2023 – 027 – Supporting Documentation Federal Agency: Various Federal Program Name: Research and Development Cluster Assistance Listing Number: Various Federal Award Identification Number and Year: Various Award Period: July 1, 2022 – June 30, 2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR part 200.403(g) states costs must meet criteria to be allowable under federal awards including be adequately documented. Condition: Credit card statements and receipts for transactions in which credit cards were used were not retained. Questioned costs: None. Context: During our testing, it was noted that 1 out of the 40 tested that the University did not maintain proper support for the expenditure. Cause: The University did not maintain documentation to support the expenditure. Effect: The University did not follow the policies and procedures in place to maintain supporting documentation for expenditures. Repeat Finding: No. Recommendation: We recommend the University develop a procedure for ensuring all expenditures made via corporate credit card receive appropriate approval. We also recommend management maintain proper recordkeeping and retention of documentation. Views of responsible officials: There is no disagreement with the audit finding.
2023 – 027 – Supporting Documentation Federal Agency: Various Federal Program Name: Research and Development Cluster Assistance Listing Number: Various Federal Award Identification Number and Year: Various Award Period: July 1, 2022 – June 30, 2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR part 200.403(g) states costs must meet criteria to be allowable under federal awards including be adequately documented. Condition: Credit card statements and receipts for transactions in which credit cards were used were not retained. Questioned costs: None. Context: During our testing, it was noted that 1 out of the 40 tested that the University did not maintain proper support for the expenditure. Cause: The University did not maintain documentation to support the expenditure. Effect: The University did not follow the policies and procedures in place to maintain supporting documentation for expenditures. Repeat Finding: No. Recommendation: We recommend the University develop a procedure for ensuring all expenditures made via corporate credit card receive appropriate approval. We also recommend management maintain proper recordkeeping and retention of documentation. Views of responsible officials: There is no disagreement with the audit finding.
2023 – 027 – Supporting Documentation Federal Agency: Various Federal Program Name: Research and Development Cluster Assistance Listing Number: Various Federal Award Identification Number and Year: Various Award Period: July 1, 2022 – June 30, 2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR part 200.403(g) states costs must meet criteria to be allowable under federal awards including be adequately documented. Condition: Credit card statements and receipts for transactions in which credit cards were used were not retained. Questioned costs: None. Context: During our testing, it was noted that 1 out of the 40 tested that the University did not maintain proper support for the expenditure. Cause: The University did not maintain documentation to support the expenditure. Effect: The University did not follow the policies and procedures in place to maintain supporting documentation for expenditures. Repeat Finding: No. Recommendation: We recommend the University develop a procedure for ensuring all expenditures made via corporate credit card receive appropriate approval. We also recommend management maintain proper recordkeeping and retention of documentation. Views of responsible officials: There is no disagreement with the audit finding.
2023 – 027 – Supporting Documentation Federal Agency: Various Federal Program Name: Research and Development Cluster Assistance Listing Number: Various Federal Award Identification Number and Year: Various Award Period: July 1, 2022 – June 30, 2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR part 200.403(g) states costs must meet criteria to be allowable under federal awards including be adequately documented. Condition: Credit card statements and receipts for transactions in which credit cards were used were not retained. Questioned costs: None. Context: During our testing, it was noted that 1 out of the 40 tested that the University did not maintain proper support for the expenditure. Cause: The University did not maintain documentation to support the expenditure. Effect: The University did not follow the policies and procedures in place to maintain supporting documentation for expenditures. Repeat Finding: No. Recommendation: We recommend the University develop a procedure for ensuring all expenditures made via corporate credit card receive appropriate approval. We also recommend management maintain proper recordkeeping and retention of documentation. Views of responsible officials: There is no disagreement with the audit finding.
2023 – 027 – Supporting Documentation Federal Agency: Various Federal Program Name: Research and Development Cluster Assistance Listing Number: Various Federal Award Identification Number and Year: Various Award Period: July 1, 2022 – June 30, 2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR part 200.403(g) states costs must meet criteria to be allowable under federal awards including be adequately documented. Condition: Credit card statements and receipts for transactions in which credit cards were used were not retained. Questioned costs: None. Context: During our testing, it was noted that 1 out of the 40 tested that the University did not maintain proper support for the expenditure. Cause: The University did not maintain documentation to support the expenditure. Effect: The University did not follow the policies and procedures in place to maintain supporting documentation for expenditures. Repeat Finding: No. Recommendation: We recommend the University develop a procedure for ensuring all expenditures made via corporate credit card receive appropriate approval. We also recommend management maintain proper recordkeeping and retention of documentation. Views of responsible officials: There is no disagreement with the audit finding.
2023 – 027 – Supporting Documentation Federal Agency: Various Federal Program Name: Research and Development Cluster Assistance Listing Number: Various Federal Award Identification Number and Year: Various Award Period: July 1, 2022 – June 30, 2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR part 200.403(g) states costs must meet criteria to be allowable under federal awards including be adequately documented. Condition: Credit card statements and receipts for transactions in which credit cards were used were not retained. Questioned costs: None. Context: During our testing, it was noted that 1 out of the 40 tested that the University did not maintain proper support for the expenditure. Cause: The University did not maintain documentation to support the expenditure. Effect: The University did not follow the policies and procedures in place to maintain supporting documentation for expenditures. Repeat Finding: No. Recommendation: We recommend the University develop a procedure for ensuring all expenditures made via corporate credit card receive appropriate approval. We also recommend management maintain proper recordkeeping and retention of documentation. Views of responsible officials: There is no disagreement with the audit finding.
2023 – 027 – Supporting Documentation Federal Agency: Various Federal Program Name: Research and Development Cluster Assistance Listing Number: Various Federal Award Identification Number and Year: Various Award Period: July 1, 2022 – June 30, 2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR part 200.403(g) states costs must meet criteria to be allowable under federal awards including be adequately documented. Condition: Credit card statements and receipts for transactions in which credit cards were used were not retained. Questioned costs: None. Context: During our testing, it was noted that 1 out of the 40 tested that the University did not maintain proper support for the expenditure. Cause: The University did not maintain documentation to support the expenditure. Effect: The University did not follow the policies and procedures in place to maintain supporting documentation for expenditures. Repeat Finding: No. Recommendation: We recommend the University develop a procedure for ensuring all expenditures made via corporate credit card receive appropriate approval. We also recommend management maintain proper recordkeeping and retention of documentation. Views of responsible officials: There is no disagreement with the audit finding.
2023 – 027 – Supporting Documentation Federal Agency: Various Federal Program Name: Research and Development Cluster Assistance Listing Number: Various Federal Award Identification Number and Year: Various Award Period: July 1, 2022 – June 30, 2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR part 200.403(g) states costs must meet criteria to be allowable under federal awards including be adequately documented. Condition: Credit card statements and receipts for transactions in which credit cards were used were not retained. Questioned costs: None. Context: During our testing, it was noted that 1 out of the 40 tested that the University did not maintain proper support for the expenditure. Cause: The University did not maintain documentation to support the expenditure. Effect: The University did not follow the policies and procedures in place to maintain supporting documentation for expenditures. Repeat Finding: No. Recommendation: We recommend the University develop a procedure for ensuring all expenditures made via corporate credit card receive appropriate approval. We also recommend management maintain proper recordkeeping and retention of documentation. Views of responsible officials: There is no disagreement with the audit finding.
2023 – 029 – Supporting Documentation Federal Agency: Department of Agriculture Federal Program Name: Supplemental Nutritional Assistance Program (SNAP) Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 235KY414Q3903 - 2023 Award Period: July 1, 2022 – June 30, 2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR part 200.403(g) states costs must meet criteria to be allowable under federal awards including be adequately documented. Condition: Credit card statements and receipts for transactions in which credit cards were used were not retained. Questioned costs: None. Context: During our testing, it was noted that 1 out of the 17 tested that the University did not maintain proper support for the expenditure. Cause: The University did not maintain documentation to support the expenditure. Effect: The University did not follow the policies and procedures in place to maintain supporting documentation for expenditures. Repeat Finding: No. Recommendation: We recommend the University develop a procedure for ensuring all expenditures made via corporate credit card receive appropriate approval. We also recommend management maintain proper recordkeeping and retention of documentation. Views of responsible officials: There is no disagreement with the audit finding.
Block Grants for Prevention and Treatment of Substance Abuse ALN No. 93.959 U.S. Department of Health and Human Services Opioid STR ALN No. 93.788 U.S. Department of Health and Human Services Criteria or Specific Requirement – Activities Allowed and Unallowed and Cost Principles – 2 CFR Part 200, Subpart E, and Period of Performance – 2 CFR sections 200.308, 200.309, and 200.403(h) Condition – A sample of 80 expenditures were selected from each of the following populations: • ALN No. 93.959 – 1,631 items totaling $1,399,666 • ALN No. 93.788 – 1,728 items totaling $2,664,710 The samples were not, and are not intended to be, statistically valid. Of the 80 expenditures tested from each grant program, the following were determined to lack appropriate supporting documentation to support being charged to grant program: • ALN No. 93.959 - 47 items totaling $48,756, including projected errors over the total population totaling $582,093 • ALN No. 93.788 - 7 items totaling $30,061, including projected errors over the total population totaling $138,133 The Organization did not have adequate supporting documentation demonstrating actual time and effort reporting and lacked evidence of supporting invoices. Cause – The Organization charged budgeted percentages to the grant programs without a system in place to monitor and track that actual time and effort was consistent with budgeted percentages. In addition, the Organization charged expenditures to the grant programs without evidence of supporting invoices. Effect or potential effect – Costs charged to the grant programs could have varied from actual time and effort. In addition, costs charged to the grant could not be supported by actual invoices. Questioned costs – • ALN No. 93.959 - $48,756 • ALN No. 93.788 - $30,061 Context – The Organization did not have a reasonable methodology of allocating costs to these grant programs and did not maintain proper supporting invoices. Identification as a repeat finding, if applicable – Repeat finding (2022-003). Recommendation – Management should implement policies and procedures that strengthen internal control over compliance in relation to activities allowed and cost principles. The policy and procedure should be designed to ensure that a reasonable allocation methodology is implemented and followed or that time and effort is certified by the employee on a regular basis. In addition, management should implement a document retention policy consistent with 2 CFR 200.334.
