Federal Agency: Department of Agriculture Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.512, 10.443, 10.215 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, NI191444XXXXG019, NI201444XXXXG009, A0192501X443G023, SUB00002488 PASS THRU 2019- 38640-29878 Award Period: 7/1/22-6/30/23 Type of Finding: Significant Deficiency in Internal Control over Compliance; Compliance, Other Matters Condition: The University does not have adequate procedures in place to ensure that USDA federal funds were not spent on disallowed costs. Criteria or specific requirement: Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. As required by 2 CFR 200.403 expenditures of federal awards should be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Context: During testing, we were made aware of thirteen individuals whose salaries were improperly coded to a teaching code in USDA federal and state match funds. A total of $256,940 in federal funds and $160,791 in state match funds were coded to a teaching account salary code. Additionally, during our testing of 40 payroll we identified 1 transaction that was improperly coded to the incorrect account code. Questioned costs: $256,940 Cause: The University does not have an effective control in place to ensure payroll transactions are properly coded between federal and nonfederal funds. Effect: Failure to properly record federal and nonfederal funds may result in inaccurate reporting of disallowed costs on the Schedule of Expenditures of Federal Awards. Repeat finding: No Recommendation: We recommend the University review its current procedures to ensure non-federal costs are not being allocated to federal fund codes. Also, the University should process retro-active cost transfers or payroll adjustments to ensure that no teaching salaries are coded to USDA grant funds. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Federal Agency: Department of Agriculture Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.512, 10.443, 10.215 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, NI191444XXXXG019, NI201444XXXXG009, A0192501X443G023, SUB00002488 PASS THRU 2019- 38640-29878 Award Period: 7/1/22-6/30/23 Type of Finding: Significant Deficiency in Internal Control over Compliance; Compliance, Other Matters Condition: The University does not have adequate procedures in place to ensure that USDA federal funds were not spent on disallowed costs. Criteria or specific requirement: Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. As required by 2 CFR 200.403 expenditures of federal awards should be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Context: During testing, we were made aware of thirteen individuals whose salaries were improperly coded to a teaching code in USDA federal and state match funds. A total of $256,940 in federal funds and $160,791 in state match funds were coded to a teaching account salary code. Additionally, during our testing of 40 payroll we identified 1 transaction that was improperly coded to the incorrect account code. Questioned costs: $256,940 Cause: The University does not have an effective control in place to ensure payroll transactions are properly coded between federal and nonfederal funds. Effect: Failure to properly record federal and nonfederal funds may result in inaccurate reporting of disallowed costs on the Schedule of Expenditures of Federal Awards. Repeat finding: No Recommendation: We recommend the University review its current procedures to ensure non-federal costs are not being allocated to federal fund codes. Also, the University should process retro-active cost transfers or payroll adjustments to ensure that no teaching salaries are coded to USDA grant funds. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Federal Agency: Department of Agriculture Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.512, 10.443, 10.215 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, NI191444XXXXG019, NI201444XXXXG009, A0192501X443G023, SUB00002488 PASS THRU 2019- 38640-29878 Award Period: 7/1/22-6/30/23 Type of Finding: Significant Deficiency in Internal Control over Compliance; Compliance, Other Matters Condition: The University does not have adequate procedures in place to ensure that USDA federal funds were not spent on disallowed costs. Criteria or specific requirement: Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. As required by 2 CFR 200.403 expenditures of federal awards should be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Context: During testing, we were made aware of thirteen individuals whose salaries were improperly coded to a teaching code in USDA federal and state match funds. A total of $256,940 in federal funds and $160,791 in state match funds were coded to a teaching account salary code. Additionally, during our testing of 40 payroll we identified 1 transaction that was improperly coded to the incorrect account code. Questioned costs: $256,940 Cause: The University does not have an effective control in place to ensure payroll transactions are properly coded between federal and nonfederal funds. Effect: Failure to properly record federal and nonfederal funds may result in inaccurate reporting of disallowed costs on the Schedule of Expenditures of Federal Awards. Repeat finding: No Recommendation: We recommend the University review its current procedures to ensure non-federal costs are not being allocated to federal fund codes. Also, the University should process retro-active cost transfers or payroll adjustments to ensure that no teaching salaries are coded to USDA grant funds. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Federal Agency: Department of Agriculture Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.512, 10.443, 10.215 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, NI191444XXXXG019, NI201444XXXXG009, A0192501X443G023, SUB00002488 PASS THRU 2019- 38640-29878 Award Period: 7/1/22-6/30/23 Type of Finding: Significant Deficiency in Internal Control over Compliance; Compliance, Other Matters Condition: The University does not have adequate procedures in place to ensure that USDA federal funds were not spent on disallowed costs. Criteria or specific requirement: Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. As required by 2 CFR 200.403 expenditures of federal awards should be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Context: During testing, we were made aware of thirteen individuals whose salaries were improperly coded to a teaching code in USDA federal and state match funds. A total of $256,940 in federal funds and $160,791 in state match funds were coded to a teaching account salary code. Additionally, during our testing of 40 payroll we identified 1 transaction that was improperly coded to the incorrect account code. Questioned costs: $256,940 Cause: The University does not have an effective control in place to ensure payroll transactions are properly coded between federal and nonfederal funds. Effect: Failure to properly record federal and nonfederal funds may result in inaccurate reporting of disallowed costs on the Schedule of Expenditures of Federal Awards. Repeat finding: No Recommendation: We recommend the University review its current procedures to ensure non-federal costs are not being allocated to federal fund codes. Also, the University should process retro-active cost transfers or payroll adjustments to ensure that no teaching salaries are coded to USDA grant funds. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Federal Agency: Department of Agriculture Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.512, 10.443, 10.215 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, NI191444XXXXG019, NI201444XXXXG009, A0192501X443G023, SUB00002488 PASS THRU 2019- 38640-29878 Award Period: 7/1/22-6/30/23 Type of Finding: Significant Deficiency in Internal Control over Compliance; Compliance, Other Matters Condition: The University does not have adequate procedures in place to ensure that USDA federal funds were not spent on disallowed costs. Criteria or specific requirement: Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. As required by 2 CFR 200.403 expenditures of federal awards should be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Context: During testing, we were made aware of thirteen individuals whose salaries were improperly coded to a teaching code in USDA federal and state match funds. A total of $256,940 in federal funds and $160,791 in state match funds were coded to a teaching account salary code. Additionally, during our testing of 40 payroll we identified 1 transaction that was improperly coded to the incorrect account code. Questioned costs: $256,940 Cause: The University does not have an effective control in place to ensure payroll transactions are properly coded between federal and nonfederal funds. Effect: Failure to properly record federal and nonfederal funds may result in inaccurate reporting of disallowed costs on the Schedule of Expenditures of Federal Awards. Repeat finding: No Recommendation: We recommend the University review its current procedures to ensure non-federal costs are not being allocated to federal fund codes. Also, the University should process retro-active cost transfers or payroll adjustments to ensure that no teaching salaries are coded to USDA grant funds. