A-87 requirements. - 4 instances where the NOPA provided did not include any evidence that the employee was approved to be federally reimbursed for the project code utilized in the payroll register. - 4 instances where the employee’s pay rate in the approved NOPA provided did not agree with the pay rate in the payroll register. As a result, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the compliance requirement. Questioned Costs – $10,789. Context – This is a condition identified per review of VIDE’s compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to the program in fiscal year 2023 was $196,740. The amount sampled is $21,572. The known amount of the instances of inconsistent funding allocation is $10,789. Effect – An ineffective control system related to review of transactions to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major programs. Cause – VIDE does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles and ensure that an appropriate level of review and approval was completed prior to charging costs to a federal program. Recommendation – We recommend that VIDE reevaluate and improve internal controls to ensure adherence to federal regulations related to the fiscal administrative requirement for expending and accounting for payroll and to ensure proper and accurate funding allocation of payroll cost. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. VIDE will develop and institute stricter fiscal controls to address the root causes of documentation and allocation discrepancies for this program. To prevent discrepancies including unapproved project codes and pay rate mismatches between NOPAs and payroll registers, the Fiscal Team will take the lead in preparing and maintaining the official staffing list for federally funded personnel within this program, an effort that involves reviewing the grant application for all positions and informing HR of required action entries. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2023-029 Prior Year Finding Number: 2022-026 Compliance Requirement: Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of Defense Government Department/Agency: Office of the Adjutant General (OTAG) National Guard Military Operations and Maintenance (O&M) Projects ALN: 12.401 Award #: W9127P-23-2-1001, W9127P-22-2-1001 Award Period: 10/01/2021 – 09/30/2022 10/01/2022 – 09/30/2023 Criteria – CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records. - Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and - Support the distribution of employee salary across multiple activities or cost objectives. The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Condition – We sampled and selected 60 out of 652 payroll transactions and noted the following: - 1 instance where health insurance costs continued to be charged to the program after the employee retired, with no related time and effort. - 1 instance where the employee pay rate did not agree to the pay rate listed on their NOPA form. - 7 instances where the timesheet for the pay period selected was not provided. Further, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the allowable costs/cost principles compliance requirements. Questioned Costs – Not determinable. Context – This is a condition identified per review of OTAG’s compliance with the specified requirements using a statistically valid sample. The total amount of payroll expenditures charged to the program during fiscal year 2023 were $1,810,965 and the total amount of our sample was $188,082. The known amount of the exceptions amounted to $26,694. Effect – OTAG is not in compliance with the stated provisions. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding. Cause – OTAG does not appear to have adequate policies and procedures in place to ensure compliance with applicable cost principles stipulations. Recommendation – We recommend that OTAG improve internal controls to ensure adherence to Federal regulations related to the fiscal and administrative requirements for expending and accounting for payroll expenditures. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. OTAG implemented enhanced payroll controls including a dual manual and electronic timesheet system, verification of pay rates against NOPA forms, and separation controls to discontinue benefit charges upon employee separation or retirement. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2023-033 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of the Interior Government Department/Agency: Department of Planning and Natural Resources Fish and Wildlife Cluster ALN: 15.605, 15.611 Award #: Various Award Period: Various Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires the non-federal entities receiving Federal awards (1.e., auditee management) establish and maintain internal control designed to reasonable ensure compliance with Federal statutes, regulations, and other terms and conditions of the Federal Award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its activities allowed or unallowed, allowable cost/cost principal process. CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records. - Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and - Support the distribution of employee salary across multiple activities or cost objectives. Condition – During our testing of allowable costs for payroll expenditures incurred throughout the year, we sampled and selected 60 of 620 payroll disbursements and noted the following: - 8 instances where the approved timesheet for the pay period selected were not available for review. - 10 instances where an employees assigned project code documented on the Notice of Personnel Action was not a project code associated with the grant. Additionally, the payroll register reflected a different project code for these transactions. - 1 instance with a variance between the hours reported on the payroll register and the hours reported on the Detail Check History. As a result, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the compliance requirement. Questioned Costs – $38,914. Context – This is a condition identified per review of the Government’s compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to the program in fiscal year 2023 was $1,572,926. The amount sampled is $165,134. The value of transactions with exceptions totaled $38,914. Effect – An ineffective control system related to review of transactions to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major programs. Cause – The Government does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles and ensure that an appropriate level of review and approval was completed prior to charging costs to a federal program. Recommendation – We recommend that the Government reevaluate and improve internal controls to ensure adherence to federal regulations related to the fiscal administrative requirement for expending and accounting for payroll and to ensure proper and accurate funding allocation of payroll cost. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. We recognize that these findings highlight areas where improvements are necessary to ensure better compliance with applicable policies and regulations governing payroll and grant management. We are committed to implementing corrective actions and enhancing the internal controls to prevent recurrence. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2023-049 Prior Year Finding Number: N/A Compliance Requirement: Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of Education Government Department/Agency: Department of Education (VIDE) Special Education Cluster ALN: 84.027A, 84.027X Award #: Various Award Period: Various Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires the non-federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonable ensure compliance with Federal statutes, regulations, and other terms and conditions of the Federal Award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its activities allowed or unallowed, allowable cost/cost principal process. CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records. - Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and - Support the distribution of employee salary across multiple activities or cost objectives. Furthermore, CFR 200.113 requires that an applicant, recipient, or subrecipient of a Federal award must promptly disclose, in writing, whenever it has credible evidence of the commission of a violation of Federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations found in Title 18 of the United States Code, or a violation of the civil False Claims Act, in connection with the Federal award (including any activities or subawards thereunder). The disclosure must be made to the Federal agency, the agency’s Office of Inspector General, and the pass-through entity (if applicable). Condition – During our testing of allowable costs for payroll expenditures incurred throughout the year, we sampled and selected 40 of 2,573 payroll disbursements and noted 2 instances where the employee’s pay rate in the approved Notice of Personnel Action provided did not agree with the pay rate in the payroll register. Additionally, a fraud incident related to falsified payroll timesheet entries charged to this program was discovered and investigated during the year. It was discovered that bus driver timesheets were being approved with falsified time entries. An analysis conducted by VIDE determined the amount of theft to be $5,221. This incident was not disclosed or reported to the Federal awarding agency as required. As a result, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the compliance requirement. Questioned Costs – $5,221. Context – This is a condition identified per review of VIDE’s compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to the program in fiscal year 2023 was $5,744,863. The amount sampled is $102,945. Effect – An ineffective control system related to review of transactions to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major programs. Cause – VIDE does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles and ensure that an appropriate level of review was completed prior to charging costs to a federal program. Recommendation – We recommend that VIDE reevaluate and improve internal controls to ensure adherence to federal regulations related to the fiscal administrative requirement for expending and accounting for payroll transactions. Additionally, fraud incident should be reported to the appropriate federal awarding agency in accordance with mandatory disclosure requirements. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. VIDE is taking immediate action to align payroll controls with our established fiscal improvement plan and to institutionalize a mandatory federal reporting protocol for fraud. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number 2023-052 Prior Year Finding Number: N/A Compliance Requirement: Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of Education Government Department/Agency: Department of Education (VIDE) Consolidated Grant to the Outlying Areas ALN: 84.403A Award #: Various Award Period: Various Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires the non-federal entities receiving Federal awards (1.e., auditee management) establish and maintain internal control designed to reasonable ensure compliance with Federal statutes, regulations, and other terms and conditions of the Federal Award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its activities allowed or unallowed, allowable cost/cost principal process. CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records. - Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and - Support the distribution of employee salary across multiple activities or cost objectives. Condition – During our testing of allowable costs for payroll expenditures incurred throughout the year, we sampled and selected 40 of 4,518 payroll disbursements and noted the following: - 18 instances where the approved timesheet for the pay period selected were not available for review. - 2 instances where the per diem support were not readily identifiable. - 1 instance where the employee’s pay rate in the approved NOPA provided did not agree with the pay rate in the payroll register. As a result, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the compliance requirement. Questioned Costs – Not determinable. Context – This is a condition identified per review of VIDE’s compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to the program in fiscal year 2023 was $7,738,716. The amount sampled is $95,985. Effect – An ineffective control system related to review of transactions to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major programs. Cause – VIDE does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles and ensure that an appropriate level of review and approval was completed prior to charging costs to a federal program. Recommendation – We recommend that VIDE reevaluate and improve internal controls to ensure adherence to federal regulations related to the fiscal administrative requirement for expending and accounting for payroll and to ensure proper and accurate funding allocation of payroll cost. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. VIDE is taking immediate action to align payroll controls with the established fiscal improvement plan. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2023-063 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of Health and Human Services Government Department/Agency: Department of Human Services (DHS) Head Start Cluster ALN: 93.356, 93.600 Award #: Various Award Period: Various Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records. - Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and - Support the distribution of employee salary across multiple activities or cost objectives. Condition – During our testing of allowable costs for payroll expenditures incurred throughout the year, we sampled and selected 60 of 2,941 payroll disbursements and noted 1 instance where fringe benefits were incorrectly charged to the program. We found the employer share of fringe benefits charged to the program with no associated time and effort by the employee. The employee retired and the fringe benefit continued to be charged to the program subsequent to retirement. Further, we noted that internal controls identified did not appear to be operating at a level of precision to ensure compliance with the above-mentioned requirements. Questioned Costs - $4,688. Context – This is a condition identified per review of DHS’ compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to the program in fiscal year 2023 were $7,037,992. The amount sampled is $150,246. The known amount of instances of noncompliance is $4,688, which represents the fringe benefits charged to the program for the entire fiscal year with no associated time and effort by the employee. Effect – An ineffective control system related to review of transactions to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major programs. Cause – DHS does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles and ensure that an appropriate level of review and approval was completed prior to charging costs to a federal program. Recommendation – We recommend that DHS reevaluate and improve internal controls to ensure adherence to federal regulations related to the fiscal administrative requirement for expending and accounting for payroll and to ensure proper and accurate funding allocation of payroll cost. Views of Responsible Officials - The Government concurs with the auditor’s findings and recommendations. DHS has incorporated into its internal controls a step to ensure that the accounts, in retrospect, are reconciled to the actual Flex earning report. DHS intends on meeting with the Department of Finance to identify the nuances that create postings to occur contrary to the Flex Earning Report account coding. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2023-074 Prior Year Finding Number: 2022-071 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: U.S. Department of Health and Human Services Government Department/Agency: Department of Human Services (DHS) Social Services Block Grant ALN: 93.667 Award #: Various Award Period: Various Criteria – CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records. - Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and - Support the distribution of employee salary across multiple activities or cost objectives. Further, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires the non-federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonable ensure compliance with Federal statutes, regulations, and other terms and conditions of the Federal Award. Condition – We sampled and selected 60 of 1,380 payroll transactions and noted the following: - 2 instances in which the project code on an employee’s Notice of Personnel Action (NOPA), which is used to record time and effort to the appropriate grant, was expired and had not been updated. During the fiscal year, program personnel did make adjustments to ensure the employee’s time and effort was recorded to the correct grant. - 1 instance in which the hours noted per the employee’s timesheet did not agree to the hours in the payroll register. We also sampled 60 of 251 non-payroll transactions and noted the following: - 18 expenditures that do not seem to conform to DHS requirements for disbursing program funds. - 6 instances where the approved requisition was not available for review. - 1 instance where the invoice date is prior to the date of the Purchase Order. - 1 instance where no supporting documentation was available for review other than the approved requisition. Questioned Costs – Not determinable. Context – This is a condition identified per review of compliance with the specified requirements using a statistically valid sample. Total amount of payroll expenditures charged to the program in fiscal year 2023 were $3,343,590. Total amount sampled is $180,273. The known amount of the exceptions is $408. Total amount of non-payroll expenditures charged to the program in fiscal year 2023 were $2,551,775. Total amount sampled is $1,004,88. The known amount of the exception is $388,742. Effect - Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding. Cause – DHS does not appear to have adequate policies and procedures in place to ensure compliance with applicable cost principles and maintenance of underlying documentation. Recommendation – We recommend that DHS improve internal controls to ensure adherence to federal regulations related to the fiscal and administrative requirements for expending and accounting for payroll and non-payroll expenditures. Views of Responsible Officials - The Government concurs with the auditor’s findings and recommendations. The Department of Human Services (DHS) adopted the electronic Timeforce (STATS) system for payroll, replacing manual processes. Time and attendance are approved through management levels, with payroll based on Notice of Personnel Action (NOPA) cost centers. Financial Analysts reconcile payroll, and a workflow ensures accurate NOPA listings for payroll purposes. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
2023-005 – Department of the Interior Federal Program Name: Natural Resource Stewardship - Pass-Through Agency: N/A Assistance Listing Number: 15.944 Federal Award Identification Year: 2023 Award Period: 10/01/2022 – 09/30/2023 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance (Modified Opinion) Criteria: 2 CFR 200.414(c) – Federal awards recipients must negotiate an indirect cost rate with the cognizant agency for indirect costs, which is typically the federal agency that provides the most funding to the recipient. 2 CFR 200.403(d) – The negotiated rate must be applied consistently across all federal awards to ensure uniformity in cost allocation. 2 CFR 200.302(b)(3) – Recipients must maintain adequate documentation to support the indirect costs charged to federal awards, ensuring compliance with the cost principles outlined in the regulation Condition: For all invoices submitted to the grantor including those that included indirect cost rate calculations, there was no documented review and approval of the submission by management. Condition: Known: $94,287 Likely: $94,287 Context: Internal controls need to be formally documented as well as have support and authorization. With no authorization or proof that the internal control was completed, we cannot rely on the controls. Effect: Not having internal controls formalized and documented can lead to higher risk of noncompliance and misreporting. Cause: Internal controls are not formalized or documented Repeat Finding: The finding is not a repeat finding. Recommendation: We recommend that CIES modifies its internal control policies for general review and approval of the reporting requirements set forth by the criteria listed above. Management’s Views: See separate corrective action plan.
2023-007 – Department of the Interior Federal Program Name: Natural Resource Stewardship - Pass-Through Agency: N/A Assistance Listing Number: 15.944 Federal Award Identification Year: 2023 Award Period: 10/01/2022 – 09/30/2023 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance (Modified Opinion) Criteria: 2 CFR 200.403(a) - Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Condition: Regarding cash and payroll related disbursements, there was not documented review and approval of cash disbursements and payroll allocations and disbursements by management. Condition: Known: $672,870 Likely: $672,870 Context: Internal controls need to be formally documented as well as have support and authorization. With no authorization or proof that the internal control was completed, we cannot rely on the controls. Effect: Not having internal controls formalized and documented can lead to higher risk of noncompliance and misreporting. Cause: Internal controls are not formalized or documented. Repeat Finding: The finding is not a repeat finding. Recommendation: We recommend that CIES modifies its internal control policies for general review and approval of the allowable costs set forth by the criteria listed above. Management’s Views: See separate corrective action plan.
Finding No.: 2023-005 Pass-Through Entity: Republic of the Marshall Islands Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social and Political Development of the Territories Federal Award No.: Compact of Free Association Program, As Amended Area: Activities Allowed or Unallowed Area: Allowable Costs/Cost Principles Questioned Costs: $61,291 Criteria: In accordance with the applicable activities allowed or unallowed requirements, institutions must demonstrate that costs incurred are allowable under the relevant program legislation, federal awarding agency regulations, and the terms and conditions of the award and consistent with the purpose of the grant. 2 CFR 200.403(a) states that federal program expenditures should be necessary and reasonable for the performance of the Federal award in accordance with allowable costs/cost principles requirements and 2 CFR 200.403(g) states that costs should be adequately documented. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Conditions: 1. For one (or 9%) of eleven items, aggregating $74,721 of $359,456 in total non-payroll expenditures, no supporting documentation was provided to substantiate how the allocated amount charged to the program was determined and how the expenditure (PO# 23-PO- 1856 ; $35,492) directly relates to the purpose of the underlying subgrant. 2. For thirty-one (or 63%) of forty-nine items, aggregating $64,266 of $1,612,427 in total payroll expenditures, we noted the following: Item #s 1 through 6 relate to employee’s salaries and wages and related fringe benefits (employer contributions for social security and health insurance) allocated and charged to federal grant for which we noted either a) the hours paid is higher compared to the hours recorded on the approved timesheet or b) the rate paid is higher compared to the rate per contract. Item #s 7 through 14 relate to salaries – overload or adjunct that were not supported by adequate documentation (i.e. semester section offering or instructor’s schedule) to ascertain whether service was received. For item #15, we noted that the rate paid is higher compared to the rate per contract. Furthermore, the related salaries – overload was not supported by adequate documentation (i.e. semester section offering/instructor’s schedule) to ascertain whether service was received. For item #s 16 through 31, there were no approved timesheet on file to substantiate the actual number of hours worked. Further, for item #s 29 through 31, approval of the amount paid to employees relating to leave was not on file. Cause: The College lacks adequate internal controls over compliance with applicable activities allowed or unallowed and allowable costs/cost principles requirements, specifically, retaining sufficient documentation to support transactions and ensuring expenditures are necessary and reasonable for the performance of the Federal award. Effect: The College is in noncompliance with activities allowed or unallowed and allowable costs/cost principles requirements. The reportable questioned cost is $61,291 based on the items identified in Conditions above. For condition #2, item #s 4 through 6, 13 through 14, and 20 through 31, questioned costs related to federal expenditures that may result from discrepancies noted or unestablished allocation are not determinable. Identification as a Repeat Finding: 2022-008 and 2022-009 Recommendation: College management should improve internal control policies and strengthen controls and procedures over compliance with applicable activities allowed or unallowed and allowable costs/cost principles requirements, specifically, retaining sufficient documentation to support transactions. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.