Block Grants for Prevention and Treatment of Substance Abuse ALN No. 93.959 U.S. Department of Health and Human Services Opioid STR ALN No. 93.788 U.S. Department of Health and Human Services Criteria or Specific Requirement – Activities Allowed and Unallowed and Cost Principles – 2 CFR Part 200, Subpart E, and Period of Performance – 2 CFR sections 200.308, 200.309, and 200.403(h) Condition – A sample of 80 expenditures were selected from each of the following populations: • ALN No. 93.959 – 1,631 items totaling $1,399,666 • ALN No. 93.788 – 1,728 items totaling $2,664,710 The samples were not, and are not intended to be, statistically valid. Of the 80 expenditures tested from each grant program, the following were determined to lack appropriate supporting documentation to support being charged to grant program: • ALN No. 93.959 - 47 items totaling $48,756, including projected errors over the total population totaling $582,093 • ALN No. 93.788 - 7 items totaling $30,061, including projected errors over the total population totaling $138,133 The Organization did not have adequate supporting documentation demonstrating actual time and effort reporting and lacked evidence of supporting invoices. Cause – The Organization charged budgeted percentages to the grant programs without a system in place to monitor and track that actual time and effort was consistent with budgeted percentages. In addition, the Organization charged expenditures to the grant programs without evidence of supporting invoices. Effect or potential effect – Costs charged to the grant programs could have varied from actual time and effort. In addition, costs charged to the grant could not be supported by actual invoices. Questioned costs – • ALN No. 93.959 - $48,756 • ALN No. 93.788 - $30,061 Context – The Organization did not have a reasonable methodology of allocating costs to these grant programs and did not maintain proper supporting invoices. Identification as a repeat finding, if applicable – Repeat finding (2022-003). Recommendation – Management should implement policies and procedures that strengthen internal control over compliance in relation to activities allowed and cost principles. The policy and procedure should be designed to ensure that a reasonable allocation methodology is implemented and followed or that time and effort is certified by the employee on a regular basis. In addition, management should implement a document retention policy consistent with 2 CFR 200.334.
Criteria: Disbursements made to vendors ought to be supported with an invoice. Cost principles in 2 CFR 200.403(g) require adequate documentation. Condition: A transaction selected for testing did not have adequate documentation to support the payment that was made. Cause: The lack of a formal record keeping process to allow for invoices to be retained in a rational manner caused documentation to be misplaced. Effect or potential effect: Internal control over the financial activities of the YWCA New Hampshire are weakened. Failure to obtain and/or retain a receipt to support payment increases the risk that an inappropriate disbursement is made. Questioned costs: The questioned cost is immaterial as related to this charge without documentation. Context: The YWCA New Hampshire expended in excess of $750,000 in federal awards and assistance during the year ending June 30, 2023 requiring a compliance audit in accordance with the Uniform Guidance. The organization has not required a compliance audit in previous years and management was not aware of the various requirements of the Uniform Guidance. This was a single instance from a nonstatistical haphazard sample. 29 Recommendation: We recommend that processes and procedures be developed to ensure that all supporting documentation is filed and retained in a safe and secure location for future reference, as needed. Views of Responsible Officials: YWCA New Hampshire’s management concurs with this audit finding.
Condition: The auditee submitted reimbursement requests to the Mississippi Department of Education (MDE) that were not fully supported: Standard monthly amounts requested for Digital Learning Instructor (DLI) labor exceeded actual contract costs, resulting in overstatements. 1 of 60 items sampled lacked support for $11,700 in charges. Cause: The Consortium requested funds before receiving invoices or verifying actual expenses. There was no reconciliation process in place to verify that reimbursement requests matched actual expenditures. Effect: Federal funds were received in excess of allowable costs and not returned to the grantor. These excess reimbursements represent questioned costs which the grantor could request funds to be refunded. Criteria: In accordance with 2 CFR §200.403 and §200.430, costs must be necessary, reasonable, and allocable, and adequately documented to be allowable under federal awards. Questioned Costs: Total known questioned costs are $49,082, which includes: $37,382 related to Digital Learning Instructor (DLI) contract labor, including $34,445 in excess labor charges and $2,937 in related indirect costs. These charges were identified through a 100% review of all DLI contract labor activity for fiscal year 2023. $11,700 from a single reimbursement request that partially lacked supporting documentation. This item was identified during testing of a sample of 60 items totaling $6,545,759.87. Based on this sample, we project likely questioned costs of $16,918, using a non-statistical method. Therefore, total questioned costs are estimated at $54,300. Recommendation: Reimbursement requests should only be submitted after expenses are incurred and documented. The Consortium should wait for invoices before requesting funds, or reconcile estimates to actual costs and return excess funds, and maintain full documentation for all requests. Views of Responsible Officials: The Consortium acknowledges the finding and is working to establish a reconciliation process to identify and return any excess funds, and providing staff training on documentation and cost principles.
FINDING REFERENCE NUMBER 2023-031 (See Finding Reference Number 2023-003) FEDERAL PROGRAM (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA Uniform Guidance at 2 CFR 200 Subpart E §200.403, Factor affecting allowability of costs, establishes that: “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (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 recipient or subrecipient. (d) Be accorded consistent treatment. For example, a cost must 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 requirements of any other federally-financed program in either the current or a prior period. See § 200.306(b). (g) Be adequately documented. See §§ 200.300 through 200.309.” STATEMENT OF CONDITION As part of our audit procedures over allowable costs requirements for TANF program, we selected seven (7) voucher payments related to activities of prevention. We found the following deficiencies: (a) When we obtained the vouchers related to payments of a contractor, we also requested the contract and the proposal, we noted that the Entity is a subrecipient and not a contractor. The transactions related to this contract were not identified as subrecipient in the SEFA (see Finding Reference Number 2023-058). We audited three (3) vouchers of this subrecipient, in each one, this Entity claimed reimbursement for utilities, supplies, and materials. When we observed documentation in the file, we noted that the entity administers other Federal awards; and no evidence was observed in the voucher that proper distribution of administrative costs is made among all Federal awards. In addition, the contract required a certification indicating absence of duplication of services provided, and it was not included in the invoice or supporting documentation. (b) In the other four (4) vouchers evaluated related to payments to contractors, reimbursement claimed by the contractors included the purchase of laptops and digital screens. No evidence was provided that indicated who is responsible for this equipment, where it is located, and how it is safeguarded. These suppliers were contracted to provide training and workshops for participants of TANF. In the invoices evaluated we noted that ADSEF is paying for all costs of the entity, including supplies, maintenance of vehicles, mileage for some personnel, telephone charges, internet, and other utilities. In the final draft of the SEFA submitted for audit procedures, ADSEF reported the amount of $2,411,184, which included all transactions related to preventive services. QUESTIONED COSTS None. PERSPECTIVE INFORMATION This is a systemic deficiency. Total transactions related to prevention services were one-hundred seven (107), amounting to $2,411,184. ADSEF does not have internal guidance and procedures establishing how transactions with sub-recipients will be handled and how they are accounted for. Furthermore, there are no internal controls documenting the evaluation of the operational costs of suppliers contracted to provide a service, and their operational expenses must be covered by them and not claimed directly from the program. STATEMENT OF CAUSE ADSEF does not have a work plan and internal control guidance that clearly defines permissible activities and describes the activities that will be carried out to meet program requirements through the contracting of suppliers and sub-recipients. POSSIBLE ASSERTED EFFECT ADSEF may be incurring non-allowable costs by reimbursing expenses not properly stipulated in the allowable cost regulations for program administration. Furthermore, the expenses incurred by the sub-recipient are not identified in the database in a manner that allows them to be identified for the preparation of the SEFA. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend management to establish internal control processes consistent with the requirements of 2 CFR 200. In addition, design and implement internal control processes to meet the requirements of subrecipient monitoring and procurement standards.
2023-001 Supporting Documentation and Approval of Disbursements Federal Program - U.S. Department of the Treasury – Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027) Federal Award Number - SLFRP0136 Compliance Requirement - Allowable Costs/Cost Principles (2 CFR § 200.403 and § 200.302) Criteria - Per 2 CFR § 200.403(g), to be allowable under a federal award, costs must be adequately documented. Additionally, 2 CFR § 200.302 requires the non-Federal entity to establish and maintain effective internal controls over federal awards that provide reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of the award. Condition - During our testing of expense and disbursement transactions charged to the federal program, we identified instances where payments were made without adequate supporting documentation or evidence of appropriate review and approval. While the costs appear consistent with the purpose of the program and are considered allowable in nature, the absence of documentation limits the ability to verify the appropriateness and accuracy of the expenditures. A majority of these transactions were related to temporary housing assistance, including payments to hotels. Cause - The organization does not currently have or did not follow a formal process to ensure that all disbursements are properly documented and reviewed. Effect - Failure to maintain adequate documentation impairs the organization’s ability to demonstrate compliance with federal requirements and increases the risk of errors or inappropriate expenditures going undetected. Questioned Costs - $0. No costs are questioned at this time, as the disbursements appear consistent with program objectives. Recommendation - We recommend that the organization strengthen internal controls over the disbursement process by implementing procedures requiring all expenses to be supported by documentation such as invoices or receipts and be reviewed and approved by appropriate personnel prior to payment. This is especially important for recurring or program-critical costs such as temporary housing. Views of Responsible Officials - we agree with the finding and determined it was due to an oversight by the organization on establishing proper procedures for a new program. Verbal communications were not recorded appropriately and approvals were not signed by management.