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Federal Agency: Department of Agriculture Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.512, 10.443, 10.215 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, NI191444XXXXG019, NI201444XXXXG009, A0192501X443G023, SUB00002488 PASS THRU 2019- 38640-29878 Award Period: 7/1/22-6/30/23 Type of Finding: Significant Deficiency in Internal Control over Compliance; Compliance, Other Matters Condition: The University does not have adequate procedures in place to ensure that USDA federal funds were not spent on disallowed costs. Criteria or specific requirement: Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. As required by 2 CFR 200.403 expenditures of federal awards should be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Context: During testing, we were made aware of thirteen individuals whose salaries were improperly coded to a teaching code in USDA federal and state match funds. A total of $256,940 in federal funds and $160,791 in state match funds were coded to a teaching account salary code. Additionally, during our testing of 40 payroll we identified 1 transaction that was improperly coded to the incorrect account code. Questioned costs: $256,940 Cause: The University does not have an effective control in place to ensure payroll transactions are properly coded between federal and nonfederal funds. Effect: Failure to properly record federal and nonfederal funds may result in inaccurate reporting of disallowed costs on the Schedule of Expenditures of Federal Awards. Repeat finding: No Recommendation: We recommend the University review its current procedures to ensure non-federal costs are not being allocated to federal fund codes. Also, the University should process retro-active cost transfers or payroll adjustments to ensure that no teaching salaries are coded to USDA grant funds. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Federal Agency: Department of Agriculture Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.512, 10.443, 10.215 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, NI191444XXXXG019, NI201444XXXXG009, A0192501X443G023, SUB00002488 PASS THRU 2019- 38640-29878 Award Period: 7/1/22-6/30/23 Type of Finding: Significant Deficiency in Internal Control over Compliance; Compliance, Other Matters Condition: The University does not have adequate procedures in place to ensure that USDA federal funds were not spent on disallowed costs. Criteria or specific requirement: Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. As required by 2 CFR 200.403 expenditures of federal awards should be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Context: During testing, we were made aware of thirteen individuals whose salaries were improperly coded to a teaching code in USDA federal and state match funds. A total of $256,940 in federal funds and $160,791 in state match funds were coded to a teaching account salary code. Additionally, during our testing of 40 payroll we identified 1 transaction that was improperly coded to the incorrect account code. Questioned costs: $256,940 Cause: The University does not have an effective control in place to ensure payroll transactions are properly coded between federal and nonfederal funds. Effect: Failure to properly record federal and nonfederal funds may result in inaccurate reporting of disallowed costs on the Schedule of Expenditures of Federal Awards. Repeat finding: No Recommendation: We recommend the University review its current procedures to ensure non-federal costs are not being allocated to federal fund codes. Also, the University should process retro-active cost transfers or payroll adjustments to ensure that no teaching salaries are coded to USDA grant funds. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Federal Agency: Department of Agriculture Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.512, 10.443, 10.215 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, NI191444XXXXG019, NI201444XXXXG009, A0192501X443G023, SUB00002488 PASS THRU 2019- 38640-29878 Award Period: 7/1/22-6/30/23 Type of Finding: Significant Deficiency in Internal Control over Compliance; Compliance, Other Matters Condition: The University does not have adequate procedures in place to ensure that USDA federal funds were not spent on disallowed costs. Criteria or specific requirement: Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. As required by 2 CFR 200.403 expenditures of federal awards should be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Context: During testing, we were made aware of thirteen individuals whose salaries were improperly coded to a teaching code in USDA federal and state match funds. A total of $256,940 in federal funds and $160,791 in state match funds were coded to a teaching account salary code. Additionally, during our testing of 40 payroll we identified 1 transaction that was improperly coded to the incorrect account code. Questioned costs: $256,940 Cause: The University does not have an effective control in place to ensure payroll transactions are properly coded between federal and nonfederal funds. Effect: Failure to properly record federal and nonfederal funds may result in inaccurate reporting of disallowed costs on the Schedule of Expenditures of Federal Awards. Repeat finding: No Recommendation: We recommend the University review its current procedures to ensure non-federal costs are not being allocated to federal fund codes. Also, the University should process retro-active cost transfers or payroll adjustments to ensure that no teaching salaries are coded to USDA grant funds. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Federal Agency: Department of Agriculture Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.512, 10.443, 10.215 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, NI191444XXXXG019, NI201444XXXXG009, A0192501X443G023, SUB00002488 PASS THRU 2019- 38640-29878 Award Period: 7/1/22-6/30/23 Type of Finding: Significant Deficiency in Internal Control over Compliance; Compliance, Other Matters Condition: The University does not have adequate procedures in place to ensure that USDA federal funds were not spent on disallowed costs. Criteria or specific requirement: Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. As required by 2 CFR 200.403 expenditures of federal awards should be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Context: During testing, we were made aware of thirteen individuals whose salaries were improperly coded to a teaching code in USDA federal and state match funds. A total of $256,940 in federal funds and $160,791 in state match funds were coded to a teaching account salary code. Additionally, during our testing of 40 payroll we identified 1 transaction that was improperly coded to the incorrect account code. Questioned costs: $256,940 Cause: The University does not have an effective control in place to ensure payroll transactions are properly coded between federal and nonfederal funds. Effect: Failure to properly record federal and nonfederal funds may result in inaccurate reporting of disallowed costs on the Schedule of Expenditures of Federal Awards. Repeat finding: No Recommendation: We recommend the University review its current procedures to ensure non-federal costs are not being allocated to federal fund codes. Also, the University should process retro-active cost transfers or payroll adjustments to ensure that no teaching salaries are coded to USDA grant funds. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Federal Agency: Department of Agriculture Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.512, 10.443, 10.215 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, NI191444XXXXG019, NI201444XXXXG009, A0192501X443G023, SUB00002488 PASS THRU 2019- 38640-29878 Award Period: 7/1/22-6/30/23 Type of Finding: Significant Deficiency in Internal Control over Compliance; Compliance, Other Matters Condition: The University does not have adequate procedures in place to ensure that USDA federal funds were not spent on disallowed costs. Criteria or specific requirement: Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. As required by 2 CFR 200.403 expenditures of federal awards should be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Context: During testing, we were made aware of thirteen individuals whose salaries were improperly coded to a teaching code in USDA federal and state match funds. A total of $256,940 in federal funds and $160,791 in state match funds were coded to a teaching account salary code. Additionally, during our testing of 40 payroll we identified 1 transaction that was improperly coded to the incorrect account code. Questioned costs: $256,940 Cause: The University does not have an effective control in place to ensure payroll transactions are properly coded between federal and nonfederal funds. Effect: Failure to properly record federal and nonfederal funds may result in inaccurate reporting of disallowed costs on the Schedule of Expenditures of Federal Awards. Repeat finding: No Recommendation: We recommend the University review its current procedures to ensure non-federal costs are not being allocated to federal fund codes. Also, the University should process retro-active cost transfers or payroll adjustments to ensure that no teaching salaries are coded to USDA grant funds. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Federal Agency: Department of Agriculture Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.512, 10.443, 10.215 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, NI191444XXXXG019, NI201444XXXXG009, A0192501X443G023, SUB00002488 PASS THRU 2019- 38640-29878 Award Period: 7/1/22-6/30/23 Type of Finding: Significant Deficiency in Internal Control over Compliance; Compliance, Other Matters Condition: The University does not have adequate procedures in place to ensure that USDA federal funds were not spent on disallowed costs. Criteria or specific requirement: Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. As required by 2 CFR 200.403 expenditures of federal awards should be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Context: During testing, we were made aware of thirteen individuals whose salaries were improperly coded to a teaching code in USDA federal and state match funds. A total of $256,940 in federal funds and $160,791 in state match funds were coded to a teaching account salary code. Additionally, during our testing of 40 payroll we identified 1 transaction that was improperly coded to the incorrect account code. Questioned costs: $256,940 Cause: The University does not have an effective control in place to ensure payroll transactions are properly coded between federal and nonfederal funds. Effect: Failure to properly record federal and nonfederal funds may result in inaccurate reporting of disallowed costs on the Schedule of Expenditures of Federal Awards. Repeat finding: No Recommendation: We recommend the University review its current procedures to ensure non-federal costs are not being allocated to federal fund codes. Also, the University should process retro-active cost transfers or payroll adjustments to ensure that no teaching salaries are coded to USDA grant funds. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Federal Agency: Department of Agriculture Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.512, 10.443, 10.215 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, NI191444XXXXG019, NI201444XXXXG009, A0192501X443G023, SUB00002488 PASS THRU 2019- 38640-29878 Award Period: 7/1/22-6/30/23 Type of Finding: Significant Deficiency in Internal Control over Compliance; Compliance, Other Matters Condition: The University does not have adequate procedures in place to ensure that USDA federal funds were not spent on disallowed costs. Criteria or specific requirement: Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. As required by 2 CFR 200.403 expenditures of federal awards should be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Context: During testing, we were made aware of thirteen individuals whose salaries were improperly coded to a teaching code in USDA federal and state match funds. A total of $256,940 in federal funds and $160,791 in state match funds were coded to a teaching account salary code. Additionally, during our testing of 40 payroll we identified 1 transaction that was improperly coded to the incorrect account code. Questioned costs: $256,940 Cause: The University does not have an effective control in place to ensure payroll transactions are properly coded between federal and nonfederal funds. Effect: Failure to properly record federal and nonfederal funds may result in inaccurate reporting of disallowed costs on the Schedule of Expenditures of Federal Awards. Repeat finding: No Recommendation: We recommend the University review its current procedures to ensure non-federal costs are not being allocated to federal fund codes. Also, the University should process retro-active cost transfers or payroll adjustments to ensure that no teaching salaries are coded to USDA grant funds. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Finding - District controls did not always ensure compliance with Federal regulations by properly expending Federal Hurricane Education Recovery Program funds, resulting in questioned costs totaling $325,202. Criteria - Title 2, Section 200.403(a), CFR, requires that allowable costs under Federal awards must be necessary and reasonable for the performance of the Federal award. In addition, Public Law 109-148 established the Hurricane Education Recovery Program and specifies in Section 102(e)(3)(A) that funding may not be used for construction or major renovations of school buildings. Condition - During the 2022-23 fiscal year, District Hurricane Education Recovery Program expenditures totaled $1,230,221, and included four payments totaling $325,202 for construction or major renovation of school facilities. Specifically, a payment for $199,500 was made for the roof replacement of a District building, and three additional payments, totaling $125,702, were made for architectural and engineering services related to the construction of the new Gadsden County K-8 School. Additionally, the approved grant application only included temporary repairs to the roof, including tarping and cleanup of water damage and did not include any architectural or engineering services. Cause - Due to staff turnover and the subsequent reassignment of duties, the District grant director lacked Hurricane Education Recovery Program experience. In response to our inquiry, District staff indicated that the Program expenditures were allowable for District site and facilities that were not damaged before the hurricane. Notwithstanding, District staff did not provide documentation from the grantor supporting allowability and the expenditures are explicitly unallowed by the Public Law. Effect - Absent effective procedures to ensure that grant funds are expended only for allowable uses, there is an increased risk that funds will be misused. Since District records did not support the allowability of these costs, the District incurred questioned costs totaling $325,202. Recommendation - The District should help ensure that Hurricane Education Recovery Program expenditures are only for allowable purposes by providing appropriate training for the Program grant director. In addition, the District should document to the FDOE the allowability of the questioned costs or contact the FDOE regarding necessary corrective action. District Response - The District confirms the audit finding and will implement policies and procedures, as well as staff training, to ensure compliance with the Federal Hurricane Education Recovery Program.
2023-001 U.S. Department of Education Passed-through the Commonwealth of Massachusetts Department of Elementary and Secondary Education Special Education Cluster (IDEA) – ALN 84.027 & 84.173 Special Education Cluster (IDEA) – ALN 84.027X & 84.173X Compliance Finding and Material Weakness in Internal Controls Over Compliance 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)). Condition: Tuition invoices and payroll costs were charged to a 2023 grant that were for services rendered prior to the grant start date. Cause: The School did not review manual journal entries for period of performance compliance when reclassifying grant expenditures from other accounts. Effect: The School was not compliant with period of performance requirements of the grant. Questioned Costs: $225,827.29 Repeat Finding from Prior Year: No. Recommendation: The School should implement procedures to review all manual journal entries for period of performance compliance before posting to the general ledger. Views of Responsible Official: Management agrees with the finding.