Finding No.: 2023-009 Federal Agency: U.S. Department of Education AL Program: 84.425 Education Stabilization Fund AL Sub-Program: 84.425F HEERF - Institutional Portion Federal Award No.: COVID-19 P425F202732 AL Sub-Program: 84.425L HEERF - Minority Serving Institution Federal Award No.: COVID-19 P425L200219 Area: Activities Allowed or Unallowed Area: Allowable Costs/Cost Principles Questioned Costs: $745,189 Criteria: In accordance with applicable activities allowed or unallowed requirements, institutions must demonstrate that costs incurred are allowable under the relevant statutory provisions and consistent with the purpose of the ESF “to prevent, prepare for, and respond to coronavirus”. Allowable expenditures incurred and liquidated prior to December 27, 2020 must have been “to cover any costs associated with significant changes to the delivery of instruction due to the coronavirus”. Further, beginning December 27, 2020, any unused HEERF I Institutional Portion funds, new HEERF II Institutional Portion funds and HEERF III Institutional Portion Funds, may be used to defray expenses associated with coronavirus (including lost revenue, reimbursement for expenses already incurred, technology costs associated with a transition to distance education, faculty and staff trainings, and payroll) and to make additional financial grants to students. HEERF I and HEERF II funds may also have been used to carry out student support activities authorized by the Higher Education Act (HEA) that address needs related to coronavirus. HEERF Frequently Asked Questions (FAQ) Rollup Document dated October 14, 2020 states that: • Question #38: Institutions can use CARES Act funds under Section 18004(a)(2) to make scholarships to students. Section 18004(a)(2) of the CARES Act state that institutions may use funds specifically “for grants to students for any component of the student’s cost of attendance (as defined under section 472 of the HEA), including food, housing, course materials, technology, health care, and child care”. • Question #47: Institution may use funds from the Institutional Portion of its section 18004(a)(1) allocation to purchase equipment or software, pay for online licensing fees, or pay for internet service to enable students to transition to distance learning as such costs are associated with a significant change in the delivery of instruction due to the coronavirus. An institution may also use Institutional Portion funds for any other costs for computer system upgrades that are reasonably related to “significant changes to the delivery of instruction due to the coronavirus.” This would not include, for example, previously planned upgrades to computer systems. 2 CFR 200.403(a) states that federal program expenditures should be necessary and reasonable for the performance of the Federal award in accordance with allowable costs/cost principles requirements and 2 CFR 200.403(g) states that costs should be adequately documented. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: For four items (or 33%) of twelve items, aggregating $1,085,985 of $1,184,585 in total non-payroll expenditures, we noted the following: Item #s 1 and 2 were not supported by adequate documentation (i.e. justification of the purpose prior to purchase and receiving reports) to ascertain whether such expenditure is associated to distance learning due to coronavirus. There is no evidence of communication or consultation with the grantor agency that this expenditure is allowable. Item # 3 pertains to relinquishment of student’s outstanding debt with the College, whereas the College directly credited student’s accounts and got reimbursement from the CARES Act funds under Section 18004(a)(2). These are not associated with coronavirus. There is no evidence of communication or consultation with the grantor agency that these expenditures are allowable. Item # 4 is standard recurring cost and not associated with coronavirus. Specifically, expenditure relates to annual software subscription of the College. There is no evidence of communication or consultation with the grantor agency that this expenditure is allowable. Cause: The College lacks adequate internal controls over compliance with applicable activities allowed or unallowed and allowable costs/cost principles requirements, specifically, retaining sufficient documentation to support transactions and ensuring expenditures are necessary and reasonable for the performance of the Federal award. Effect: The College is in noncompliance with activities allowed or unallowed and allowable costs/cost principles requirements. The reportable questioned cost is $745,189 based on the items identified in Condition above. Identification as a Repeat Finding: 2022-019 Recommendation: College management should improve internal control policies and strengthen controls and procedures over compliance with applicable activities allowed or unallowed and allowable costs/cost principles requirements, specifically, retaining sufficient documentation to support transactions. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.
Finding No. 2023-006 Federal Agency: U.S. Department of Education AL Program: 84.027 Special Education Cluster - Grants to States (IDEA, Part B) Federal Award No.: H027A200106, H027A210106, H027X210106, H027A22106, H027A230106 Area: Activities Allowed/Unallowed, Allowable Costs/Cost Principles Questioned Costs: $5,130 Criteria: 1. Per CFR §200.403(a), costs must be necessary and reasonable for the performance of the Federal award. 2. In accordance with 2 CFR §200.403, costs must be adequately documented in order to be allowable under federal programs. Condition: 1. Of ten nonpayroll expenditures tested, aggregating $184,105 of a total population of $1,241,478, one (or 10%), transaction pertains to an off-island travel from Rota to Saipan to attend PSS’ education day celebration event. There was no documentation provided to justify that such an event is necessary and reasonable for the performance of the federal award, for which the corresponding directly associated travel costs are also questioned. 2. Of thirty payroll expenditures tested, aggregating $75,035 of a total population of $3,488,866, the following were noted: a. For one (or 3%), the differential pay rate for the nine hours paid to an employee was not provided, for which the corresponding directly associated payroll costs are also questioned. b. For one (or 3%), the gross pay comprised of the employee’s payroll cost and annual leave pay out; however, the approved timesheet for the hours worked was not provided, for which the corresponding directly associated costs are also questioned. Cause: 1. PSS lacks monitoring control procedures to ensure program costs are supported; and 2. Inadequate documentation and inadequate systematic filing of relevant documentation supporting program costs. Effect or potential effect: PSS is in noncompliance with the applicable allowable costs/cost principles compliance requirements and questioned costs of $5,130 result as the projected questioned costs exceed the $25,000 threshold. Identification as Repeat Finding: Finding No. 2022-003 Recommendation: 1. PSS should implement and enforce monitoring controls over compliance with applicable allowable costs/cost principles; and 2. Establish and maintain effective systematic filing of relevant documentation to support program costs and for easier retrieval. Views of Auditee and Corrective Action Plan: PSS concurs with the audit findings and the associated questioned costs. Refer to PSS’ Corrective Action Plan for additional information.
Finding No. 2023-013 Federal Agency: U.S. Department of Commerce AL Program: 11.307 Economic Adjustment Assistance Federal Award No.: 07-79-07645, 07-79-07631, 07-79-07562 Area: Activities Allowed or Unallowed Allowable Costs/Cost Principles Questioned Costs: $3,695,208 Criteria: In accordance with 2 CFR 200.303(a), the recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Additionally, in accordance with 2 CFR §200.403(g), non-Federal entities must maintain adequate documentation to support all charges to Federal awards. Condition: Of twenty-two nonpayroll expenditures tested, aggregating $3,695,208 of a total population of $4,435,648, the following were noted: 1. For two (or 9%), CNMI did not provide the invoices and/or contract agreements. No questioned costs are presented as amounts are questioned at Condition 2. 2. For twenty-two (or 100%), CNMI did not provide cancelled checks or related bank statements to provide evidence that payments were properly authorized, were made to eligible parties, and did not constitute improper payments for the following transactions. Finding No. 2023-013, continued Federal Agency: U.S. Department of Commerce AL Program: 11.307 Economic Adjustment Assistance Federal Award No.: 07-79-07645, 07-79-07631, 07-79-07562 Area: Activities Allowed or Unallowed Allowable Costs/Cost Principles Questioned Costs: $3,695,208 Cause: CNMI did not properly enforce their record-keeping and document retention controls. Effect or Potential Effect: CNMI is in noncompliance with applicable activities allowed or unallowed and allowable costs/cost principles compliance requirements and questioned costs of $3,695,208 result for Condition 2. Identification of a Repeat Finding: This is not a repeat finding. Recommendation: CNMI should improve their record-keeping and document retention policies by properly utilizing the database functionality of their current Enterprise Resources Planning (ERP) software, which is Tyler MUNIS. Views of Responsible Officials: Condition 1 - CNMI Department of Finance respectfully disagrees with this finding related to project number FG17010001 (Economic Resiliency Center). CNMI DOF acknowledges that although supporting documentation, such as journal entries, approvals of expense transfers, sole-source justification memo and grantor approval were submitted, copies of the related invoices and/or contract agreement were not included. This omission was an oversight and resulted in a documentation-timing deficiency. Condition 2 - CNMI Department of Finance respectfully disagrees with this finding related to PA Journals 478, 360, 2137 and 335. These transactions pertain to the Department’s Economic Resiliency Center (ERC) project. Due to internal scheduling constraints and the compressed 2-day turnaround to provide supporting documentation to the auditors, the requested documents were not submitted by the specified deadline. This timing issue resulted in the finding; however, it does not reflect a lack of documentation or inadequate record-keeping. CNMI DOF maintains all relevant supporting documentation for these transactions and such documentation is available for review upon request from the Grantor. Finding No. 2023-013, continued Federal Agency: U.S. Department of Commerce AL Program: 11.307 Economic Adjustment Assistance Federal Award No.: 07-79-07645, 07-79-07631, 07-79-07562 Area: Activities Allowed or Unallowed Allowable Costs/Cost Principles Questioned Costs: $3,695,208 Views of Responsible Officials, continued: The Office of Planning and Development (OPD) partially agrees with the finding. OPD reviewed the questioned transactions and supporting documentation available under its custody. Payment documentation has been identified for PA Journals 186, 142, 141, 2670, 270, 4200, 556, 4180, and 913 and is maintained by OPD for review. For PA Journals 191 and 144, OPD verified that the invoice amounts are consistent with Contract No. 32200454; however, the PA Journal effective dates and journal numbers provided in the audit schedule do not correspond with the records reflected in the Munis system. For PA Journals 1585, 1862, 2219, 1138, 197, 593, and 219, additional information is required to complete verification because the PA Journal effective dates and journal numbers differ from the Munis records available to OPD. The referenced invoice amounts alone are insufficient to identify the transactions, as they may represent portions of cost shared expenditures or partial payments associated with larger transactions. Identification of the vendor would significantly assist in locating and reconciling the transactions. Refer to CNMI’s Corrective Action Plan for additional information. Auditor response: Conditions 1 and 2 - CNMI states disagreement; however, CNMI also acknowledges that documentation supporting program costs were not provided. In addition, the program office should coordinate with the CNMI Department of Finance on identifying the PA journal effective dates, journal numbers and vendors that the program could not trace in the Munis system.