Type of finding: Federal Award. Situation: Material weakness; Material noncompliance with federal regulations. Federal Program: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing 21.027 Compliance Requirements: Activities allowed or unallowed / Allowable costs/Cost Principle Prior-Year(s) Audit Finding(s): 2022-004 Questioned Costs: $164,619 Condition: The Municipality could not provide supporting documentation for the disbursement of $164,619 of program funds. Documentation for the disbursement of $164,619 of program funds was not identified by the Municipality nor provided for our review, therefore we could not ascertain that the disbursements complied with program regulations. Context: The Municipality recognized as revenue $3,518,621 during the fiscal year ended on June 30, 2023. A total of $164,619 of program funds were disbursed without sufficient and appropriate documentation. The Municipality indicated that Revenue Replacement was their only project expenditure category on their annual March 2023 SLFRF Compliance Report. Revenue loss in and of itself is not an eligible use. Instead, recipients calculate lost revenue based on the formula provided in the Interim Final Rule and Final Rule to determine the limit for funds that can be used for the provision of government services. Entities are expected to use the direct payments to meet pandemic response needs and rebuild a strong, more equitable economy as the country recovers. Interim and final regulations state that recipients may not use funds to pay interest or principal on outstanding debt, as these expenses would not address the needs of pandemic response or its negative economic impacts. Such expenses would also not be considered provision of government services, as these financing expenses do not directly provide services or aid to citizens. The Coronavirus State and Local Fiscal Recovery Funds program is authorized by sections 602 and 603 of the Social Security Act as added by section 9901 of the American Rescue Plan Act of 2021, Pub. L. No. 117-2 (Mar. 11, 2021). Recipients may use payments from the Fund to among other things, replace lost public sector revenue to provide government services. Criteria: Uniform Guidance states in 2 CFR 200.403 that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. As per 2 CFR 200.302 the other non-Federal entity’s financial management system must provide for the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statues, regulations, and the terms and conditions of the Federal Award. Further, Coronavirus Local Fiscal Recovery Fund Award terms and conditions state the following regarding the maintenance of and Access to Records: 1. Recipient shall maintain records and financial documents sufficient to evidence compliance with section 603 © of the Act, Treasury’s regulations implementing that section, and guidance issued by Treasury regarding the foregoing. 2. The Treasury Office of Inspector General and the Government Accountability Office, or their authorized representatives, shall have the right of access of records (electronic or otherwise) of Recipient in order to conduct audits or other investigations. 3. Records shall be maintained by the Recipient for a period of five (5) years after all funds have been expended or returned the Treasury, whichever is later. Cause: The Municipality applied inconsistent program procedures to disbursement transactions totaling $164,619. Effect: Coronavirus Local Fiscal Recovery Fund Award terms and conditions state the following regarding Remedial Actions: In the event of recipient’s noncompliance with section 603 of the Act, other applicable laws, Treasury’s implementing regulations, guidance, or any reporting or other program requirements, Treasury may impose additional conditions on the receipt of a subsequent tranche of future award funds, if any, or take other available remedies as set forth in 2 CFR 200.339. In case of a violation of section 603 © of the Act regarding the use of funds, previous payments shall be subject to recoupment as provided in section 603 © of the Act. Auditor’s recommendation: The Municipality must strengthen internal controls and procedures to ensure that disbursement of program funds is properly documented and allowed under program regulations. The Municipality must ensure that all documentation that serves as evidence for eligible expenses be preserved and maintained for at least five years. 2023-003, cont. Views of Responsible officials and corrective actions:
Type of finding: Federal Award. Situation: Material weakness; material noncompliance with federal regulations. Federal Program: Disaster Grants – Public Assistance (Presidentially Declared Disasters) Assistance Listing 97.036 Compliance Requirements: Activities allowed or unallowed / Allowable costs/Cost Principle Prior-Year(s) Audit Finding(s): 2022-005, 2021-002 Questioned Costs: $14,435 Condition: The Municipality could not provide supporting documentation for the disbursement of $14,435 of program funds. Documentation for the disbursement of $14,435 of program funds was not identified by the Municipality nor provided for our review, therefore we could not ascertain that the disbursements complied with program regulations. Context: A total of $14,435 of program funds were disbursed without sufficient and appropriate documentation. In previous years, program funds were also disbursed without sufficient and appropriate documentation and were accounted for as increases in the due from other funds account. The Municipality repaid during the current year the amount of $49,839. As of June 30, 2023 the balance of the due from other funds account is $505,271. Program regulation states that costs must be directly tied to the performance of eligible work; adequately documented; reduced by all applicable credits, such as insurance proceeds and salvage values; authorized and not prohibited under Federal or State government laws or regulation; consistent with the applicant’s internal policies, regulations, and procedures that apply uniformly toboth Federal awards and other activities of the applicant; and necessary and reasonable to accomplish the work properly and efficiently. We could not ascertain that these disbursements complied with program regulations. The Public Assistance Program is authorized under the Robert T. Stafford Disaster Relief and Emergency assistance Act, as Amended (Stafford Act). Assistance is provided so that communities can quickly respond to and recover from major disasters or emergencies declared by the President. The Municipality has approved grants for the Hurricane Irma and Maria disasters declared on September 2017 (disasters 3384EMPR, 4336 DRPR and 4339 DRPR). The program approves funding for debris removal, emergency protective measures, and the restoration of disaster-damaged, publicly owned facilities. It also encourages protection of damaged facilities from future incidents by providing assistance for hazard mitigation measures. Criteria: Uniform Guidance states in 2 CFR 200.403 that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. As per 2 CFR 200.302 the other non-Federal entity’s financial management system must provide for the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statues, regulations, and the terms and conditions of the Federal Award. As per 44 CFR section 206.201 and 206.203, the public assistance program provides grant funding for emergency protective measures and debris removal (Emergency Work) and for permanent restoration of damaged facilities, including cost-effective hazard mitigation to protect facilities from future damage (Permanent Work) Cause: The Municipality applied inconsistent program procedures to the three disbursement transactions totaling $189,389 Effect: Remedies for noncompliance are described in 2 CFR 200.339. Grantor may impose additional conditions as described in 2 CRF 200.208 or take one or more of the actions listed on 2 CRF 200.339 as appropriate in the circumstances. Program regulations provide for recovery of assistance and penalty provisions on 44 CFR Part 206. Auditor’s recommendation: The Municipality must strengthen internal controls and procedures to assure that disbursement of program funds are properly documented, can be directly tied to the performance of eligible work, and is allowed under program regulations. Views of Responsible officials and corrective actions:
U.S. Department of Health and Human Services Medicaid Cluster: State Medicaid Fraud Control Units, 93.775 State Survey and Certification of Health Care Providers and Suppliers (Title XVIII) Medicare, 93.777 Medical Assistance Program (Medicaid; Title XIX), 93.778 Allowable Activities and Allowable Costs/Cost Principles Material Weakness in Internal Control over Compliance Grant Award Number: Affects all grant awards included under assistance listing 93.778 on the Schedule of Expenditures of Federal Awards. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.403 provides that costs must be adequately documented to support the allowability of the cost. Condition: Underlying supporting documentation for certain administrative costs was not maintained by the Division of Health Care Financing and Policy (DHCFP). Cause: DHCFP did not have adequate internal controls to ensure supporting documentation for administrative expenditures was maintained. Effect: Administrative costs were charged to the federal program without appropriate supporting documentation. Questioned Costs: $5,459 Context/Sampling: A nonstatistical sample of 60 transactions ($634,037) out of a population of 4,335 transactions ($134,939,132) was selected for testing. No documentation was available to support seven transactions, totaling $5,459, that were charged to the federal program. These charges included general ledger descriptions of: • Per diem in-state • Annual leave • Building and grounds lease assessment • IT virtual server hosting • IT security assessment Of the seven transactions, five were journal vouchers that did not contain the underlying support for the journal voucher. One transaction was coded as a direct payment voucher and one transaction was coded as an expenditure to a cash receipt (rather than payment voucher). Repeat Finding from Prior Year: No Recommendation: We recommend DHCFP enhance internal controls to ensure supporting documentation for administrative expenditures is maintained. Views of Responsible Officials: The Division of Health Care Financing and Policy agrees with this finding.
Finding 2023-002 – Material Weakness & Material Noncompliance – Allowable Costs/Cost Principles related to Title I, Part A – Grants to Local Education Agencies, Assistance Listing Number 84.010A, Award Number 231530 and the Education Stabilization Fund, Assistance Listing Number 84.425D, Award Number 213712 Criteria: Management is responsible for complying with the specific compliance requirements set forth by the Uniform Guidance, the U.S. Department of Education, and the District’s pass-through entity Michigan Department of Education (MDE), as it relates to federally funded grants. 2 CFR 200.403 requires that costs be charged appropriately according to budget and that costs be necessary and reasonable for the performance of the grant. Condition: As a result of our audit procedures, we identified that function and object codes allocated to the Title I, Part A – Grants to Local Education Agencies were materially over the budget approved by MDE or not within the approved budget. The Education Stabilization Fund had a similar budgetary issue, however, it was not material to the grant. These grants were not overspent in total, nor would the grant expenditures tested have been considered unallowable if they had been within budget. Cause and Effect: The District’s internal control over grant compliance, along with budgetary review, were not sufficient to detect and correct errors in a timely manner. The effect was that actual costs exceeded the approved grant budget by function. Questioned Costs: Title I - The District exceeded budget by $127,769, calculated by comparing functional amounts charged to the budget by function. In addition, the District initially recorded $78,440 as a grant expenditure within the incorrect function compared to the approved budget and was subsequently reclassified to the correct function. Education Stabilization Fund - The District exceeded budget beyond the 10% allowable by function without a budget amendment by $91,851. In addition, the District initially recorded $8,761 as a grant expenditure that was not approved within the budget and was subsequently reclassified to the General Fund. Recommendation: We recommend the District expand its internal control over budgetary review of its grants, particularly in regard to reviewing MDE approved budgeted amounts to actual expenditures. Views of Responsible Officials: Management agrees with the finding. Corrective Action Plan: See attached corrective action plan.
Finding 2023-002 – Material Weakness & Material Noncompliance – Allowable Costs/Cost Principles related to Title I, Part A – Grants to Local Education Agencies, Assistance Listing Number 84.010A, Award Number 231530 and the Education Stabilization Fund, Assistance Listing Number 84.425D, Award Number 213712 Criteria: Management is responsible for complying with the specific compliance requirements set forth by the Uniform Guidance, the U.S. Department of Education, and the District’s pass-through entity Michigan Department of Education (MDE), as it relates to federally funded grants. 2 CFR 200.403 requires that costs be charged appropriately according to budget and that costs be necessary and reasonable for the performance of the grant. Condition: As a result of our audit procedures, we identified that function and object codes allocated to the Title I, Part A – Grants to Local Education Agencies were materially over the budget approved by MDE or not within the approved budget. The Education Stabilization Fund had a similar budgetary issue, however, it was not material to the grant. These grants were not overspent in total, nor would the grant expenditures tested have been considered unallowable if they had been within budget. Cause and Effect: The District’s internal control over grant compliance, along with budgetary review, were not sufficient to detect and correct errors in a timely manner. The effect was that actual costs exceeded the approved grant budget by function. Questioned Costs: Title I - The District exceeded budget by $127,769, calculated by comparing functional amounts charged to the budget by function. In addition, the District initially recorded $78,440 as a grant expenditure within the incorrect function compared to the approved budget and was subsequently reclassified to the correct function. Education Stabilization Fund - The District exceeded budget beyond the 10% allowable by function without a budget amendment by $91,851. In addition, the District initially recorded $8,761 as a grant expenditure that was not approved within the budget and was subsequently reclassified to the General Fund. Recommendation: We recommend the District expand its internal control over budgetary review of its grants, particularly in regard to reviewing MDE approved budgeted amounts to actual expenditures. Views of Responsible Officials: Management agrees with the finding. Corrective Action Plan: See attached corrective action plan.