2023-001 U.S. Department of Education Passed-through the Commonwealth of Massachusetts Department of Elementary and Secondary Education Special Education Cluster (IDEA) – ALN 84.027 & 84.173 Special Education Cluster (IDEA) – ALN 84.027X & 84.173X Compliance Finding and Material Weakness in Internal Controls Over Compliance 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)). Condition: Tuition invoices and payroll costs were charged to a 2023 grant that were for services rendered prior to the grant start date. Cause: The School did not review manual journal entries for period of performance compliance when reclassifying grant expenditures from other accounts. Effect: The School was not compliant with period of performance requirements of the grant. Questioned Costs: $225,827.29 Repeat Finding from Prior Year: No. Recommendation: The School should implement procedures to review all manual journal entries for period of performance compliance before posting to the general ledger. Views of Responsible Official: Management agrees with the finding.
2023-001 U.S. Department of Education Passed-through the Commonwealth of Massachusetts Department of Elementary and Secondary Education Special Education Cluster (IDEA) – ALN 84.027 & 84.173 Special Education Cluster (IDEA) – ALN 84.027X & 84.173X Compliance Finding and Material Weakness in Internal Controls Over Compliance 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)). Condition: Tuition invoices and payroll costs were charged to a 2023 grant that were for services rendered prior to the grant start date. Cause: The School did not review manual journal entries for period of performance compliance when reclassifying grant expenditures from other accounts. Effect: The School was not compliant with period of performance requirements of the grant. Questioned Costs: $225,827.29 Repeat Finding from Prior Year: No. Recommendation: The School should implement procedures to review all manual journal entries for period of performance compliance before posting to the general ledger. Views of Responsible Official: Management agrees with the finding.
2023-001 U.S. Department of Education Passed-through the Commonwealth of Massachusetts Department of Elementary and Secondary Education Special Education Cluster (IDEA) – ALN 84.027 & 84.173 Special Education Cluster (IDEA) – ALN 84.027X & 84.173X Compliance Finding and Material Weakness in Internal Controls Over Compliance 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)). Condition: Tuition invoices and payroll costs were charged to a 2023 grant that were for services rendered prior to the grant start date. Cause: The School did not review manual journal entries for period of performance compliance when reclassifying grant expenditures from other accounts. Effect: The School was not compliant with period of performance requirements of the grant. Questioned Costs: $225,827.29 Repeat Finding from Prior Year: No. Recommendation: The School should implement procedures to review all manual journal entries for period of performance compliance before posting to the general ledger. Views of Responsible Official: Management agrees with the finding.
2023-001 U.S. Department of Education Passed-through the Commonwealth of Massachusetts Department of Elementary and Secondary Education Special Education Cluster (IDEA) – ALN 84.027 & 84.173 Special Education Cluster (IDEA) – ALN 84.027X & 84.173X Compliance Finding and Material Weakness in Internal Controls Over Compliance 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)). Condition: Tuition invoices and payroll costs were charged to a 2023 grant that were for services rendered prior to the grant start date. Cause: The School did not review manual journal entries for period of performance compliance when reclassifying grant expenditures from other accounts. Effect: The School was not compliant with period of performance requirements of the grant. Questioned Costs: $225,827.29 Repeat Finding from Prior Year: No. Recommendation: The School should implement procedures to review all manual journal entries for period of performance compliance before posting to the general ledger. Views of Responsible Official: Management agrees with the finding.
2023-001 U.S. Department of Education Passed-through the Commonwealth of Massachusetts Department of Elementary and Secondary Education Special Education Cluster (IDEA) – ALN 84.027 & 84.173 Special Education Cluster (IDEA) – ALN 84.027X & 84.173X Compliance Finding and Material Weakness in Internal Controls Over Compliance 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)). Condition: Tuition invoices and payroll costs were charged to a 2023 grant that were for services rendered prior to the grant start date. Cause: The School did not review manual journal entries for period of performance compliance when reclassifying grant expenditures from other accounts. Effect: The School was not compliant with period of performance requirements of the grant. Questioned Costs: $225,827.29 Repeat Finding from Prior Year: No. Recommendation: The School should implement procedures to review all manual journal entries for period of performance compliance before posting to the general ledger. Views of Responsible Official: Management agrees with the finding.
2023-001 U.S. Department of Education Passed-through the Commonwealth of Massachusetts Department of Elementary and Secondary Education Special Education Cluster (IDEA) – ALN 84.027 & 84.173 Special Education Cluster (IDEA) – ALN 84.027X & 84.173X Compliance Finding and Material Weakness in Internal Controls Over Compliance 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)). Condition: Tuition invoices and payroll costs were charged to a 2023 grant that were for services rendered prior to the grant start date. Cause: The School did not review manual journal entries for period of performance compliance when reclassifying grant expenditures from other accounts. Effect: The School was not compliant with period of performance requirements of the grant. Questioned Costs: $225,827.29 Repeat Finding from Prior Year: No. Recommendation: The School should implement procedures to review all manual journal entries for period of performance compliance before posting to the general ledger. Views of Responsible Official: Management agrees with the finding.
Finding Number 2023-002: Timesheet vs. Time Study Hours (Significant Deficiency over Internal Control and Instance of Noncompliance – Allowable Costs/Cost Principles) FALN Number 93.778 Alameda Health Care Services Agency - Medical Assistance Program (Medi-Cal Administrative Activities), Award Number MAA MOU 2022-2023, Award Year 2022-2023 Criteria: 2023 Compliance Supplement and 2 CFR 200.403(h) stated that a non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance. Condition/Context: As a result of our audit procedures, we noted 1 of 40 timesheets tested in which the hours on the employee’s timesheet did not agree to the hours reported on the time study. We identified 2.5 hours of steward leave being reported on the timesheet but not the time study. Repeat Finding from Prior Year(s): No Cause and Effect: The Health System did not have proper controls in place to ensure hours reported on the timesheet agree to the hours on the time study, which could lead to inaccurate hours being reported and disbursed to employees. Questioned Cost: None Recommendation: We recommend management review policies and procedures to ensure the hours reported on the timesheet agree to the hours on the time study. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. The Health System will review, modify, and implement policies and procedures over the program to ensure that costs incurred are appropriately charged based on the contracts’ performance periods.