Finding No. 2023-015 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D22AP00279, D21AP10223, D20AP00005 Area: Activities Allowed or Unallowed Allowable Costs/Cost Principles Questioned Costs: $4,203 Criteria: In accordance with 2 CFR 200.303(a), the recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In accordance with the grant agreement, costs may not be incurred, and work may not commence on the project until the Office of Insular Affairs (OIA) has issued an Authorization to Proceed (ATP). Based on 2 CFR 200.403(g), except where otherwise authorized by statute, costs must be adequately documented to be allowable under Federal awards. Condition: 1. Of thirty-five nonpayroll expenditures tested, aggregating $1,470,476 of a total population of $9,317,282, for four (or 11%), CNMI did not provide evidence of grantor approved ATPs. Finding No. 2023-015, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D22AP00279, D21AP10223, D20AP00005 Area: Activities Allowed or Unallowed Allowable Costs/Cost Principles Questioned Costs: $4,203 Condition, continued: 2. Of five payroll expenditures tested, aggregating $10,639 of a total population of $1,285,604, for two (or 40%), CNMI did not provide employees’ timesheets for the selected pay periods, for which the corresponding directly associated costs are also questioned. Cause: 1. CNMI lacks control procedures to ensure that each office receiving federal grants provides a copy of the necessary documentation to the Office of the Grants Management. 2. CNMI did not properly enforce their record-keeping and document retention controls. Effect or potential effect: CNMI is in noncompliance with applicable activities allowed or unallowed and allowable costs/cost principles compliance requirements and questioned costs of $4,203 result, as the projected questioned costs exceeds the $25,000 reportable threshold. Finding No. 2023-015, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D22AP00279, D21AP10223, D20AP00005 Area: Activities Allowed or Unallowed Allowable Costs/Cost Principles Questioned Costs: $4,203 Identification as a Repeat Finding: Finding No. 2022-013 Recommendation: 1. CNMI should improve their record-keeping and document retention policies by properly utilizing the database functionality of their current Enterprise Resources Planning (ERP) software, which is Tyler MUNIS. 2. CNMI should establish controls to ensure that the individual offices who receive grants, process the required documentation timely and upload processed files in MUNIS. Views of Responsible Officials: Condition 1 - The Office of Grants Management (OGM) disagrees with this finding and the questioned costs of $1,400. The ATP document is vested with the Division of Energy (DOE) and not OGM. The award is from OIA; however, not all awards are under the possession of OGM. In this matter, CNMI Department of Energy is the recipient. However, OGM was able to obtain a copy of the document after several phone calls to their office. Document is available for review upon request. Condition 2 - OGM disagrees with this finding and the questioned cost of $2,803. The documents were obtained for both employees and are available for review upon request. Refer to CNMI’s Corrective Action Plan for additional information. Auditor Response: Condition 1 - It was established during the planning stage of the audit that OGM will be responsible for all grant awards, except for CIP and Compact programs. Additionally, multiple follow up communications were sent for the submission of the ATPs but were not provided. Questioned costs are retained, as costs at the time of the audit were not supported by adequate documentation. Condition 2 - CNMI states disagreement; however, CNMI also acknowledges that documentation supporting program costs were not provided. Questioned costs are retained, as costs at the time of the audit were not supported by adequate documentation.
Finding No. 2023-020 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D23AF00036, D23AP00068, D22AF00299, D21AP10043, D21AP10044, D19AP00081, D17AP00132 Area: Subrecipient Monitoring Questioned Costs: $2,399,988 Criteria: In accordance with 2 CFR 200.303(a), the recipient and subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. As stated in 2 CFR 200.332(a), pass-through entities are required to verify that potential subrecipients are not suspended and debarred prior to awarding the agreements. The verification can be done through methods indicated in 2 CFR § 180.300 as follows: (a) Checking SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. Additionally, based on 2 CFR 200.332(b), pass-through entities should ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the information provided in 2 CFR 200.322(b)(1) to (6). A pass-through entity must provide the best available information when some of the information below is unavailable. A pass-through entity must provide unavailable information when it is obtained. Further, in accordance with 2 CFR 200.332(c), a pass-through entity should evaluate each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in 2 CFR 200.322(f). Lastly, in accordance with 2 CFR 200.332(d)(2), the pass-through entity’s monitoring of the subrecipient must include following-up to ensure that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity. Condition: 1. Of three subrecipients tested, aggregating $970,384 of a total population of $970,384, the following were noted: Finding No. 2023-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D23AF00036, D23AP00068, D22AF00299, D21AP10043, D21AP10044, D19AP00081, D17AP00132 Area: Subrecipient Monitoring Questioned Costs: $2,399,988 Condition, continued: a. For three (or 100%), CNMI did not verify whether the subrecipient is excluded or disqualified pursuant to the requirements of 2 CFR 180.300 prior to entering into a subaward agreement. The subaward date for D22AF00299 is unknown as the subaward agreement was not provided, as noted at Condition 1b. No questioned cost is presented for D23AP00068 as there was no subaward disbursement made during FY2023. b. For one (or 33%), CNMI did not provide the signed and approved subaward agreement. No questioned cost is presented as the amount is questioned at Condition 1a. c. For three (or 100%), CNMI did not perform the risk assessment prior to issuing the subaward agreements to the subrecipients. The subaward date for D22AF00299 is unknown as the subaward agreement was not provided, as noted at Condition 1b. No questioned costs are presented as amounts are questioned at Condition 1a for D23AF00036 and D22AF00299 and there was no subaward disbursement made during FY2023 for D23AP00068. Finding No. 2023-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D23AF00036, D23AP00068, D22AF00299, D21AP10043, D21AP10044, D19AP00081, D17AP00132 Area: Subrecipient Monitoring Questioned Costs: $2,399,988 2. For two (or 100%) of two subrecipients that incurred expenditures above $750,000 during the year, CNMI did not perform proper monitoring to ensure that they are subjected to single audit requirements or if they have taken appropriate actions on all deficiencies detected from previous single audits. No questioned cost is presented for D23AF00036 as the amount is questioned at Condition 1a. Cause: 1. CNMI’s current policy and procedures for monitoring the suspension and debarment status of the subrecipient prior to entering a subaward agreement is not tailored to the provisions of 2 CFR 180.300. The currently established procedure of CNMI only identifies suspension or debarment upon occurrences of violation which is an after-the-fact approach rather than a preventive process. Finding No. 2023-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D23AF00036, D23AP00068, D22AF00299, D21AP10043, D21AP10044, D19AP00081, D17AP00132 Area: Subrecipient Monitoring Questioned Costs: $2,399,988 Cause, continued: 2. CNMI lacks proper monitoring procedures to ensure that an agreement is executed for every new subaward between the pass-through entity and a new or existing subrecipient. 3. CNMI does not have an established subrecipient risk assessment policy and procedures prior to entering into the subaward agreement and to identify the type of monitoring procedures required to be performed for the subrecipient. 4. CNMI does not have an established policy or procedure that monitors whether a subrecipient that incurs expenditures above $750,000 during the year, has hired the services of a reputable auditor to conduct a single audit engagement and to ensure that follow-up corrective actions have been performed as regards to the deficiencies identified during the previous audits. Effect or potential effect: CNMI is in noncompliance with the subrecipient monitoring compliance requirements and questioned costs of $2,399,988 result. Identification of Repeat Finding: Finding No. 2022-019 Recommendation: CNMI should strengthen and enforce compliance with subrecipient monitoring compliance requirements over the following: 1. Establish policies and procedures for monitoring suspension and debarment status of each subrecipient prior to granting any subaward. The guidance should be reflective of the provisions set by 2 CFR 180.300. Finding No. 2023-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D23AF00036, D23AP00068, D22AF00299, D21AP10043, D21AP10044, D19AP00081, D17AP00132 Area: Subrecipient Monitoring Questioned Costs: $2,399,988 Recommendation, continued: 2. Improve and strengthen their monitoring procedures to ensure that all subawards are enforced with a properly accomplished agreement that is in accordance with 2 CFR 200.332(a)(1). 3. Establish policies and procedures to ensure that a risk assessment is conducted prior to entering into a subaward agreement with a subrecipient and to identify the level of monitoring required for each type of subrecipient as a result of the risk assessment. 