Assistance Title: Education Stabilization Fund Assistance Listing Number: 84.425E and 84.425F Federal Agency: Department of Education Type of Finding: Significant Deficiency and Noncompliance Category of Finding: Allowable Costs and Activities Allowed Known Questioned Costs: $864 Likely Questioned Costs: Up to $3,000 Criteria: Under 2 CFR 200.403(g), costs must be adequately documented to be allowable under Federal awards. Condition: We tested a sample of sixty expenditures charged to the Education Stabilization Fund and identified two instances of noncompliance and deficiencies in internal control. For one student who received a student award under the Higher Education Emergency Relief Fund (HEERF), there was an absence of clarity regarding approved and unapproved expenditures, along with inadequate itemized receipts. Additionally, for one student who received a student award under HEERF, there was no completed application or supporting documentation to support the award. Cause: Lack of robust review process to ensure that all expenditures have detailed, appropriate supporting documentation. Effect: Unallowable costs could be incurred with Federal funds, subjecting the College to potential penalties and claw backs. Recommendation: We recommend that procedures be strengthened to ensure adequate documentation of expenses charged to Federal awards. Management’s Response: Management concurs with this finding. See Management’s Response and Corrective Action plan.
Information on Federal Program: U.S. Department of Education (Twenty-First Century Community Learning Centers, 84.287), passed through the New York State Education Department. Condition: During our testing of payroll expenditures charged to this program, it was noted that salaries were being charged that were not allowable under the grant. Criteria: Compliance under 2 CFR Part 200, Subpart E §200.403 and 200.404 under compliance requirement Allowable Costs/Cost Principles. Cause: While the District had policies in place for documentation of time and effort of salaries charged to the grant, there was a misinterpretation of the allowable costs relating to salaries being charged. Effect: Costs were charged to the grant that were unallowable in the amount of $27,980. After management discussed the specific situation with the Fiscal Manager who approved the District’s grant, management received approval to move these costs to cover allowable payroll costs the District incurred, that were allowable under the grant and not reimbursed under any other federal grants. These funds were therefore not fully required to be returned. Questioned Costs: None Perspective Information/Context: As part of testing compliance, a selection of employees charged to the grants was tested for compliance with applicable direct and material compliance requirements. Of the 40 individuals selected for testing, one employee’s time charged to the grant was for hours worked during the school day. For these specific tasks, the grant only allows for reimbursement if the time worked is outside of school hours. Therefore, the time that was related to work performed during school hours was deemed unallowable due to the time the work was performed, not the tasks being performed. This is also the first year the District received this funding. Identification of Repeat Finding: No Recommendation: We recommend that grant documents and regulations be reviewed regularly to ensure a clear understanding of the allowable costs, to ensure only allowable costs are charged to the grant at the time costs are incurred. District Response: The District acknowledges the finding regarding the unallowed costs associated with the 21st CCLC Grant. During the audit process, we found that salary costs within this grant were included in error and should not have been. We have contacted both the fiscal department for 21st CCLC and NYSED Grants Finance, in hopes to correct this issue. We adjusted the FS10F report for final expenses and copies are being sent out to the appropriate departments for correction. This issue should be resolved by January 2024 and will be implemented by the Business Manager, Christopher Karwiel.
2023 – 002 INTERNAL CONTROLS OVER DISBURSEMENTS Significant Deficiency U.S. DEPARTMENTS OF EDUCATION Federal Assistance No. 84.425U COVID-19: ARP - Elementary and Secondary Schools Emergency Relief Passthrough Agency: New Mexico Public Education Department Award Period: July 1, 2022 – June 30, 2023 Allowable Costs/Cost Principles Condition: During the testing there was an invoice in the amount of $299,271 that was paid of twice during June 2023. The expenditure was submitted for reimbursement from federal funds. The District was notified by the vendor of the double payment while asking to use it as credit against a separate invoice. Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS § 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. § 200.403 Factors affecting allowability of costs. Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non- Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. See also § 200.306(b). (g) Be adequately documented. See also § 200.300 through 200.309 of this part. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Cause: The facilities department submitted the invoice to the finance department for payment at the beginning of June and towards the end of June. The accounts payable clerk bypassed the system error that the invoice number had been entered previously. Questioned costs: $299,271 was the amount of the duplicate payment. The expenditure from the duplicate payment was not reported in the schedule of expenditures in federal awards and was reported as a receivable from the vendor in the financial statements for Fund 24330. Effect or potential effect: Expenditures could be overstated, as well as revenues, if invoices are paid more than once and then also reimbursed. As a result, a receivable and unearned income must be recognized. Recommendation: Training should be given to accounts payable staff regarding the importance system warnings and the need to monitor invoices form the vendors. A tracking system should be implemented for tracking major projects to ensure than invoices are not reported more than once. Invoices should be stamped received upon receipt, marked when applied to a major project, and marked recorded once entered into the accounting system. Management’s response: Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023
2023 – 002 INTERNAL CONTROLS OVER DISBURSEMENTS Significant Deficiency U.S. DEPARTMENTS OF EDUCATION Federal Assistance No. 84.425U COVID-19: ARP - Elementary and Secondary Schools Emergency Relief Passthrough Agency: New Mexico Public Education Department Award Period: July 1, 2022 – June 30, 2023 Allowable Costs/Cost Principles Condition: During the testing there was an invoice in the amount of $299,271 that was paid of twice during June 2023. The expenditure was submitted for reimbursement from federal funds. The District was notified by the vendor of the double payment while asking to use it as credit against a separate invoice. Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS § 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. § 200.403 Factors affecting allowability of costs. Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non- Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. See also § 200.306(b). (g) Be adequately documented. See also § 200.300 through 200.309 of this part. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Cause: The facilities department submitted the invoice to the finance department for payment at the beginning of June and towards the end of June. The accounts payable clerk bypassed the system error that the invoice number had been entered previously. Questioned costs: $299,271 was the amount of the duplicate payment. The expenditure from the duplicate payment was not reported in the schedule of expenditures in federal awards and was reported as a receivable from the vendor in the financial statements for Fund 24330. Effect or potential effect: Expenditures could be overstated, as well as revenues, if invoices are paid more than once and then also reimbursed. As a result, a receivable and unearned income must be recognized. Recommendation: Training should be given to accounts payable staff regarding the importance system warnings and the need to monitor invoices form the vendors. A tracking system should be implemented for tracking major projects to ensure than invoices are not reported more than once. Invoices should be stamped received upon receipt, marked when applied to a major project, and marked recorded once entered into the accounting system. Management’s response: Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023
2023 – 002 INTERNAL CONTROLS OVER DISBURSEMENTS Significant Deficiency U.S. DEPARTMENTS OF EDUCATION Federal Assistance No. 84.425U COVID-19: ARP - Elementary and Secondary Schools Emergency Relief Passthrough Agency: New Mexico Public Education Department Award Period: July 1, 2022 – June 30, 2023 Allowable Costs/Cost Principles Condition: During the testing there was an invoice in the amount of $299,271 that was paid of twice during June 2023. The expenditure was submitted for reimbursement from federal funds. The District was notified by the vendor of the double payment while asking to use it as credit against a separate invoice. Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS § 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. § 200.403 Factors affecting allowability of costs. Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non- Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. See also § 200.306(b). (g) Be adequately documented. See also § 200.300 through 200.309 of this part. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Cause: The facilities department submitted the invoice to the finance department for payment at the beginning of June and towards the end of June. The accounts payable clerk bypassed the system error that the invoice number had been entered previously. Questioned costs: $299,271 was the amount of the duplicate payment. The expenditure from the duplicate payment was not reported in the schedule of expenditures in federal awards and was reported as a receivable from the vendor in the financial statements for Fund 24330. Effect or potential effect: Expenditures could be overstated, as well as revenues, if invoices are paid more than once and then also reimbursed. As a result, a receivable and unearned income must be recognized. Recommendation: Training should be given to accounts payable staff regarding the importance system warnings and the need to monitor invoices form the vendors. A tracking system should be implemented for tracking major projects to ensure than invoices are not reported more than once. Invoices should be stamped received upon receipt, marked when applied to a major project, and marked recorded once entered into the accounting system. Management’s response: Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023
2023 – 002 INTERNAL CONTROLS OVER DISBURSEMENTS Significant Deficiency U.S. DEPARTMENTS OF EDUCATION Federal Assistance No. 84.425U COVID-19: ARP - Elementary and Secondary Schools Emergency Relief Passthrough Agency: New Mexico Public Education Department Award Period: July 1, 2022 – June 30, 2023 Allowable Costs/Cost Principles Condition: During the testing there was an invoice in the amount of $299,271 that was paid of twice during June 2023. The expenditure was submitted for reimbursement from federal funds. The District was notified by the vendor of the double payment while asking to use it as credit against a separate invoice. Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS § 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. § 200.403 Factors affecting allowability of costs. Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non- Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. See also § 200.306(b). (g) Be adequately documented. See also § 200.300 through 200.309 of this part. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Cause: The facilities department submitted the invoice to the finance department for payment at the beginning of June and towards the end of June. The accounts payable clerk bypassed the system error that the invoice number had been entered previously. Questioned costs: $299,271 was the amount of the duplicate payment. The expenditure from the duplicate payment was not reported in the schedule of expenditures in federal awards and was reported as a receivable from the vendor in the financial statements for Fund 24330. Effect or potential effect: Expenditures could be overstated, as well as revenues, if invoices are paid more than once and then also reimbursed. As a result, a receivable and unearned income must be recognized. Recommendation: Training should be given to accounts payable staff regarding the importance system warnings and the need to monitor invoices form the vendors. A tracking system should be implemented for tracking major projects to ensure than invoices are not reported more than once. Invoices should be stamped received upon receipt, marked when applied to a major project, and marked recorded once entered into the accounting system. Management’s response: Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023