Finding Number 2023-006: Costs Incurred Outside Period of Performance (Significant Deficiency over Internal Control and Instances of Noncompliance – Period of Performance; Allowable Costs/Cost Principles) FALN Number 93.959 Block Grants for Prevention and Treatment of Substance Abuse, Award Number 900077, Award Year 2022-2023 Criteria: 2023 Compliance Supplement and 2 CFR 200.403(h) stated that a non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance. Condition/Context: As a result of our audit procedures, we noted 2 of 25 timesheets tested in which the costs incurred were charged outside of the program’s performance period. The two timesheets had payroll costs incurred during the pay period of 6/12/2022 – 6/25/2022; however, the contract had a performance period of 7/1/2022 – 6/30/2023. Repeat Finding from Prior Year(s): No Cause and Effect: The Health System did not have proper controls in place to ensure only costs incurred in the performance period were charged to the program, which resulted in non-compliance with program requirements. Questioned Cost: None Recommendation: We recommend management review policies and procedures of the program to ensure the costs incurred are appropriately charged based on the contracts’ performance periods. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. The Health System will review, modify, and implement policies and procedures over the program to ensure that costs incurred are appropriately charged based on the contracts’ performance periods.
Finding Number 2023-007: Costs Incurred Outside Period of Performance (Significant Deficiency over Internal Control and Instances of Noncompliance – Period of Performance; Allowable Costs/Cost Principles) FALN Number 16.575 U.S. Department of Justice, Office of Victims of Crime – Crime Victim Assistance, Award Number 94-3302014, Award Year 2022-2023 Criteria: 2023 Compliance Supplement and 2 CFR 200.403(h) stated that a non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance. Condition/Context: As a result of our audit procedures to evaluate the summary schedule of prior audit findings, we noted 1 sample of payroll expenditure of $6,561 incurred during the pay period 3/19/2023 – 4/1/2023; however, the payroll costs incurred was charged to the program based on the pay date instead of the pay period incurred. Repeat Finding from Prior Year(s): Yes, Finding Number 2022-003 Cause and Effect: The Health System did not have proper controls in place to ensure only costs incurred in the period of performance were charged to the program, which resulted in costs outside of period of performance being charged to the program. Questioned Cost: None Recommendation: We recommend management review policies and procedures of the program to ensure the costs incurred are appropriately charged based on the contracts’ performance periods. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. The Health System will review, modify, and implement policies and procedures over the program to ensure that costs incurred are appropriately charged based on the contracts’ performance periods.
Reference Number: 2023-003 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Department of Public Health Federal Program: WIC Special Supplemental Nutrition Program for Women, Infants, and Children Assistance Listing Number: 10.557 Award Number and Year: 224MA702WI003 (10/1/2021 – 9/30/2022) Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Department of Public Health (Department) charged costs to the federal grant after the end of the grant’s allowable period of performance. Context: One of forty expenditure transactions selected for testing was incurred after the end of the grant’s period of performance. The period of performance ended on September 30, 2022 and the expenditure was incurred on October 10, 2022. Funds were not encumbered prior to the end of the period of performance. Cause: The Department’s procedures and internal controls were not operating sufficiently to ensure that expenditures were charged to the correct grant year. The Department had a contract in place with the vendor but did not encumber funds for the transaction prior to September 30, 2022. Therefore, the expenditures should have been charged to the FFY2023 grant period. Effect: Costs could be deemed unallowable by the awarding agency if funds are expended and/or obligated after the allowable period of performance. Questioned costs: None above reportable threshold. Recommendation: The Department should review and enhance its procedures and internal controls to ensure that it charges expenditures to the program that are incurred within an award’s allowable period of performance. The Department should ensure that it encumbers funds prior to the end of the period of performance when appropriate. Views of responsible officials: Management agrees with the finding.
Federal Agency: Department of Education Cluster/Program: Special Education Cluster AL Number(s): 84.027 Award Year: 2023 Compliance Requirement: Period of Performance Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement 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)). Management of the School District is also responsible for establishing and maintaining effective internal control over compliance with federal requirements that have a direct and material effect on a federal pro¬gram. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of per¬forming their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. Condition and Context There were several payroll charges and invoices for costs that occurred prior to the start of the School District’s fiscal year 2023 IDEA special education grant. Since these costs occurred outside of the authorized period of performance, they are not eligible to be charged to that grant. Cause The School District has not established adequate procedures to ensure costs charged to the grant are within the authorized period of performance. Effect or Potential Effect Due to the weakness in internal control noted above, there are known and questioned costs reported related to salaries and contracted services incurred prior to the period of performance and charged to the grant. Questioned Costs The payroll charges and invoices for costs in question are below $25,000. Recommendation The School District should implement controls to ensure that no costs are incurred for a grant prior to the authorized period of performance. Views of Responsible Official Management agrees with the finding. Planned Corrective Action Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
Condition: During testing of federal expenditures, we noted 5 out of 40 expense transactions tested thatlacked supporting documentation to validate the expense. Criteria: Per 2 CRF section 200.403(g), costs must be adequately documented. Cause of Condition: This issue was caused by inadequate policies and weakened internal controls. Effect: Failure to retain proper supporting documentation could result in noncompliance with 2 CFR 200.403(g) and/or questioned costs. Recommendation: We recommend all disbursements be supported with a receipt or invoice detailing the date, amount, and business purpose of the expenditure. This procedure will help ensure all expenditures are properly recorded and documented. Furthermore, all receipts should specify the purchase and, if for a meal purchase, the specific attendees who benefited from the expense in order to be in compliance with IRS expense guidelines. NCHE should also establish a policy regarding missing receipts. Management Response: Management accepts the finding and recommendation.
Condition: During testing of federal expenditures, we noted 5 out of 40 expense transactions tested thatlacked supporting documentation to validate the expense. Criteria: Per 2 CRF section 200.403(g), costs must be adequately documented. Cause of Condition: This issue was caused by inadequate policies and weakened internal controls. Effect: Failure to retain proper supporting documentation could result in noncompliance with 2 CFR 200.403(g) and/or questioned costs. Recommendation: We recommend all disbursements be supported with a receipt or invoice detailing the date, amount, and business purpose of the expenditure. This procedure will help ensure all expenditures are properly recorded and documented. Furthermore, all receipts should specify the purchase and, if for a meal purchase, the specific attendees who benefited from the expense in order to be in compliance with IRS expense guidelines. NCHE should also establish a policy regarding missing receipts. Management Response: Management accepts the finding and recommendation.