4. Establish policies and procedures to ensure that subrecipient incurring expenditures above $750,000 are properly monitored, that they follow the single audit requirements and that the corrective actions are implemented as a result of prior year audits. Views of Responsible Officials: Condition 1a - For Grant Award Nos. D23AF00036 and D22AF00299, Office of Management and Budget (OMB) agrees with the finding and the need for a formally written policy and procedures for subrecipient monitoring. OMB has adopted the Department of Finance’s Subrecipient Monitoring Policy and Procedures effective 08/04/25 establishing a formal monitoring suspension and debarment status of each subrecipient prior to granting any subaward. The guidance is reflective of the provisions set by 2 CFR 180.300. Conditions 1a and 1c - For Grant Award No. D23AP00068, Capital Improvement Program (CIP) disagrees with this finding because the required verification was performed. Although documentation was not retained, CIP verifies that all subrecipients comply with OPA requirements before federal funds are awarded. Condition 1b - OMB agrees with the finding. OMB fully executed a subrecipient agreement with the subrecipient on 01/27/23, prior to any grant administration taking place. The adoption of the Department of Finance’s Subrecipient Monitoring Policy and Procedures effective 08/04/25 also further formalizes the process. Finding No. 2023-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D23AF00036, D23AP00068, D22AF00299, D21AP10043, D21AP10044, D19AP00081, D17AP00132 Area: Subrecipient Monitoring Questioned Costs: $2,399,988 Views of Responsible Officials, continued: Condition 1c - For Grant Award Nos. D23AF00036 and D22AF00299, OMB agrees with the finding and agrees with the need for a formally written policy and procedures for subrecipient monitoring. OMB has adopted the Department of Finance’s Subrecipient Monitoring Policy and Procedures effective 08/04/25 establishing a formal subrecipient risk assessment prior to entering into the subaward agreement and identifying the type of monitoring procedures to be performed for the subrecipient. Condition 2 - For Grant Award No. D23AF00036, OMB agrees with the finding and agree with the need for a formally written policy and procedures for subrecipient monitoring. OMB has adopted the Department of Finance’s Subrecipient Monitoring Policy and Procedures effective 08/04/25 to perform proper monitoring to ensure that subrecipients are in compliance with single audits. For Grant Award No. D17AP00132, D21AP10043, D19AP00081, and D21AP10044, CIP agrees with the finding that a subrecipient with expenditures exceeding $750,000 during the year was not verified for compliance with single audit requirements, including whether corrective actions were taken to address prior audit findings. Refer to CNMI’s Corrective Action Plan for additional information. Auditor Response: Conditions 1a and 1c - CNMI states disagreement for grant award number D23AP00068; however, CNMI also acknowledges that documentation of its verification performed were not kept on file. In accordance with 2 CFR 200.403, costs must be adequately documented to be allowable under federal awards.
Finding No. 2023-021 Federal Agency: U.S. Department of Labor AL Program: COVID-19 17.225 Unemployment Insurance (UI) Federal Award No.: UI-34837-20-55-A-69 Area: Activities Allowed or Unallowed Allowable Costs/Cost Principles Questioned Costs: $224,846 Criteria: In accordance with 2 CFR 200.303(a), the recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In accordance with 2 CFR 200.403(g), except where otherwise authorized by statute, costs must be adequately documented to be allowable under Federal awards. Condition: 1. For six (or 15%) of forty nonpayroll expenditures tested, aggregating $361,973 of total population of $3,763,528, CNMI did not provide the invoices, benefit payment summaries, and check/ACH payments supporting allowability of costs. Finding No. 2023-021, continued Federal Agency: U.S. Department of Labor AL Program: COVID-19 17.225 Unemployment Insurance (UI) Federal Award No.: UI-34837-20-55-A-69 Area: Activities Allowed or Unallowed Allowable Costs/Cost Principles Questioned Costs: $224,846 Condition, continued 2. For three (or 15%) of twenty payroll expenditures tested, aggregating $34,219 of a total population of $1,817,923, CNMI failed to reflect the updated hourly rate per Personnel Action Form (PAF) on the payroll register for the weeks selected for testing. No questioned costs are presented as this relates to internal control. Cause: CNMI did not properly enforce their record-keeping and document retention controls. Effect or Potential Effect: CNMI is in noncompliance with applicable activities allowed or unallowed and allowable costs/cost principles compliance requirements and questioned costs of $224,846 result for Condition 1. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: CNMI should improve its record-keeping and document retention policies implemented by properly utilizing MUNIS as a database. Finding No. 2023-021, continued Federal Agency: U.S. Department of Labor AL Program: COVID-19 17.225 Unemployment Insurance (UI) Federal Award No.: UI-34837-20-55-A-69 Area: Activities Allowed or Unallowed Allowable Costs/Cost Principles Questioned Costs: $224,846 Views of Responsible Officials: Condition 1 - CNMI Department of Labor agrees with this finding, as the supporting documents extracted from Munis were insufficient to support the referenced line items based on the documentation requested. The corresponding payment registers were uploaded on June 8, 2026, to support the entries. Condition 2 - CNMI partially agrees with this finding. The payroll records for Employee Numbers 4381 and 5600 did not reflect the adjusted hourly rates during the weeks selected for testing because the Requests for Personnel Action (RFPAs) associated with the funding awards could not be finalized until the funding was officially awarded. The funding awards tied to the employee contracts during that time were provided through funding opportunities made available under UIPL 16-20, Change 7. The initial application was due to the Employment and Training Administration (ETA) on January 6, 2023. Following submission, communication between the CNMI and ETA regarding revisions and clarifications continued through March 26, 2023. The Notices of Award (NOAs) were subsequently issued on May 19 and May 22, 2023. The budget narrative submitted to ETA included position modifications and salary adjustments intended to be effective April 1, 2023. However, because the NOAs and associated funding were received after that effective date, retroactive RFPAs were initiated beginning June 13, 2023, and were not fully completed until mid-July 2023. As a result, the updated hourly rates were not reflected in the payroll registers for the periods selected for testing. With respect to employee no. 2293, the employee was a regular Department of Labor employee whose employment contract was scheduled to expire on September 30, 2022 and was subsequently renewed to include a salary adjustment. The RFPA for this employee was initiated in September 22, 2022 but did not complete the routing process until late October 2022. As a result, the adjusted hourly rate was not reflected in the payroll registers for the period selected for testing. All employees received the difference between their adjusted salary and initial salary at a later date in the form of a retroactive lump-sum payment. Refer to CNMI’s Corrective Action Plan for additional information. Finding No. 2023-021, continued Federal Agency: U.S. Department of Labor AL Program: COVID-19 17.225 Unemployment Insurance (UI) Federal Award No.: UI-34837-20-55-A-69 Area: Activities Allowed or Unallowed Allowable Costs/Cost Principles Questioned Costs: $224,846 Auditor Response: Condition 2 - We acknowledge CNMI’s explanation of the discrepancies in pay rates; however, no documentation was provided to support the difference in pay rates and that employees were retroactively paid. Further, adequate documentation is essential to support internal control procedures over the verification of pay rates, ensuring that the correct rates are paid.
Finding No. 2023-039 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.575/93.596 CCDF Cluster COVID-19 93.575/93.596 CCDF Cluster Federal Award No.: 2201MPCCDD, 2101MPCCC5, 2001MPCCDD Area: Activities Allowed or Unallowed Allowable Costs/Cost Principles Questioned Costs: $71,972 Criteria: In accordance with 2 CFR 200.303(a), the recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Additionally, based on 2 CFR 200.403(g), except where otherwise authorized by statute, costs must be adequately documented to be allowable under Federal awards. Condition: For seven (or 18%) out of the forty nonpayroll expenditures tested, aggregating $845,463 of a total population of $18,417,064, CNMI did not provide the purchase orders, contracts, and/or invoice(s) supporting the allowability of the costs. Cause: CNMI did not properly enforce their record-keeping and document retention controls. Effect or Potential Effect: CNMI is in noncompliance with applicable activities allowed or unallowed and allowable costs/cost principles compliance requirement and questioned costs of $71,972 result. Finding No. 2023-039, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.575/93.596 CCDF Cluster COVID-19 93.575/93.596 CCDF Cluster Federal Award No.: 2201MPCCDD, 2101MPCCC5, 2001MPCCDD Area: Activities Allowed or Unallowed Allowable Costs/Cost Principles Questioned Costs: $71,972 Identification as a Repeat Finding: This is not a repeat finding. Recommendation: CNMI should improve their record-keeping and document retention policies implementation by properly utilizing the database functionality of their current Enterprise Resources Planning (ERP) software, which is Tyler MUNIS. Views of Responsible Officials: CNMI CCDF Program agrees with this finding. For seven (or 18%) out of the forty samples tested, CNMI did not provide the purchase order, contract, and/or invoice(s) supporting the allowability of the costs. Refer to CNMI’s Corrective Action Plan for additional information.