2023 – 002 INTERNAL CONTROLS OVER DISBURSEMENTS Significant Deficiency U.S. DEPARTMENTS OF EDUCATION Federal Assistance No. 84.425U COVID-19: ARP - Elementary and Secondary Schools Emergency Relief Passthrough Agency: New Mexico Public Education Department Award Period: July 1, 2022 – June 30, 2023 Allowable Costs/Cost Principles Condition: During the testing there was an invoice in the amount of $299,271 that was paid of twice during June 2023. The expenditure was submitted for reimbursement from federal funds. The District was notified by the vendor of the double payment while asking to use it as credit against a separate invoice. Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS § 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. § 200.403 Factors affecting allowability of costs. Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non- Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. See also § 200.306(b). (g) Be adequately documented. See also § 200.300 through 200.309 of this part. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Cause: The facilities department submitted the invoice to the finance department for payment at the beginning of June and towards the end of June. The accounts payable clerk bypassed the system error that the invoice number had been entered previously. Questioned costs: $299,271 was the amount of the duplicate payment. The expenditure from the duplicate payment was not reported in the schedule of expenditures in federal awards and was reported as a receivable from the vendor in the financial statements for Fund 24330. Effect or potential effect: Expenditures could be overstated, as well as revenues, if invoices are paid more than once and then also reimbursed. As a result, a receivable and unearned income must be recognized. Recommendation: Training should be given to accounts payable staff regarding the importance system warnings and the need to monitor invoices form the vendors. A tracking system should be implemented for tracking major projects to ensure than invoices are not reported more than once. Invoices should be stamped received upon receipt, marked when applied to a major project, and marked recorded once entered into the accounting system. Management’s response: Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023
2023 – 002 INTERNAL CONTROLS OVER DISBURSEMENTS Significant Deficiency U.S. DEPARTMENTS OF EDUCATION Federal Assistance No. 84.425U COVID-19: ARP - Elementary and Secondary Schools Emergency Relief Passthrough Agency: New Mexico Public Education Department Award Period: July 1, 2022 – June 30, 2023 Allowable Costs/Cost Principles Condition: During the testing there was an invoice in the amount of $299,271 that was paid of twice during June 2023. The expenditure was submitted for reimbursement from federal funds. The District was notified by the vendor of the double payment while asking to use it as credit against a separate invoice. Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS § 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. § 200.403 Factors affecting allowability of costs. Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non- Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. See also § 200.306(b). (g) Be adequately documented. See also § 200.300 through 200.309 of this part. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Cause: The facilities department submitted the invoice to the finance department for payment at the beginning of June and towards the end of June. The accounts payable clerk bypassed the system error that the invoice number had been entered previously. Questioned costs: $299,271 was the amount of the duplicate payment. The expenditure from the duplicate payment was not reported in the schedule of expenditures in federal awards and was reported as a receivable from the vendor in the financial statements for Fund 24330. Effect or potential effect: Expenditures could be overstated, as well as revenues, if invoices are paid more than once and then also reimbursed. As a result, a receivable and unearned income must be recognized. Recommendation: Training should be given to accounts payable staff regarding the importance system warnings and the need to monitor invoices form the vendors. A tracking system should be implemented for tracking major projects to ensure than invoices are not reported more than once. Invoices should be stamped received upon receipt, marked when applied to a major project, and marked recorded once entered into the accounting system. Management’s response: Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023
2023 – 002 INTERNAL CONTROLS OVER DISBURSEMENTS Significant Deficiency U.S. DEPARTMENTS OF EDUCATION Federal Assistance No. 84.425U COVID-19: ARP - Elementary and Secondary Schools Emergency Relief Passthrough Agency: New Mexico Public Education Department Award Period: July 1, 2022 – June 30, 2023 Allowable Costs/Cost Principles Condition: During the testing there was an invoice in the amount of $299,271 that was paid of twice during June 2023. The expenditure was submitted for reimbursement from federal funds. The District was notified by the vendor of the double payment while asking to use it as credit against a separate invoice. Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS § 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. § 200.403 Factors affecting allowability of costs. Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non- Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. See also § 200.306(b). (g) Be adequately documented. See also § 200.300 through 200.309 of this part. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Cause: The facilities department submitted the invoice to the finance department for payment at the beginning of June and towards the end of June. The accounts payable clerk bypassed the system error that the invoice number had been entered previously. Questioned costs: $299,271 was the amount of the duplicate payment. The expenditure from the duplicate payment was not reported in the schedule of expenditures in federal awards and was reported as a receivable from the vendor in the financial statements for Fund 24330. Effect or potential effect: Expenditures could be overstated, as well as revenues, if invoices are paid more than once and then also reimbursed. As a result, a receivable and unearned income must be recognized. Recommendation: Training should be given to accounts payable staff regarding the importance system warnings and the need to monitor invoices form the vendors. A tracking system should be implemented for tracking major projects to ensure than invoices are not reported more than once. Invoices should be stamped received upon receipt, marked when applied to a major project, and marked recorded once entered into the accounting system. Management’s response: Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023
2023 – 002 INTERNAL CONTROLS OVER DISBURSEMENTS Significant Deficiency U.S. DEPARTMENTS OF EDUCATION Federal Assistance No. 84.425U COVID-19: ARP - Elementary and Secondary Schools Emergency Relief Passthrough Agency: New Mexico Public Education Department Award Period: July 1, 2022 – June 30, 2023 Allowable Costs/Cost Principles Condition: During the testing there was an invoice in the amount of $299,271 that was paid of twice during June 2023. The expenditure was submitted for reimbursement from federal funds. The District was notified by the vendor of the double payment while asking to use it as credit against a separate invoice. Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS § 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. § 200.403 Factors affecting allowability of costs. Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non- Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. See also § 200.306(b). (g) Be adequately documented. See also § 200.300 through 200.309 of this part. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Cause: The facilities department submitted the invoice to the finance department for payment at the beginning of June and towards the end of June. The accounts payable clerk bypassed the system error that the invoice number had been entered previously. Questioned costs: $299,271 was the amount of the duplicate payment. The expenditure from the duplicate payment was not reported in the schedule of expenditures in federal awards and was reported as a receivable from the vendor in the financial statements for Fund 24330. Effect or potential effect: Expenditures could be overstated, as well as revenues, if invoices are paid more than once and then also reimbursed. As a result, a receivable and unearned income must be recognized. Recommendation: Training should be given to accounts payable staff regarding the importance system warnings and the need to monitor invoices form the vendors. A tracking system should be implemented for tracking major projects to ensure than invoices are not reported more than once. Invoices should be stamped received upon receipt, marked when applied to a major project, and marked recorded once entered into the accounting system. Management’s response: Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023
8. Criteria or specific requirement (including statutory, regulatory, or other citation): The compliance requirements for B. Allowability of Costs pursuant to § 200.403 state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…”. Further, LEA personnel must also provide program-specific assurances related to the ESSER program when completing the grant application. These assurances are reflected in the Uniform Guidance, § 200.415 – Required Certifications, and include provisions that require LEAs “to assure that expenditures are proper and in accordance with the terms and conditions of the Federal award and approved project budgets…”. 9. Condition: A sample of 118 payroll-related expenditures were randomly selected for testing using a random sampling approach, of which included a total of 37 district employees paid & claimed under this grant. These payroll-related expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. Upon completing this testing, we noted the following discrepancies: -There were 4 employee salary & benefits claimed that were not included in the 22-4998-E3 grant budget detail. The budget specified teachers & paraprofessionals, and support staff were not included, resulting in known questioned costs of $4,857.50. -There were 11 employees where a portion of the claimed payroll & benefits were deemed allowable per the budget but $8,947.88 was deemed not allowable, resulting in known questioned costs of $8,947.88. -Additionally, there were $6,686.25 of the employee salary & benefits that was not deemed allowable per the budget as the pay period dates did not align with “loss of learning” related pay dates or other approved activities. 10. Questioned Costs: $20,492 of known questioned costs (based on testing 30.49% of population). $67,209 of projected questioned costs (estimate based on 100% of population). 11. Context: Upon testing a sample of $200,352.23 of payroll-related expenditures, known questioned costs of $20,491.63 were identified. Using the total salary & benefits claimed at 6/30/23 population of $722,722, we project the likely questioned costs to be approximately $67,209.45. 12. Effect: The District’s was not in compliance with the Uniform Guidance related to the ESSER program. Failure to accurately develop and amend budget information throughout the application process and verify compliance with applicable policies and regulations prior to the expenditure of federal program funds may expose the District to unnecessary financial strains and shortages as ISBE may require the District to return funds associated with unapproved and unallowable expenditures. 13. Cause: The District did not establish appropriate internal control procedures, such as a review by appropriate personnel to ensure compliance with the approved ESSER 22-4998-E3 Budget prior to the expenditure of federal funds. Additionally, the existence of multiple ESSER programs and lack of understanding of the related grant application led to the District’s failure to establish appropriate internal control procedures to ensure the expenditure was properly claimed per the approved itemized budget that funded the expenditure. 14. Recommendation: The District should develop and/or modify its policies and procedures to ensure that potential expenditures are approved are deemed to be allowable before spending federal funds. In addition, management should develop and implement a monitoring process to ensure that control procedures are being followed. 15. Management's response: The District has agreed with the findings and recommendations as presented. See Corrective Action Plan provided by the District.
Finding 2023-002: Questioned Cost – Material Weakness Criteria: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). Also, costs should not be included as a cost of any other federally financed programs in either the current or prior period. Costs charged to federal grants should be reviewed by an individual familiar with the Cost Principles for Nonprofit Organizations contained in 2 CFR, Section 200 as part of the SEFA review process. Condition: Costs for US Department of Transportation, Mobility Management Grant 20.507 Section 5307 included a $30,000 charge for use of the Data Management System (DMS). The charge is based on a contract rate charged to outside entities that varies depending on the number of users. Management stated the charge was to recoup costs for use of the DMS. Costs for the DMS consist of historical costs to get the system functioning, along with current personnel costs to operate the system and provide the contracted training. The historical costs occurred outside the period of performance and are thus unallowable. Personnel costs are already being charged to the grant through the allocated payroll and benefits of trainers and other personnel, and thus should not also be charged through the contract rate. In addition, if the contract rate includes a profit component this would also be unallowable to charge to the grant. We also noted the same $30,000 charge was included in US Department of Transportation, Enhanced Mobility of Seniors and Individuals with Disabilities, Section 5310. Cause: Paratransit’s internal controls over the determination of allowable costs were not operating effectively. Effect: The DMS costs were removed and replaced with an allowable 10% de minimus overhead charge. Recommendation: We recommend that costs charged to federal grants be reviewed by an individual familiar with the Cost Principles for Nonprofit Organizations contained in 2 CFR, Section 200 as part of the SEFA review process. Management’s Response: See corrective action plan.