Condition: During testing of federal expenditures, we noted 5 out of 40 expense transactions tested thatlacked supporting documentation to validate the expense. Criteria: Per 2 CRF section 200.403(g), costs must be adequately documented. Cause of Condition: This issue was caused by inadequate policies and weakened internal controls. Effect: Failure to retain proper supporting documentation could result in noncompliance with 2 CFR 200.403(g) and/or questioned costs. Recommendation: We recommend all disbursements be supported with a receipt or invoice detailing the date, amount, and business purpose of the expenditure. This procedure will help ensure all expenditures are properly recorded and documented. Furthermore, all receipts should specify the purchase and, if for a meal purchase, the specific attendees who benefited from the expense in order to be in compliance with IRS expense guidelines. NCHE should also establish a policy regarding missing receipts. Management Response: Management accepts the finding and recommendation.
CONDITION: The District did not comply with the laws and regulations related to its participation in it’s various federal grant program reporting requirements. Personnel did not complete and submit the required ‘quarterly cash on hand reports’ and ‘final expenditure report’ (FER) for the grant programs based on supporting accurate general ledger expenditures as required by Section 2 CFR 200.403(g) of the Uniform Guidance. This is a repeat finding from (2022-002) from the previous fiscal year. CRITERIA: The PA Department of Education (PDE) and Section 2 CFR 200.403(g) of the Uniform Guidance requires the completion and submission of a ‘quarterly cash on hand report’ quarterly as needed and a ‘final expenditure report’ (FER) at the conclusion of each grant program year (including any carryover period) based on information contained in the School District’s financial management system and supported by all underlying documentation. EFFECT: The District was not in compliance with the PA Department of Education (PDE) and Section 2 CFR 200.403(g) of the Uniform Guidance financial reporting requirements relative to its participation the ESSER and ARP ESSER grant programs that require submission of ‘quarterly cash on hand reports’ and a ‘final expenditure report’ (FER) based on supporting accurate financial management system expenditures. CAUSE: The District experienced turnover in key business office personnel during the last two fiscal years, which resulted in errors in posting federal expenditures to the appropriate general ledger account codes. This further lead to inaccurate reporting as outlined above. QUESTIONED COST: None RECOMMENDATION: I recommend that the District re-file the required federal program ‘final expenditure reports’, if possible, based on accurate financial information obtained from the District’s financial management system after any corrections are made, in order to 1) comply with PDE and Uniform Guidance reporting requirements for the District’s applicable federal programs, and 2) to avoid any sanctions from PDE as a result of not filing these reports properly with accurate general ledger detail in a timely manner. All further federal grant reporting should be completed based on accurate general ledger expenditures. VIEW OF RESPONSIBLE OFFICIALS: See Correction Action Plan
CONDITION: The District did not comply with the laws and regulations related to its participation in it’s various federal grant program reporting requirements. Personnel did not complete and submit the required ‘quarterly cash on hand reports’ and ‘final expenditure report’ (FER) for the grant programs based on supporting accurate general ledger expenditures as required by Section 2 CFR 200.403(g) of the Uniform Guidance. This is a repeat finding from (2022-002) from the previous fiscal year. CRITERIA: The PA Department of Education (PDE) and Section 2 CFR 200.403(g) of the Uniform Guidance requires the completion and submission of a ‘quarterly cash on hand report’ quarterly as needed and a ‘final expenditure report’ (FER) at the conclusion of each grant program year (including any carryover period) based on information contained in the School District’s financial management system and supported by all underlying documentation. EFFECT: The District was not in compliance with the PA Department of Education (PDE) and Section 2 CFR 200.403(g) of the Uniform Guidance financial reporting requirements relative to its participation the ESSER and ARP ESSER grant programs that require submission of ‘quarterly cash on hand reports’ and a ‘final expenditure report’ (FER) based on supporting accurate financial management system expenditures. CAUSE: The District experienced turnover in key business office personnel during the last two fiscal years, which resulted in errors in posting federal expenditures to the appropriate general ledger account codes. This further lead to inaccurate reporting as outlined above. QUESTIONED COST: None RECOMMENDATION: I recommend that the District re-file the required federal program ‘final expenditure reports’, if possible, based on accurate financial information obtained from the District’s financial management system after any corrections are made, in order to 1) comply with PDE and Uniform Guidance reporting requirements for the District’s applicable federal programs, and 2) to avoid any sanctions from PDE as a result of not filing these reports properly with accurate general ledger detail in a timely manner. All further federal grant reporting should be completed based on accurate general ledger expenditures. VIEW OF RESPONSIBLE OFFICIALS: See Correction Action Plan
CONDITION: The District did not comply with the laws and regulations related to its participation in it’s various federal grant program reporting requirements. Personnel did not complete and submit the required ‘quarterly cash on hand reports’ and ‘final expenditure report’ (FER) for the grant programs based on supporting accurate general ledger expenditures as required by Section 2 CFR 200.403(g) of the Uniform Guidance. This is a repeat finding from (2022-002) from the previous fiscal year. CRITERIA: The PA Department of Education (PDE) and Section 2 CFR 200.403(g) of the Uniform Guidance requires the completion and submission of a ‘quarterly cash on hand report’ quarterly as needed and a ‘final expenditure report’ (FER) at the conclusion of each grant program year (including any carryover period) based on information contained in the School District’s financial management system and supported by all underlying documentation. EFFECT: The District was not in compliance with the PA Department of Education (PDE) and Section 2 CFR 200.403(g) of the Uniform Guidance financial reporting requirements relative to its participation the ESSER and ARP ESSER grant programs that require submission of ‘quarterly cash on hand reports’ and a ‘final expenditure report’ (FER) based on supporting accurate financial management system expenditures. CAUSE: The District experienced turnover in key business office personnel during the last two fiscal years, which resulted in errors in posting federal expenditures to the appropriate general ledger account codes. This further lead to inaccurate reporting as outlined above. QUESTIONED COST: None RECOMMENDATION: I recommend that the District re-file the required federal program ‘final expenditure reports’, if possible, based on accurate financial information obtained from the District’s financial management system after any corrections are made, in order to 1) comply with PDE and Uniform Guidance reporting requirements for the District’s applicable federal programs, and 2) to avoid any sanctions from PDE as a result of not filing these reports properly with accurate general ledger detail in a timely manner. All further federal grant reporting should be completed based on accurate general ledger expenditures. VIEW OF RESPONSIBLE OFFICIALS: See Correction Action Plan