Finding No. 2023-041 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.575/93.596 CCDF Cluster COVID-19 93.575/93.596 CCDF Cluster Federal Award No.: 2101MPCCC5, 2101MPCCDF, 1901MPCCDD Area: Period of Performance Questioned Costs: $95,367 Criteria: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). The Program must liquidate all financial obligations incurred under the federal award not later than two years after the end date of the period of performance as specified in the terms and conditions of the federal award. In accordance with 2 CFR 200.303(a), the recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: 1. CNMI does not have any documentation or evidence to provide support that transactions are being reviewed to ensure that they are incurred within the period of performance. This condition does not result in questioned costs as this is an internal control finding. 2. CNMI does not properly monitor whether expenditures are paid prior to the end of the liquidation period. This condition does not result in questioned costs as this is an internal control finding. 3. Of forty expenditures tested, aggregating $817,071 of a total population of $2,171,232, the following were noted: a. For four (or 10%), CNMI did not provide the purchase order or contract to support that expenditures were incurred within the period of performance end date of 09/30/23. Finding No. 2023-041, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.575/93.596 CCDF Cluster COVID-19 93.575/93.596 CCDF Cluster Federal Award No.: 2101MPCCC5, 2101MPCCDF, 1901MPCCDD Area: Period of Performance Questioned Costs: $95,367 Condition, continued: b. For ten (or 25%), CNMI did not provide a breakdown of the batch payments identified in the bank statements to identify and trace the clearance dates of each transaction, to support that the expenditures were liquidated within the liquidation period end date of 09/30/25. Cause: 1. CNMI’s current policy and procedure does not include proper documentation of the review being performed to verify that the transactions are valid and still within the period of performance. Finding No. 2023-041, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.575/93.596 CCDF Cluster COVID-19 93.575/93.596 CCDF Cluster Federal Award No.: 2101MPCCC5, 2101MPCCDF, 1901MPCCDD Area: Period of Performance Questioned Costs: $95,367 Cause, continued: 2. CNMI does not have any policies and procedures established to monitor and ensure that payments to vendors are liquidated within the end of the liquidation period. 3. CNMI did not provide sufficient and appropriate audit evidence to substantiate the expenditures over compliance with applicable period of performance compliance requirements. Effect or Potential Effect: CNMI is in noncompliance with applicable period of performance compliance requirements and questioned costs of $95,367 result. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: CNMI should strengthen and enforce compliance with period of performance compliance requirements over the following: 1. CNMI should update their current policies and procedures to ensure that part of the documentation of checking the allowability of each transaction includes the verification if the expenditures are still within the period of performance. This can be done by attaching the copy of the grant award, or a certification from the program administrator, or personnel in-charge of checking the allowability of each transaction, that the grant being charged is in compliance with the period of performance compliance requirements. Finding No. 2023-041, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.575/93.596 CCDF Cluster COVID-19 93.575/93.596 CCDF Cluster Federal Award No.: 2101MPCCC5, 2101MPCCDF, 1901MPCCDD Area: Period of Performance Questioned Costs: $95,367 Recommendation, continued: 2. CNMI should establish monitoring procedures to ensure that checks issued to vendors are cleared by the banks within the liquidation period. The DOF Financial Services could establish a monitoring log for all checks issued for each vendor and each office. The assigned offices should then request a copy from the DOF Financial Services of the monitoring and conduct timely follow-up to each vendor on ensuring the checks are paid. Lastly, CNMI could also adopt a purely ACH payment to ensure that payments are done real-time. 3. CNMI should improve their record-keeping and document retention policies implementation by properly utilizing the database functionality of their current Enterprise Resources Planning (ERP) software, which is Tyler MUNIS. Views of Responsible Officials: Conditions 1 and 3a - CNMI CCDF Program agrees with this finding. To strengthen oversight and ensure adequate accountability over Federal awards, the CNMI CCDF Program has implemented a filing system where all documents relating to a federal award are properly maintained and labeled for accessibility. This system became effective on October 1, 2025. Conditions 2 and 3b - CNMI CCDF Program agrees with this finding and acknowledges the need to strengthen internal controls to ensure that all expenditures are cleared by the bank before the end of the liquidation period. Refer to CNMI’s Corrective Action Plan for additional information.
Assistance Listing, Federal Agency, and Program Name - 21.027, U.S. Department of the Treasury, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year - 38080710K, 2022 Pass-through Entity - Illinois Department of Public Health (IDPH) Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.303, the recipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control-Integrated Framework, issued by the Committee of Sponsoring Organizations (COSO). Per 2 CFR 200.403, except where otherwise authorized by statute, in order to be allowable under Federal awards, costs must be determined in accordance with generally accepted accounting principles (GAAP), incurred during the approved budget period, and adequately documented. Per 2 CFR 200.510, the auditee must prepare a schedule of federal expenditures (SEFA) for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with § 200.502. Per 2 CFR 200.328, the funding agency establishes the financial reporting basis of accounting. Based on the reimbursement certificate template required by the passthrough funding agency, the recipient should report expenditures from expense activity, as well as cash or in-kind matching contributions where applicable. Condition - Management lacked adequate controls at the transaction level to ensure compliance with activities allowed or unallowed, allowable cost principles, and period of performance, which resulted in the improper inclusion of duplicate costs and costs from a prior fiscal period. Further, a lack of effective controls over financial reporting and over preparation of the SEFA resulted in management reporting activity on a cash basis, inconsistent with the basis of reporting established in Note 1 and with requirements established by the passthrough funding agency. Questioned Costs - $109,149 If Questioned Costs Are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not Be Reported - N/A Identification of How Questioned Costs Were Computed - Questioned costs totaling $49,754 represent a duplicate invoice found as the result of compliance testing. An additional $59,395 of costs were identified during compliance testing from invoices for goods or services received during fiscal year 2022. Context - During a walkthrough of management's processes and controls, we noted management did not have controls in place at the invoice level for 2 of the 3 vendors charged to the program during the fiscal period under audit to ensure compliance with activities allowed or unallowed, allowable cost principles, or period of performance. As the result of compliance testing, we identified 1 invoice in the amount of $49,754 out of 60 samples that was a duplicate transaction of another sample. As the result of compliance testing, we identified 7 out of 60 transactions totaling $59,395 incurred during the fiscal year ended September 30, 2022. Through discussions with management and in an effort to reconcile the SEFA to underlying general ledger expenditure activity incurred during the fiscal period under audit, we noted that the amount on the SEFA reflected cash reimbursed by IDPH and not expenditures incurred during the fiscal period. In addition, for 2 of the 4 quarterly financial reports selected for testing, we noted that amounts requested for reimbursement for those periods were overstated by approximately $217,000 in aggregate, in relation to the underlying expenditure activity incurred at the time of the submission of the financial report to and request for reimbursement from IDPH. Cause and Effect - A lack of effective controls over the preparation of the SEFA could result in material inaccuracies to the SEFA. A lack of effective controls at the transaction level resulted in noncompliance with accounting principles, duplicate charges to the program, and questioned costs. A lack of effective controls over financial reporting resulted in noncompliance with reporting requirements and an inaccurate reflection of activity incurred during the period reported. Recommendation - We recommend management implement effective controls at the transaction level to ensure costs are allowable under the terms and conditions of the grant agreement have not been duplicated within the population of costs charged to the program and are in compliance with cost principles outlined within the Uniform Guidance. In addition, we recommend that management review the Uniform Guidance and grant agreements carefully to understand the required basis of accounting and to implement an effective set of controls to ensure compliance with these requirements. Views of Responsible Officials and Corrective Action Plan - Management has implemented a new review and oversight process related to the process for the grant submissions in question.
Finding No. 2023-006 Federal Agency: U.S. Department of Education AL Program: 84.027 Special Education Cluster - Grants to States (IDEA, Part B) Federal Award No.: H027A200106, H027A210106, H027X210106, H027A22106, H027A230106 Area: Activities Allowed/Unallowed, Allowable Costs/Cost Principles Questioned Costs: $5,130 Criteria: 1. Per CFR §200.403(a), costs must be necessary and reasonable for the performance of the Federal award. 2. In accordance with 2 CFR §200.403, costs must be adequately documented in order to be allowable under federal programs. Condition: 1. Of ten nonpayroll expenditures tested, aggregating $184,105 of a total population of $1,241,478, one (or 10%), transaction pertains to an off-island travel from Rota to Saipan to attend PSS’ education day celebration event. There was no documentation provided to justify that such an event is necessary and reasonable for the performance of the federal award, for which the corresponding directly associated travel costs are also questioned. 2. Of thirty payroll expenditures tested, aggregating $75,035 of a total population of $3,488,866, the following were noted: a. For one (or 3%), the differential pay rate for the nine hours paid to an employee was not provided, for which the corresponding directly associated payroll costs are also questioned. b. For one (or 3%), the gross pay comprised of the employee’s payroll cost and annual leave pay out; however, the approved timesheet for the hours worked was not provided, for which the corresponding directly associated costs are also questioned. Cause: 1. PSS lacks monitoring control procedures to ensure program costs are supported; and 2. Inadequate documentation and inadequate systematic filing of relevant documentation supporting program costs. Effect or potential effect: PSS is in noncompliance with the applicable allowable costs/cost principles compliance requirements and questioned costs of $5,130 result as the projected questioned costs exceed the $25,000 threshold. Identification as Repeat Finding: Finding No. 2022-003 Recommendation: 1. PSS should implement and enforce monitoring controls over compliance with applicable allowable costs/cost principles; and 2. Establish and maintain effective systematic filing of relevant documentation to support program costs and for easier retrieval. Views of Auditee and Corrective Action Plan: PSS concurs with the audit findings and the associated questioned costs. Refer to PSS’ Corrective Action Plan for additional information.
Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Block Grants for Community Mental Health Services ALN: 93.958 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 1B09SM087345, 6B09SM087345, 1B09SM087322-01 October 1, 2022 – September 30, 2024, October 17,2022 – October 16, 2024 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403(h) cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Condition: For projects with period of performance beginning dates during the fiscal year, audit procedures included testing transactions posted to the general ledger during the first month of the award. We noted the following instances of noncompliance: For the two sampled transactions, totaling $56,997, one of the expenditures, totaling $31,254, was related to costs incurred prior to the period of performance begin date. Questioned costs: $31,254. Context: See “Condition.” Cause: Current controls are not at the correct precision level to detect costs charged outside of the period of performance. Effect: Ineffective internal controls may result in questioned costs and noncompliance with the terms of the grant. Repeat finding: No Recommendation: HHSC should enhance and/or modify existing controls to ensure that costs charged to a project have service dates within the period of performance stated in the federal award. Views of responsible officials: HHSC concurs with the finding.
Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Block Grants for Community Mental Health Services ALN: 93.958 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 1B09SM087345, 6B09SM087345, 1B09SM087322-01 October 1, 2022 – September 30, 2024, October 17,2022 – October 16, 2024 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403(h) cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Condition: For projects with period of performance beginning dates during the fiscal year, audit procedures included testing transactions posted to the general ledger during the first month of the award. We noted the following instances of noncompliance: For the two sampled transactions, totaling $56,997, one of the expenditures, totaling $31,254, was related to costs incurred prior to the period of performance begin date. Questioned costs: $31,254. Context: See “Condition.” Cause: Current controls are not at the correct precision level to detect costs charged outside of the period of performance. Effect: Ineffective internal controls may result in questioned costs and noncompliance with the terms of the grant. Repeat finding: No Recommendation: HHSC should enhance and/or modify existing controls to ensure that costs charged to a project have service dates within the period of performance stated in the federal award. Views of responsible officials: HHSC concurs with the finding.
Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Block Grants for Community Mental Health Services ALN: 93.958 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 1B09SM087345, 6B09SM087345, 1B09SM087322-01 October 1, 2022 – September 30, 2024, October 17,2022 – October 16, 2024 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403(h) cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Condition: For projects with period of performance beginning dates during the fiscal year, audit procedures included testing transactions posted to the general ledger during the first month of the award. We noted the following instances of noncompliance: For the two sampled transactions, totaling $56,997, one of the expenditures, totaling $31,254, was related to costs incurred prior to the period of performance begin date. Questioned costs: $31,254. Context: See “Condition.” Cause: Current controls are not at the correct precision level to detect costs charged outside of the period of performance. Effect: Ineffective internal controls may result in questioned costs and noncompliance with the terms of the grant. Repeat finding: No Recommendation: HHSC should enhance and/or modify existing controls to ensure that costs charged to a project have service dates within the period of performance stated in the federal award. Views of responsible officials: HHSC concurs with the finding.
Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Block Grants for Community Mental Health Services ALN: 93.958 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 1B09SM087345, 6B09SM087345, 1B09SM087322-01 October 1, 2022 – September 30, 2024, October 17,2022 – October 16, 2024 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403(h) cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Condition: For projects with period of performance beginning dates during the fiscal year, audit procedures included testing transactions posted to the general ledger during the first month of the award. We noted the following instances of noncompliance: For the two sampled transactions, totaling $56,997, one of the expenditures, totaling $31,254, was related to costs incurred prior to the period of performance begin date. Questioned costs: $31,254. Context: See “Condition.” Cause: Current controls are not at the correct precision level to detect costs charged outside of the period of performance. Effect: Ineffective internal controls may result in questioned costs and noncompliance with the terms of the grant. Repeat finding: No Recommendation: HHSC should enhance and/or modify existing controls to ensure that costs charged to a project have service dates within the period of performance stated in the federal award. Views of responsible officials: HHSC concurs with the finding.
Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Block Grants for Community Mental Health Services ALN: 93.958 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 1B09SM087345, 6B09SM087345, 1B09SM087322-01 October 1, 2022 – September 30, 2024, October 17,2022 – October 16, 2024 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403(h) cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Condition: For projects with period of performance beginning dates during the fiscal year, audit procedures included testing transactions posted to the general ledger during the first month of the award. We noted the following instances of noncompliance: For the two sampled transactions, totaling $56,997, one of the expenditures, totaling $31,254, was related to costs incurred prior to the period of performance begin date. Questioned costs: $31,254. Context: See “Condition.” Cause: Current controls are not at the correct precision level to detect costs charged outside of the period of performance. Effect: Ineffective internal controls may result in questioned costs and noncompliance with the terms of the grant. Repeat finding: No Recommendation: HHSC should enhance and/or modify existing controls to ensure that costs charged to a project have service dates within the period of performance stated in the federal award. Views of responsible officials: HHSC concurs with the finding.
Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Block Grants for Community Mental Health Services ALN: 93.958 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 1B09SM087345, 6B09SM087345, 1B09SM087322-01 October 1, 2022 – September 30, 2024, October 17,2022 – October 16, 2024 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403(h) cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Condition: For projects with period of performance beginning dates during the fiscal year, audit procedures included testing transactions posted to the general ledger during the first month of the award. We noted the following instances of noncompliance: For the two sampled transactions, totaling $56,997, one of the expenditures, totaling $31,254, was related to costs incurred prior to the period of performance begin date. Questioned costs: $31,254. Context: See “Condition.” Cause: Current controls are not at the correct precision level to detect costs charged outside of the period of performance. Effect: Ineffective internal controls may result in questioned costs and noncompliance with the terms of the grant. Repeat finding: No Recommendation: HHSC should enhance and/or modify existing controls to ensure that costs charged to a project have service dates within the period of performance stated in the federal award. Views of responsible officials: HHSC concurs with the finding.
Finding 2023-002 – Material Weakness & Material Noncompliance – Allowable Costs/Cost Principles related to Title I, Part A – Grants to Local Education Agencies, Assistance Listing Number 84.010A, Award Number 231530 and the Education Stabilization Fund, Assistance Listing Number 84.425D, Award Number 213712 Criteria: Management is responsible for complying with the specific compliance requirements set forth by the Uniform Guidance, the U.S. Department of Education, and the District’s pass-through entity Michigan Department of Education (MDE), as it relates to federally funded grants. 2 CFR 200.403 requires that costs be charged appropriately according to budget and that costs be necessary and reasonable for the performance of the grant. Condition: As a result of our audit procedures, we identified that function and object codes allocated to the Title I, Part A – Grants to Local Education Agencies were materially over the budget approved by MDE or not within the approved budget. The Education Stabilization Fund had a similar budgetary issue, however, it was not material to the grant. These grants were not overspent in total, nor would the grant expenditures tested have been considered unallowable if they had been within budget. Cause and Effect: The District’s internal control over grant compliance, along with budgetary review, were not sufficient to detect and correct errors in a timely manner. The effect was that actual costs exceeded the approved grant budget by function. Questioned Costs: Title I - The District exceeded budget by $127,769, calculated by comparing functional amounts charged to the budget by function. In addition, the District initially recorded $78,440 as a grant expenditure within the incorrect function compared to the approved budget and was subsequently reclassified to the correct function. Education Stabilization Fund - The District exceeded budget beyond the 10% allowable by function without a budget amendment by $91,851. In addition, the District initially recorded $8,761 as a grant expenditure that was not approved within the budget and was subsequently reclassified to the General Fund. Recommendation: We recommend the District expand its internal control over budgetary review of its grants, particularly in regard to reviewing MDE approved budgeted amounts to actual expenditures. Views of Responsible Officials: Management agrees with the finding. Corrective Action Plan: See attached corrective action plan.