Disaster Grants – Public Assistance (Presidentially Declared Disasters) Assistance Listing Numbers – 97.036 Criteria: The Uniform Guidance Federal regulations per 2 CFR section 200.403 requires among other things, the specific criteria be met, costs are adequately documented and be necessary and reasonable for the performance of the federal award and be allocable thereto under these principles. Universe/Population: The total population was all employees using equipment for the purpose of aid to the general public during the Presidentially Declared Emergency period. Based on these requirements, the population consisted of 435 individuals, 1,863 days, and a total dollar amount of $593,233. Condition: 40 individuals spanning a total of 393 days with a total dollar amount of $117,899 were selected for testing. We noted for two individuals, on 3 separate days, charges were more for equipment hours than the employees were physically at work. The Louisiana State Police (LSP), in its oversite capacity had reviewed 100% of the charges and found overages, including the two individuals noted in our sampled test, for a total overage of $2,913 out of the total population amount of $593,233. Cause: During a period of shifting positions and job responsibilities, the Sheriff did not check and review the employees and charges requested for reimbursement under the grant award, with a sufficient level of detail. Effect: Without accurate review of the costs being submitted for reimbursement, the Sherrif could request for reimbursement costs that are unallowable. There is no questioned cost noted due to the reimbursements being adjusted after LSP’s review. Recommendation: The Sheriff should review all costs before being submitted for reimbursement to ensure appropriate allowability and accuracy of the requests. View of Responsible Official: Management agrees with this finding and will implement a more detailed review process of FEMA grant reimbursement requests for future disasters to ensure equipment hour costs reported are accurate.
Disaster Grants – Public Assistance (Presidentially Declared Disasters) Assistance Listing Numbers – 97.036 Criteria: The Uniform Guidance Federal regulations per 2 CFR section 200.403 requires among other things, the specific criteria be met, costs are adequately documented and be necessary and reasonable for the performance of the federal award and be allocable thereto under these principles. Universe/Population: The total population was all employees using equipment for the purpose of aid to the general public during the Presidentially Declared Emergency period. Based on these requirements, the population consisted of 435 individuals, 1,863 days, and a total dollar amount of $593,233. Condition: 40 individuals spanning a total of 393 days with a total dollar amount of $117,899 were selected for testing. We noted for two individuals, on 3 separate days, charges were more for equipment hours than the employees were physically at work. The Louisiana State Police (LSP), in its oversite capacity had reviewed 100% of the charges and found overages, including the two individuals noted in our sampled test, for a total overage of $2,913 out of the total population amount of $593,233. Cause: During a period of shifting positions and job responsibilities, the Sheriff did not check and review the employees and charges requested for reimbursement under the grant award, with a sufficient level of detail. Effect: Without accurate review of the costs being submitted for reimbursement, the Sherrif could request for reimbursement costs that are unallowable. There is no questioned cost noted due to the reimbursements being adjusted after LSP’s review. Recommendation: The Sheriff should review all costs before being submitted for reimbursement to ensure appropriate allowability and accuracy of the requests. View of Responsible Official: Management agrees with this finding and will implement a more detailed review process of FEMA grant reimbursement requests for future disasters to ensure equipment hour costs reported are accurate.
Disaster Grants – Public Assistance (Presidentially Declared Disasters) Assistance Listing Numbers – 97.036 Criteria: The Uniform Guidance Federal regulations per 2 CFR section 200.403 requires among other things, the specific criteria be met, costs are adequately documented and be necessary and reasonable for the performance of the federal award and be allocable thereto under these principles. Universe/Population: The total population was all employees using equipment for the purpose of aid to the general public during the Presidentially Declared Emergency period. Based on these requirements, the population consisted of 435 individuals, 1,863 days, and a total dollar amount of $593,233. Condition: 40 individuals spanning a total of 393 days with a total dollar amount of $117,899 were selected for testing. We noted for two individuals, on 3 separate days, charges were more for equipment hours than the employees were physically at work. The Louisiana State Police (LSP), in its oversite capacity had reviewed 100% of the charges and found overages, including the two individuals noted in our sampled test, for a total overage of $2,913 out of the total population amount of $593,233. Cause: During a period of shifting positions and job responsibilities, the Sheriff did not check and review the employees and charges requested for reimbursement under the grant award, with a sufficient level of detail. Effect: Without accurate review of the costs being submitted for reimbursement, the Sherrif could request for reimbursement costs that are unallowable. There is no questioned cost noted due to the reimbursements being adjusted after LSP’s review. Recommendation: The Sheriff should review all costs before being submitted for reimbursement to ensure appropriate allowability and accuracy of the requests. View of Responsible Official: Management agrees with this finding and will implement a more detailed review process of FEMA grant reimbursement requests for future disasters to ensure equipment hour costs reported are accurate.
Disaster Grants – Public Assistance (Presidentially Declared Disasters) Assistance Listing Numbers – 97.036 Criteria: The Uniform Guidance Federal regulations per 2 CFR section 200.403 requires among other things, the specific criteria be met, costs are adequately documented and be necessary and reasonable for the performance of the federal award and be allocable thereto under these principles. Universe/Population: The total population was all employees using equipment for the purpose of aid to the general public during the Presidentially Declared Emergency period. Based on these requirements, the population consisted of 435 individuals, 1,863 days, and a total dollar amount of $593,233. Condition: 40 individuals spanning a total of 393 days with a total dollar amount of $117,899 were selected for testing. We noted for two individuals, on 3 separate days, charges were more for equipment hours than the employees were physically at work. The Louisiana State Police (LSP), in its oversite capacity had reviewed 100% of the charges and found overages, including the two individuals noted in our sampled test, for a total overage of $2,913 out of the total population amount of $593,233. Cause: During a period of shifting positions and job responsibilities, the Sheriff did not check and review the employees and charges requested for reimbursement under the grant award, with a sufficient level of detail. Effect: Without accurate review of the costs being submitted for reimbursement, the Sherrif could request for reimbursement costs that are unallowable. There is no questioned cost noted due to the reimbursements being adjusted after LSP’s review. Recommendation: The Sheriff should review all costs before being submitted for reimbursement to ensure appropriate allowability and accuracy of the requests. View of Responsible Official: Management agrees with this finding and will implement a more detailed review process of FEMA grant reimbursement requests for future disasters to ensure equipment hour costs reported are accurate.
2 C.F.R. § 3474.1 gives regulatory effect to the Department of Education for 2 C.F.R. § 200.403 Factors affecting allowability of costs. Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. Section 2003 of the American Rescue Plan Act of 2021 (ARP) (Pub. L. 117-2) (award or grant) by the U.S. Department of Education (Department) are governed by section 2003 of the ARP and section 314 of the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA) (Pub. L. 116-260) and the following terms and conditions of this Certification and Agreement (C&A): Use of Grant Funds: 1. Section 2003(7) of the ARP requires Recipient, an institution of higher education as defined in section 101 or 102(c) of the Higher Education Act of 1965, as amended (HEA), 20 USC § 1001 or 1002(c), to provide emergency financial aid grants to students in an amount equivalent to the sum of two amounts: 50 percent of the portion of its allocation that is based on formula factors from CRRSAA section 314(a)(1)(A)-(D) and 100 percent of the portion of its allocation that is based on formula factors from CRRSAA section 314(a)(1)(E)-(F). The amount of funds made available by this award under Assistance Listing Number (ALN) 84.425E represents the minimum amount that Recipient must use for making emergency financial aid grants to students. 2. Under section 2003(7) of the ARP and section 314(c)(3) of the CRRSAA, Recipient must make emergency financial aid grants to students (which may include students exclusively enrolled in distance education), which may be used for any component of the student’s cost of attendance or for emergency costs that arise due to coronavirus, such as tuition, food, housing, health care (including mental health care), or child care. The Center failed to spend $12,517 of its ARP #84.425E funds on grants to students, funds were spent on administrative expenditures. In addition, interest submitted to the Department of Health and Human Services owed from the prior audit period was paid from HEERF funds in the amount of $328 and Adult Education fund in the amount of $396, however since the interest earned was all credited to the General fund, the repayment to the Department of Health and Human Services should have been made from the General fund. Failure to expend funds as required under the grant agreement could lead to future questioned costs, reduced future federal funding, and the requirement to repay the Department of Health and Human Services. The Treasurer and Superintendent should ensure expenditures paid by federal grant funds are within the constraints of the grant agreement.
2 C.F.R. § 3474.1 gives regulatory effect to the Department of Education for 2 C.F.R. § 200.403 Factors affecting allowability of costs. Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. Section 2003 of the American Rescue Plan Act of 2021 (ARP) (Pub. L. 117-2) (award or grant) by the U.S. Department of Education (Department) are governed by section 2003 of the ARP and section 314 of the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA) (Pub. L. 116-260) and the following terms and conditions of this Certification and Agreement (C&A): Use of Grant Funds: 1. Section 2003(7) of the ARP requires Recipient, an institution of higher education as defined in section 101 or 102(c) of the Higher Education Act of 1965, as amended (HEA), 20 USC § 1001 or 1002(c), to provide emergency financial aid grants to students in an amount equivalent to the sum of two amounts: 50 percent of the portion of its allocation that is based on formula factors from CRRSAA section 314(a)(1)(A)-(D) and 100 percent of the portion of its allocation that is based on formula factors from CRRSAA section 314(a)(1)(E)-(F). The amount of funds made available by this award under Assistance Listing Number (ALN) 84.425E represents the minimum amount that Recipient must use for making emergency financial aid grants to students. 2. Under section 2003(7) of the ARP and section 314(c)(3) of the CRRSAA, Recipient must make emergency financial aid grants to students (which may include students exclusively enrolled in distance education), which may be used for any component of the student’s cost of attendance or for emergency costs that arise due to coronavirus, such as tuition, food, housing, health care (including mental health care), or child care. The Center failed to spend $12,517 of its ARP #84.425E funds on grants to students, funds were spent on administrative expenditures. In addition, interest submitted to the Department of Health and Human Services owed from the prior audit period was paid from HEERF funds in the amount of $328 and Adult Education fund in the amount of $396, however since the interest earned was all credited to the General fund, the repayment to the Department of Health and Human Services should have been made from the General fund. Failure to expend funds as required under the grant agreement could lead to future questioned costs, reduced future federal funding, and the requirement to repay the Department of Health and Human Services. The Treasurer and Superintendent should ensure expenditures paid by federal grant funds are within the constraints of the grant agreement.