CONDITION: The District did not comply with the laws and regulations related to its participation in it’s various federal grant program reporting requirements. Personnel did not complete and submit the required ‘quarterly cash on hand reports’ and ‘final expenditure report’ (FER) for the grant programs based on supporting accurate general ledger expenditures as required by Section 2 CFR 200.403(g) of the Uniform Guidance. This is a repeat finding from (2022-002) from the previous fiscal year. CRITERIA: The PA Department of Education (PDE) and Section 2 CFR 200.403(g) of the Uniform Guidance requires the completion and submission of a ‘quarterly cash on hand report’ quarterly as needed and a ‘final expenditure report’ (FER) at the conclusion of each grant program year (including any carryover period) based on information contained in the School District’s financial management system and supported by all underlying documentation. EFFECT: The District was not in compliance with the PA Department of Education (PDE) and Section 2 CFR 200.403(g) of the Uniform Guidance financial reporting requirements relative to its participation the ESSER and ARP ESSER grant programs that require submission of ‘quarterly cash on hand reports’ and a ‘final expenditure report’ (FER) based on supporting accurate financial management system expenditures. CAUSE: The District experienced turnover in key business office personnel during the last two fiscal years, which resulted in errors in posting federal expenditures to the appropriate general ledger account codes. This further lead to inaccurate reporting as outlined above. QUESTIONED COST: None RECOMMENDATION: I recommend that the District re-file the required federal program ‘final expenditure reports’, if possible, based on accurate financial information obtained from the District’s financial management system after any corrections are made, in order to 1) comply with PDE and Uniform Guidance reporting requirements for the District’s applicable federal programs, and 2) to avoid any sanctions from PDE as a result of not filing these reports properly with accurate general ledger detail in a timely manner. All further federal grant reporting should be completed based on accurate general ledger expenditures. VIEW OF RESPONSIBLE OFFICIALS: See Correction Action Plan
Finding 2023-039: U. S. Department of Education ALN #84.371 Comprehensive Literacy Development Program Grant #S371C190012, S371C190012-19A, S371C190012-20, S371C190012-21 Criteria: Federal regulation, 2 CFR 200.332(d), requires pass-through entities to “Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved.” Federal regulation, 2 CFR Part 200.403(a) and (g), require costs to be necessary and reasonable, as well as adequately documented. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: The Office of Public Instruction (office) subrecipient monitoring process related to the Comprehensive Literacy State Development Program did not include obtaining sufficient documentation on cash requests to ensure funds were used for allowable activities and costs as required by federal regulations. This is also a control deficiency related to activities allowed, allowable costs, and subrecipient monitoring. Questioned Costs: We question $659,331 of the cash requests we reviewed. There may be more questioned costs for items we did not review. Context: We sampled 22 cash requests from 10 Local Educational Agencies (LEAs) out of a population of 120 LEAs. The total amount of cash requested for these sample items was $886,597. The sample was not statistically valid. Twelve cash requests lacked adequate detail to determine if all the costs were for allowable activities and costs. Four of the errors, totaling $254,234 were related to the final cash requests, where there was no documentation on how the LEA spent the remaining funds. The other eight requests did not contain adequate support to ensure the costs were reasonable and necessary. For example, one cash request’s description said, “Lease payments for Literacy van to transport students to afterschool program.” The LEA requested $29,519, split between pre-k, elementary, middle, and high school. We do not believe the support had enough detail for the office to determine the time period covered by the request, if the lease payment was excessive, or if the lease was for more than one van. Effect: Without adequate controls over cash requests, the office has reimbursed subrecipients for expenses that may be unallowable, or unnecessary and unreasonable for performance of the federal award. The office did not comply with federal regulations related to activities allowed, allowable costs, and subrecipient monitoring. Cause: The office agrees that LEAs do not always providing sufficient descriptions in cash requests, but they noted program staff visited LEAs at least bi-monthly to physically review items that the money was spent on at the beginning of the grant, with continued visits as needed during the audit period. However, based on our follow up, the onsite reviews did not include reviewing the support the LEA retains for purchases related to cash requests. Instead, they focused on other subrecipient monitoring activities, such as reviewing evidence of the impact of expenditures, like improved reading scores. While useful, these activities do not address concerns about cash request documentation, because there is no evidence that the office reimbursed the actual amount spent. Recommendation: We recommend the Office of Public Instruction: A. Strengthen subrecipient monitoring internal controls to ensure subrecipient grant expenditures are for allowable costs and activities. B. Obtain sufficient documentation of subrecipient expenditures to ensure compliance with federal awards requirements. Views of Responsible Officials: The office partially concurs with the recommendation. Management notes that they increased the documentation requirements for cash requests at the end of the first year of the audit period. LEAs are required to maintain all receipts and provide them upon request. Management also notes no request for additional LEA documentation was included as part of this audit process. Rebuttal of Views of Responsible Officials: We considered the office’s partial concurrence. Cash requests from both years of the audit period were tested, and instances of insufficient documentation were found throughout the audit period. While we are not prohibited from requesting subrecipients’ documentation during an audit, we are not required to do so. It is our position that unless the office maintains documentation, or documents their monitoring activities, compliance with the requirements applicable to the office cannot be demonstrated. As such, our recommendation stands.