Finding 2023-002 – Material Weakness & Material Noncompliance – Allowable Costs/Cost Principles related to Title I, Part A – Grants to Local Education Agencies, Assistance Listing Number 84.010A, Award Number 231530 and the Education Stabilization Fund, Assistance Listing Number 84.425D, Award Number 213712 Criteria: Management is responsible for complying with the specific compliance requirements set forth by the Uniform Guidance, the U.S. Department of Education, and the District’s pass-through entity Michigan Department of Education (MDE), as it relates to federally funded grants. 2 CFR 200.403 requires that costs be charged appropriately according to budget and that costs be necessary and reasonable for the performance of the grant. Condition: As a result of our audit procedures, we identified that function and object codes allocated to the Title I, Part A – Grants to Local Education Agencies were materially over the budget approved by MDE or not within the approved budget. The Education Stabilization Fund had a similar budgetary issue, however, it was not material to the grant. These grants were not overspent in total, nor would the grant expenditures tested have been considered unallowable if they had been within budget. Cause and Effect: The District’s internal control over grant compliance, along with budgetary review, were not sufficient to detect and correct errors in a timely manner. The effect was that actual costs exceeded the approved grant budget by function. Questioned Costs: Title I - The District exceeded budget by $127,769, calculated by comparing functional amounts charged to the budget by function. In addition, the District initially recorded $78,440 as a grant expenditure within the incorrect function compared to the approved budget and was subsequently reclassified to the correct function. Education Stabilization Fund - The District exceeded budget beyond the 10% allowable by function without a budget amendment by $91,851. In addition, the District initially recorded $8,761 as a grant expenditure that was not approved within the budget and was subsequently reclassified to the General Fund. Recommendation: We recommend the District expand its internal control over budgetary review of its grants, particularly in regard to reviewing MDE approved budgeted amounts to actual expenditures. Views of Responsible Officials: Management agrees with the finding. Corrective Action Plan: See attached corrective action plan.
Assistance Title: Education Stabilization Fund Assistance Listing Number: 84.425E and 84.425F Federal Agency: Department of Education Type of Finding: Significant Deficiency and Noncompliance Category of Finding: Allowable Costs and Activities Allowed Known Questioned Costs: $864 Likely Questioned Costs: Up to $3,000 Criteria: Under 2 CFR 200.403(g), costs must be adequately documented to be allowable under Federal awards. Condition: We tested a sample of sixty expenditures charged to the Education Stabilization Fund and identified two instances of noncompliance and deficiencies in internal control. For one student who received a student award under the Higher Education Emergency Relief Fund (HEERF), there was an absence of clarity regarding approved and unapproved expenditures, along with inadequate itemized receipts. Additionally, for one student who received a student award under HEERF, there was no completed application or supporting documentation to support the award. Cause: Lack of robust review process to ensure that all expenditures have detailed, appropriate supporting documentation. Effect: Unallowable costs could be incurred with Federal funds, subjecting the College to potential penalties and claw backs. Recommendation: We recommend that procedures be strengthened to ensure adequate documentation of expenses charged to Federal awards. Management’s Response: Management concurs with this finding. See Management’s Response and Corrective Action plan.
Information on Federal Program: U.S. Department of Education (Twenty-First Century Community Learning Centers, 84.287), passed through the New York State Education Department. Condition: During our testing of payroll expenditures charged to this program, it was noted that salaries were being charged that were not allowable under the grant. Criteria: Compliance under 2 CFR Part 200, Subpart E §200.403 and 200.404 under compliance requirement Allowable Costs/Cost Principles. Cause: While the District had policies in place for documentation of time and effort of salaries charged to the grant, there was a misinterpretation of the allowable costs relating to salaries being charged. Effect: Costs were charged to the grant that were unallowable in the amount of $27,980. After management discussed the specific situation with the Fiscal Manager who approved the District’s grant, management received approval to move these costs to cover allowable payroll costs the District incurred, that were allowable under the grant and not reimbursed under any other federal grants. These funds were therefore not fully required to be returned. Questioned Costs: None Perspective Information/Context: As part of testing compliance, a selection of employees charged to the grants was tested for compliance with applicable direct and material compliance requirements. Of the 40 individuals selected for testing, one employee’s time charged to the grant was for hours worked during the school day. For these specific tasks, the grant only allows for reimbursement if the time worked is outside of school hours. Therefore, the time that was related to work performed during school hours was deemed unallowable due to the time the work was performed, not the tasks being performed. This is also the first year the District received this funding. Identification of Repeat Finding: No Recommendation: We recommend that grant documents and regulations be reviewed regularly to ensure a clear understanding of the allowable costs, to ensure only allowable costs are charged to the grant at the time costs are incurred. District Response: The District acknowledges the finding regarding the unallowed costs associated with the 21st CCLC Grant. During the audit process, we found that salary costs within this grant were included in error and should not have been. We have contacted both the fiscal department for 21st CCLC and NYSED Grants Finance, in hopes to correct this issue. We adjusted the FS10F report for final expenses and copies are being sent out to the appropriate departments for correction. This issue should be resolved by January 2024 and will be implemented by the Business Manager, Christopher Karwiel.
2023 – 002 INTERNAL CONTROLS OVER DISBURSEMENTS Significant Deficiency U.S. DEPARTMENTS OF EDUCATION Federal Assistance No. 84.425U COVID-19: ARP - Elementary and Secondary Schools Emergency Relief Passthrough Agency: New Mexico Public Education Department Award Period: July 1, 2022 – June 30, 2023 Allowable Costs/Cost Principles Condition: During the testing there was an invoice in the amount of $299,271 that was paid of twice during June 2023. The expenditure was submitted for reimbursement from federal funds. The District was notified by the vendor of the double payment while asking to use it as credit against a separate invoice. Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS § 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. § 200.403 Factors affecting allowability of costs. Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non- Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. See also § 200.306(b). (g) Be adequately documented. See also § 200.300 through 200.309 of this part. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Cause: The facilities department submitted the invoice to the finance department for payment at the beginning of June and towards the end of June. The accounts payable clerk bypassed the system error that the invoice number had been entered previously. Questioned costs: $299,271 was the amount of the duplicate payment. The expenditure from the duplicate payment was not reported in the schedule of expenditures in federal awards and was reported as a receivable from the vendor in the financial statements for Fund 24330. Effect or potential effect: Expenditures could be overstated, as well as revenues, if invoices are paid more than once and then also reimbursed. As a result, a receivable and unearned income must be recognized. Recommendation: Training should be given to accounts payable staff regarding the importance system warnings and the need to monitor invoices form the vendors. A tracking system should be implemented for tracking major projects to ensure than invoices are not reported more than once. Invoices should be stamped received upon receipt, marked when applied to a major project, and marked recorded once entered into the accounting system. Management’s response: Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023
2023 – 002 INTERNAL CONTROLS OVER DISBURSEMENTS Significant Deficiency U.S. DEPARTMENTS OF EDUCATION Federal Assistance No. 84.425U COVID-19: ARP - Elementary and Secondary Schools Emergency Relief Passthrough Agency: New Mexico Public Education Department Award Period: July 1, 2022 – June 30, 2023 Allowable Costs/Cost Principles Condition: During the testing there was an invoice in the amount of $299,271 that was paid of twice during June 2023. The expenditure was submitted for reimbursement from federal funds. The District was notified by the vendor of the double payment while asking to use it as credit against a separate invoice. Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS § 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. § 200.403 Factors affecting allowability of costs. Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non- Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. See also § 200.306(b). (g) Be adequately documented. See also § 200.300 through 200.309 of this part. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Cause: The facilities department submitted the invoice to the finance department for payment at the beginning of June and towards the end of June. The accounts payable clerk bypassed the system error that the invoice number had been entered previously. Questioned costs: $299,271 was the amount of the duplicate payment. The expenditure from the duplicate payment was not reported in the schedule of expenditures in federal awards and was reported as a receivable from the vendor in the financial statements for Fund 24330. Effect or potential effect: Expenditures could be overstated, as well as revenues, if invoices are paid more than once and then also reimbursed. As a result, a receivable and unearned income must be recognized. Recommendation: Training should be given to accounts payable staff regarding the importance system warnings and the need to monitor invoices form the vendors. A tracking system should be implemented for tracking major projects to ensure than invoices are not reported more than once. Invoices should be stamped received upon receipt, marked when applied to a major project, and marked recorded once entered into the accounting system. Management’s response: Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023
2023 – 002 INTERNAL CONTROLS OVER DISBURSEMENTS Significant Deficiency U.S. DEPARTMENTS OF EDUCATION Federal Assistance No. 84.425U COVID-19: ARP - Elementary and Secondary Schools Emergency Relief Passthrough Agency: New Mexico Public Education Department Award Period: July 1, 2022 – June 30, 2023 Allowable Costs/Cost Principles Condition: During the testing there was an invoice in the amount of $299,271 that was paid of twice during June 2023. The expenditure was submitted for reimbursement from federal funds. The District was notified by the vendor of the double payment while asking to use it as credit against a separate invoice. Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS § 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. § 200.403 Factors affecting allowability of costs. Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non- Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. See also § 200.306(b). (g) Be adequately documented. See also § 200.300 through 200.309 of this part. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Cause: The facilities department submitted the invoice to the finance department for payment at the beginning of June and towards the end of June. The accounts payable clerk bypassed the system error that the invoice number had been entered previously. Questioned costs: $299,271 was the amount of the duplicate payment. The expenditure from the duplicate payment was not reported in the schedule of expenditures in federal awards and was reported as a receivable from the vendor in the financial statements for Fund 24330. Effect or potential effect: Expenditures could be overstated, as well as revenues, if invoices are paid more than once and then also reimbursed. As a result, a receivable and unearned income must be recognized. Recommendation: Training should be given to accounts payable staff regarding the importance system warnings and the need to monitor invoices form the vendors. A tracking system should be implemented for tracking major projects to ensure than invoices are not reported more than once. Invoices should be stamped received upon receipt, marked when applied to a major project, and marked recorded once entered into the accounting system. Management’s response: Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023