2 C.F.R. § 3474.1 gives regulatory effect to the Department of Education for 2 C.F.R. § 200.403 Factors affecting allowability of costs. Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. Section 2003 of the American Rescue Plan Act of 2021 (ARP) (Pub. L. 117-2) (award or grant) by the U.S. Department of Education (Department) are governed by section 2003 of the ARP and section 314 of the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA) (Pub. L. 116-260) and the following terms and conditions of this Certification and Agreement (C&A): Use of Grant Funds: 1. Section 2003(7) of the ARP requires Recipient, an institution of higher education as defined in section 101 or 102(c) of the Higher Education Act of 1965, as amended (HEA), 20 USC § 1001 or 1002(c), to provide emergency financial aid grants to students in an amount equivalent to the sum of two amounts: 50 percent of the portion of its allocation that is based on formula factors from CRRSAA section 314(a)(1)(A)-(D) and 100 percent of the portion of its allocation that is based on formula factors from CRRSAA section 314(a)(1)(E)-(F). The amount of funds made available by this award under Assistance Listing Number (ALN) 84.425E represents the minimum amount that Recipient must use for making emergency financial aid grants to students. 2. Under section 2003(7) of the ARP and section 314(c)(3) of the CRRSAA, Recipient must make emergency financial aid grants to students (which may include students exclusively enrolled in distance education), which may be used for any component of the student’s cost of attendance or for emergency costs that arise due to coronavirus, such as tuition, food, housing, health care (including mental health care), or child care. The Center failed to spend $12,517 of its ARP #84.425E funds on grants to students, funds were spent on administrative expenditures. In addition, interest submitted to the Department of Health and Human Services owed from the prior audit period was paid from HEERF funds in the amount of $328 and Adult Education fund in the amount of $396, however since the interest earned was all credited to the General fund, the repayment to the Department of Health and Human Services should have been made from the General fund. Failure to expend funds as required under the grant agreement could lead to future questioned costs, reduced future federal funding, and the requirement to repay the Department of Health and Human Services. The Treasurer and Superintendent should ensure expenditures paid by federal grant funds are within the constraints of the grant agreement.
2 C.F.R. § 3474.1 gives regulatory effect to the Department of Education for 2 C.F.R. § 200.403 Factors affecting allowability of costs. Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. Section 2003 of the American Rescue Plan Act of 2021 (ARP) (Pub. L. 117-2) (award or grant) by the U.S. Department of Education (Department) are governed by section 2003 of the ARP and section 314 of the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA) (Pub. L. 116-260) and the following terms and conditions of this Certification and Agreement (C&A): Use of Grant Funds: 1. Section 2003(7) of the ARP requires Recipient, an institution of higher education as defined in section 101 or 102(c) of the Higher Education Act of 1965, as amended (HEA), 20 USC § 1001 or 1002(c), to provide emergency financial aid grants to students in an amount equivalent to the sum of two amounts: 50 percent of the portion of its allocation that is based on formula factors from CRRSAA section 314(a)(1)(A)-(D) and 100 percent of the portion of its allocation that is based on formula factors from CRRSAA section 314(a)(1)(E)-(F). The amount of funds made available by this award under Assistance Listing Number (ALN) 84.425E represents the minimum amount that Recipient must use for making emergency financial aid grants to students. 2. Under section 2003(7) of the ARP and section 314(c)(3) of the CRRSAA, Recipient must make emergency financial aid grants to students (which may include students exclusively enrolled in distance education), which may be used for any component of the student’s cost of attendance or for emergency costs that arise due to coronavirus, such as tuition, food, housing, health care (including mental health care), or child care. The Center failed to spend $12,517 of its ARP #84.425E funds on grants to students, funds were spent on administrative expenditures. In addition, interest submitted to the Department of Health and Human Services owed from the prior audit period was paid from HEERF funds in the amount of $328 and Adult Education fund in the amount of $396, however since the interest earned was all credited to the General fund, the repayment to the Department of Health and Human Services should have been made from the General fund. Failure to expend funds as required under the grant agreement could lead to future questioned costs, reduced future federal funding, and the requirement to repay the Department of Health and Human Services. The Treasurer and Superintendent should ensure expenditures paid by federal grant funds are within the constraints of the grant agreement.
Criteria: The Uniform Guidance administrative requirements and cost principles apply to federal funding awarded on or after December 26, 2014. 2 CFR 200, Subpart E – Cost Principles Section 200.403(a) states that costs must be necessary and reasonable for the performance of the federal award and be allocable thereto under cost principles. Condition: The City requested and received reimbursement from Federal Emergency Management Agency (FEMA) in the amount of $68,728, of which $36,438 (or 884 hours) related to force equipment and $32,290 (or 1,061 overtime manhours) related to force labor. Out of a population of 884 force equipment hours, or $36,438, 350 hours were tested. Of the tested amount, 298 hours, or $12,236, lacked equipment hours logs. Out of a population of 1,061 overtime manhours, or $32,290, spread across 27 employees, we tested 388 overtime manhours, or $9,648, spread across 5 employees. Of the tested amount, there were discrepancies in rates charged for the employees, as well as hour classification between overtime and straight time. Additionally, the time sheet for one employee was for a different period than the period in which reimbursement was requested. This accounted for 96 of the tested hours. When analyzing differences in costs requested, of the total $9,648 tested it was found that $1,782, or 18.5%, was over requested. When projected to the population, it results in a request that is approximately $6,000 too high. Cause: The City does not have policies and procedures in place to ensure compliance with federal cost requirements regarding the allowability of reimbursed costs. Questioned Costs: $18,201 Effect: The City may be in noncompliance with the Uniform Guidance Allowable Costs standards. Recommendation: The City should implement policies and procedures that ensure an effective review of reimbursement requests prior to submission to ensure all costs requested are legitimate and allowable. Identification of a repeat finding: This is a new finding in the current year. View of Responsible Official: Management concurs with the finding.
Campus management is responsible for establishing and maintaining internal controls over disbursements that are adequate to ensure that all financial activities are properly processed and reported. Additionally, the Campus is required, except where otherwise authorized by statute, to ensure costs meet the general criteria outlined in 2 CFR 200.403 in order to be allowable under federal awards, including the costs be necessary and reasonable for the performance of the federal award and be allocable thereto under these principles. The Single Audit Reporting Package must have a report date nine months after fiscal year-end.
Campus management is responsible for establishing and maintaining internal controls over disbursements that are adequate to ensure that all financial activities are properly processed and reported. Additionally, the Campus is required, except where otherwise authorized by statute, to ensure costs meet the general criteria outlined in 2 CFR 200.403 in order to be allowable under federal awards, including the costs be necessary and reasonable for the performance of the federal award and be allocable thereto under these principles. The Single Audit Reporting Package must have a report date nine months after fiscal year-end.
Assistance Listing Number, Federal Agency, and Program Name - 14.218, Department of Housing and Urban Development, CDBG Entitlement Grants Cluster - Community Development Block Grant/Entitlement Grants (CDBG) 14.241, Department of Housing and Urban Development, Housing Opportunities for Persons With Aids (HOPWA) 14.905, Department of Housing and Urban Development, Lead Hazard Reduction Demonstration Grant Program (Lead) Federal Award Identification Number and Year - CDBG - B-22-MC-26-0006 HOPWA - MIH22F001 Lead - MILNG0007-19, and MILHB0682-18 Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government," issued by the Comptroller General of the United States, or the "Internal Control Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403(9), costs must be adequately documented. Condition - The City duplicated costs charged to certain grants. Questioned Costs - None Identification of How Questioned Costs Were Computed - Refer to context below Context - In conjunction with the year-end close process, the City manually reviews invoices received subsequent to year end and identifies amounts to be accrued. These amounts are accrued via manual journal entries posted to period 13. As this is a period 13 entry, the amounts automatically reverse in the new year. During this process, the City duplicated costs to be accrued in the amount of $12,300 under ALN 14.218 (CDBG), $327,709 under ALN 14.241 (HOPWA), and $235,911 under ALN 14.905 (Lead). Despite being accrued, the City did not request reimbursement for these costs, as reimbursement is only requested after expenses are paid. Upon identification of the error, the City reduced the amounts reported on the schedule of expenditures of federal awards (SEFA) by the amounts noted above. Cause and Effect - The City's control regarding the year-end close process did not identify that certain costs accrued were duplicated. As a result, the initial SEFA provided to the auditors was overstated by these costs. The City excluded the duplicate costs from the final SEFA. Recommendation - We recommend the City review its processes and controls to ensure that the preparation and review of journal entries to accrue for costs include a review for duplicate costs. Views of Responsible Officials and Corrective Action Plan - The City will review its journal entry controls and processes to help ensure journal entries are posted accurately and implement a review for duplicate costs.
Assistance Listing Number, Federal Agency, and Program Name - 14.218, Department of Housing and Urban Development, CDBG Entitlement Grants Cluster - Community Development Block Grant/Entitlement Grants (CDBG) 14.241, Department of Housing and Urban Development, Housing Opportunities for Persons With Aids (HOPWA) 14.905, Department of Housing and Urban Development, Lead Hazard Reduction Demonstration Grant Program (Lead) Federal Award Identification Number and Year - CDBG - B-22-MC-26-0006 HOPWA - MIH22F001 Lead - MILNG0007-19, and MILHB0682-18 Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government," issued by the Comptroller General of the United States, or the "Internal Control Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403(9), costs must be adequately documented. Condition - The City duplicated costs charged to certain grants. Questioned Costs - None Identification of How Questioned Costs Were Computed - Refer to context below Context - In conjunction with the year-end close process, the City manually reviews invoices received subsequent to year end and identifies amounts to be accrued. These amounts are accrued via manual journal entries posted to period 13. As this is a period 13 entry, the amounts automatically reverse in the new year. During this process, the City duplicated costs to be accrued in the amount of $12,300 under ALN 14.218 (CDBG), $327,709 under ALN 14.241 (HOPWA), and $235,911 under ALN 14.905 (Lead). Despite being accrued, the City did not request reimbursement for these costs, as reimbursement is only requested after expenses are paid. Upon identification of the error, the City reduced the amounts reported on the schedule of expenditures of federal awards (SEFA) by the amounts noted above. Cause and Effect - The City's control regarding the year-end close process did not identify that certain costs accrued were duplicated. As a result, the initial SEFA provided to the auditors was overstated by these costs. The City excluded the duplicate costs from the final SEFA. Recommendation - We recommend the City review its processes and controls to ensure that the preparation and review of journal entries to accrue for costs include a review for duplicate costs. Views of Responsible Officials and Corrective Action Plan - The City will review its journal entry controls and processes to help ensure journal entries are posted accurately and implement a review for duplicate costs.
Assistance Listing Number, Federal Agency, and Program Name - 14.218, Department of Housing and Urban Development, CDBG Entitlement Grants Cluster - Community Development Block Grant/Entitlement Grants (CDBG) 14.241, Department of Housing and Urban Development, Housing Opportunities for Persons With Aids (HOPWA) 14.905, Department of Housing and Urban Development, Lead Hazard Reduction Demonstration Grant Program (Lead) Federal Award Identification Number and Year - CDBG - B-22-MC-26-0006 HOPWA - MIH22F001 Lead - MILNG0007-19, and MILHB0682-18 Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government," issued by the Comptroller General of the United States, or the "Internal Control Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403(9), costs must be adequately documented. Condition - The City duplicated costs charged to certain grants. Questioned Costs - None Identification of How Questioned Costs Were Computed - Refer to context below Context - In conjunction with the year-end close process, the City manually reviews invoices received subsequent to year end and identifies amounts to be accrued. These amounts are accrued via manual journal entries posted to period 13. As this is a period 13 entry, the amounts automatically reverse in the new year. During this process, the City duplicated costs to be accrued in the amount of $12,300 under ALN 14.218 (CDBG), $327,709 under ALN 14.241 (HOPWA), and $235,911 under ALN 14.905 (Lead). Despite being accrued, the City did not request reimbursement for these costs, as reimbursement is only requested after expenses are paid. Upon identification of the error, the City reduced the amounts reported on the schedule of expenditures of federal awards (SEFA) by the amounts noted above. Cause and Effect - The City's control regarding the year-end close process did not identify that certain costs accrued were duplicated. As a result, the initial SEFA provided to the auditors was overstated by these costs. The City excluded the duplicate costs from the final SEFA. Recommendation - We recommend the City review its processes and controls to ensure that the preparation and review of journal entries to accrue for costs include a review for duplicate costs. Views of Responsible Officials and Corrective Action Plan - The City will review its journal entry controls and processes to help ensure journal entries are posted accurately and implement a review for duplicate costs.
Assistance Listing Number, Federal Agency, and Program Name - 14.218, Department of Housing and Urban Development, CDBG Entitlement Grants Cluster - Community Development Block Grant/Entitlement Grants (CDBG) 14.241, Department of Housing and Urban Development, Housing Opportunities for Persons With Aids (HOPWA) 14.905, Department of Housing and Urban Development, Lead Hazard Reduction Demonstration Grant Program (Lead) Federal Award Identification Number and Year - CDBG - B-22-MC-26-0006 HOPWA - MIH22F001 Lead - MILNG0007-19, and MILHB0682-18 Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government," issued by the Comptroller General of the United States, or the "Internal Control Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403(9), costs must be adequately documented. Condition - The City duplicated costs charged to certain grants. Questioned Costs - None Identification of How Questioned Costs Were Computed - Refer to context below Context - In conjunction with the year-end close process, the City manually reviews invoices received subsequent to year end and identifies amounts to be accrued. These amounts are accrued via manual journal entries posted to period 13. As this is a period 13 entry, the amounts automatically reverse in the new year. During this process, the City duplicated costs to be accrued in the amount of $12,300 under ALN 14.218 (CDBG), $327,709 under ALN 14.241 (HOPWA), and $235,911 under ALN 14.905 (Lead). Despite being accrued, the City did not request reimbursement for these costs, as reimbursement is only requested after expenses are paid. Upon identification of the error, the City reduced the amounts reported on the schedule of expenditures of federal awards (SEFA) by the amounts noted above. Cause and Effect - The City's control regarding the year-end close process did not identify that certain costs accrued were duplicated. As a result, the initial SEFA provided to the auditors was overstated by these costs. The City excluded the duplicate costs from the final SEFA. Recommendation - We recommend the City review its processes and controls to ensure that the preparation and review of journal entries to accrue for costs include a review for duplicate costs. Views of Responsible Officials and Corrective Action Plan - The City will review its journal entry controls and processes to help ensure journal entries are posted accurately and implement a review for duplicate costs.
Program Information Federal Agency: U.S. Department of Education, Department of Health and Human Services Federal Agency: Student Financial Assistance Cluster, Research and Development Cluster Federal Programs: 84.033 Federal Work-Study Program, 93.243 Drug Abuse and Addiction Research Programs, and 93.855 Allergy and Infectious Diseases Research Pass-through entity(ies): None Federal Award Year: July 1, 2022 – June 30, 2023 Criteria or Requirement Title 2, U.S. Code of Federal Regulations Part 200 (2 CRF 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award, (Subpart E, Section 200.403), requires that charges to federal awards for salaries and wages be based on records that accurately reflect the work performed. Per chapter 2, Volume 6, of the 2022-2023 Federal Student Aid Handbook, institutions must maintain adequate timesheets or records of hours worked for Federal Work Study (FWS) students. Students working for your school must have their timesheets certified by either their supervisor or an official at the school. Students working in off-campus jobs must have their timesheets certified by an official at the off-campus site Title 200 part 2 CFR 200.303 states that the Institution, as a federal grant recipient, must “establish and maintain effective internal controls over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition found, including facts that support the deficiency identified in the finding and information to provide proper perspective for judging the prevalence and consequences of the finding For 3 of 80 payroll transactions selected for testing, the engagement team identified that the timesheet did not contain evidence of approval by the supervisor/manager. Cause and Possible Asserted Effect The University did not have sufficient controls over approval of time worked. As a result, expenditures may be charged to federal grants for time that was not worked. Identification of questioned costs and how they were computed None Sample statistically valid The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding from prior year The audit finding is not a repeat finding. Recommendation We recommend that the University strengthen its controls over timekeeping approvals of all employee timesheets, in order to ensure that payroll expenditures charged to the program are allowable. Views on responsible officials Pacific University acknowledges the importance of an effective control environment. The University’s policies do currently require approval of all timesheets; therefore, management will re-emphasize the importance of this approval control, including review of supervisor compliance with this approval requirement, and follow-up with supervisors who may not be meeting requirements. Additionally, management will begin offering mandatory annual training for all supervisors overseeing Federal Work Study students.
Program Information Federal Agency: U.S. Department of Education, Department of Health and Human Services Federal Agency: Student Financial Assistance Cluster, Research and Development Cluster Federal Programs: 84.033 Federal Work-Study Program, 93.243 Drug Abuse and Addiction Research Programs, and 93.855 Allergy and Infectious Diseases Research Pass-through entity(ies): None Federal Award Year: July 1, 2022 – June 30, 2023 Criteria or Requirement Title 2, U.S. Code of Federal Regulations Part 200 (2 CRF 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award, (Subpart E, Section 200.403), requires that charges to federal awards for salaries and wages be based on records that accurately reflect the work performed. Per chapter 2, Volume 6, of the 2022-2023 Federal Student Aid Handbook, institutions must maintain adequate timesheets or records of hours worked for Federal Work Study (FWS) students. Students working for your school must have their timesheets certified by either their supervisor or an official at the school. Students working in off-campus jobs must have their timesheets certified by an official at the off-campus site Title 200 part 2 CFR 200.303 states that the Institution, as a federal grant recipient, must “establish and maintain effective internal controls over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition found, including facts that support the deficiency identified in the finding and information to provide proper perspective for judging the prevalence and consequences of the finding For 3 of 80 payroll transactions selected for testing, the engagement team identified that the timesheet did not contain evidence of approval by the supervisor/manager. Cause and Possible Asserted Effect The University did not have sufficient controls over approval of time worked. As a result, expenditures may be charged to federal grants for time that was not worked. Identification of questioned costs and how they were computed None Sample statistically valid The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding from prior year The audit finding is not a repeat finding. Recommendation We recommend that the University strengthen its controls over timekeeping approvals of all employee timesheets, in order to ensure that payroll expenditures charged to the program are allowable. Views on responsible officials Pacific University acknowledges the importance of an effective control environment. The University’s policies do currently require approval of all timesheets; therefore, management will re-emphasize the importance of this approval control, including review of supervisor compliance with this approval requirement, and follow-up with supervisors who may not be meeting requirements. Additionally, management will begin offering mandatory annual training for all supervisors overseeing Federal Work Study students.
Program Information Federal Agency: U.S. Department of Education, Department of Health and Human Services Federal Agency: Student Financial Assistance Cluster, Research and Development Cluster Federal Programs: 84.033 Federal Work-Study Program, 93.243 Drug Abuse and Addiction Research Programs, and 93.855 Allergy and Infectious Diseases Research Pass-through entity(ies): None Federal Award Year: July 1, 2022 – June 30, 2023 Criteria or Requirement Title 2, U.S. Code of Federal Regulations Part 200 (2 CRF 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award, (Subpart E, Section 200.403), requires that charges to federal awards for salaries and wages be based on records that accurately reflect the work performed. Per chapter 2, Volume 6, of the 2022-2023 Federal Student Aid Handbook, institutions must maintain adequate timesheets or records of hours worked for Federal Work Study (FWS) students. Students working for your school must have their timesheets certified by either their supervisor or an official at the school. Students working in off-campus jobs must have their timesheets certified by an official at the off-campus site Title 200 part 2 CFR 200.303 states that the Institution, as a federal grant recipient, must “establish and maintain effective internal controls over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition found, including facts that support the deficiency identified in the finding and information to provide proper perspective for judging the prevalence and consequences of the finding For 3 of 80 payroll transactions selected for testing, the engagement team identified that the timesheet did not contain evidence of approval by the supervisor/manager. Cause and Possible Asserted Effect The University did not have sufficient controls over approval of time worked. As a result, expenditures may be charged to federal grants for time that was not worked. Identification of questioned costs and how they were computed None Sample statistically valid The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding from prior year The audit finding is not a repeat finding. Recommendation We recommend that the University strengthen its controls over timekeeping approvals of all employee timesheets, in order to ensure that payroll expenditures charged to the program are allowable. Views on responsible officials Pacific University acknowledges the importance of an effective control environment. The University’s policies do currently require approval of all timesheets; therefore, management will re-emphasize the importance of this approval control, including review of supervisor compliance with this approval requirement, and follow-up with supervisors who may not be meeting requirements. Additionally, management will begin offering mandatory annual training for all supervisors overseeing Federal Work Study students.