Finding 2023-039: U. S. Department of Education ALN #84.371 Comprehensive Literacy Development Program Grant #S371C190012, S371C190012-19A, S371C190012-20, S371C190012-21 Criteria: Federal regulation, 2 CFR 200.332(d), requires pass-through entities to “Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved.” Federal regulation, 2 CFR Part 200.403(a) and (g), require costs to be necessary and reasonable, as well as adequately documented. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: The Office of Public Instruction (office) subrecipient monitoring process related to the Comprehensive Literacy State Development Program did not include obtaining sufficient documentation on cash requests to ensure funds were used for allowable activities and costs as required by federal regulations. This is also a control deficiency related to activities allowed, allowable costs, and subrecipient monitoring. Questioned Costs: We question $659,331 of the cash requests we reviewed. There may be more questioned costs for items we did not review. Context: We sampled 22 cash requests from 10 Local Educational Agencies (LEAs) out of a population of 120 LEAs. The total amount of cash requested for these sample items was $886,597. The sample was not statistically valid. Twelve cash requests lacked adequate detail to determine if all the costs were for allowable activities and costs. Four of the errors, totaling $254,234 were related to the final cash requests, where there was no documentation on how the LEA spent the remaining funds. The other eight requests did not contain adequate support to ensure the costs were reasonable and necessary. For example, one cash request’s description said, “Lease payments for Literacy van to transport students to afterschool program.” The LEA requested $29,519, split between pre-k, elementary, middle, and high school. We do not believe the support had enough detail for the office to determine the time period covered by the request, if the lease payment was excessive, or if the lease was for more than one van. Effect: Without adequate controls over cash requests, the office has reimbursed subrecipients for expenses that may be unallowable, or unnecessary and unreasonable for performance of the federal award. The office did not comply with federal regulations related to activities allowed, allowable costs, and subrecipient monitoring. Cause: The office agrees that LEAs do not always providing sufficient descriptions in cash requests, but they noted program staff visited LEAs at least bi-monthly to physically review items that the money was spent on at the beginning of the grant, with continued visits as needed during the audit period. However, based on our follow up, the onsite reviews did not include reviewing the support the LEA retains for purchases related to cash requests. Instead, they focused on other subrecipient monitoring activities, such as reviewing evidence of the impact of expenditures, like improved reading scores. While useful, these activities do not address concerns about cash request documentation, because there is no evidence that the office reimbursed the actual amount spent. Recommendation: We recommend the Office of Public Instruction: A. Strengthen subrecipient monitoring internal controls to ensure subrecipient grant expenditures are for allowable costs and activities. B. Obtain sufficient documentation of subrecipient expenditures to ensure compliance with federal awards requirements. Views of Responsible Officials: The office partially concurs with the recommendation. Management notes that they increased the documentation requirements for cash requests at the end of the first year of the audit period. LEAs are required to maintain all receipts and provide them upon request. Management also notes no request for additional LEA documentation was included as part of this audit process. Rebuttal of Views of Responsible Officials: We considered the office’s partial concurrence. Cash requests from both years of the audit period were tested, and instances of insufficient documentation were found throughout the audit period. While we are not prohibited from requesting subrecipients’ documentation during an audit, we are not required to do so. It is our position that unless the office maintains documentation, or documents their monitoring activities, compliance with the requirements applicable to the office cannot be demonstrated. As such, our recommendation stands.
Finding 2023-032: U.S. Department of Education ALN #84.425D and #84.425U, Education Stabilization Fund (ESF) (COVID-19) Grant #S425D200006, S425D210006, and S452U210006-21A Criteria: Federal regulation, 2CFR 200.332(d), requires pass through entities to "Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved." The Office of Management and Budget 2022 Compliance Supplement (compliance supplement), ESF Program (Section III, Part F-Equipment /Real Property Management) explains that construction projects using Elementary and Secondary School Emergency Relief Fund (ESSER funds) must meet Davis-Bacon prevailing wage requirements, meaning they must pay wages based on federal requirements. A memo from the Department of Education related to Davis-Bacon released April 2023 further clarified that states should be collecting and monitoring all Local Educational Agencies’ (LEA) wage certifications. The compliance supplement (Section III, Part A Activities Allowed or Unallowed) also requires costs to be consistent with the purpose of the ESF, “to prevent, prepare for, and respond to COVID-19”. Federal regulation, 2 CFR 200.403 (a) and (g), requires allowable costs to be “necessary and reasonable for the performance of the Federal award” and to be “adequately documented”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: ESSER is part of the ESF. The Office of Public Instruction’s (office) controls were not sufficient to prevent, or detect and correct, noncompliance with federal requirements during the audit period. The office assessed subrecipients risk, reviewed audit reports for LEAs whose audits included ESSER as a major program, and required subrecipients to document their use of ESSER funds on cash requests. However, the office did not comply with federal allowable cost regulations. This is because they did not require documentation beyond the cash requests to ensure those expenditures followed ESSER program requirements. Examples include being related to the COVID-19 pandemic, being reasonable and necessary, and complying with equipment and construction requirements. In addition, the office did not complete any after the award monitoring, including collecting Davis-Bacon wage certifications related to subrecipients’ construction projects as required by federal regulations. Questioned Costs: We question costs of over $52 million. Specifically, $19,748,561 for 84.425D (ESSER I and II) and $32,288,058 for 84.425U (ESSER III). We calculated this amount by summing the payments from the cash draws we tested that lacked sufficient documentation. The potential questioned costs could be higher since our testing was limited to cash requests over $1 million. Context: During the audit period, over $257 million of ESSER grants were paid to LEAs. We tested 27 ESSER cash requests over $1 million each in fiscal years 2022 and 2023. Total payments made to subrecipients from these cash draws exceeded $77 million. We first considered support retained at the office. We also requested further support from LEAs in an attempt to consider all information available. Not all requested support was provided. We reviewed what was provided as part of our testing. This was not a sample as we tested all cash requests above $1 million. Each cash request contained a variety of items on the same request. We noted the following: • Documentation in 12 out of the 27 cash requests tested did not indicate how the expenses related to preventing, preparing for, and responding to COVID-19 pandemic. • 14 out of the 27 cash requests tested did not have enough detail to determine if the costs were reasonable and necessary. • 12 of the cash requests reviewed involved construction and the office did not review any wage certifications during the audit period. In addition, there was no monitoring of LEAs’ compliance related to equipment and real property management requirements beyond compliance certifications by the LEAs. • Descriptions on two cash requests indicated ESSER funds were spent on items we believe are unreasonable or have no clear connection to the pandemic. These costs include t-shirts for a new teacher event and massage chairs for a teacher’s lounge. Overall, the cash requests are more detailed than in the prior audit, but they still are not sufficient to meet the office’s obligation to ensure subrecipients’ compliance with federal regulations. In addition, fiscal year 2023 was the third year of ESSER spending, indicating there has been time to set up an after the award subrecipient monitoring program. Repeat Finding: This is a repeat finding and was reported as Single Audit finding 2021-036 in the audit for the two fiscal years ended June 30, 2021. Effect: The office is not in compliance with federal regulations and subrecipients may have spent ESSER funds on activities not allowed by federal requirements, to prevent, prepare for, and respond to the coronavirus pandemic, or on items that are not necessary and reasonable for the performance of the federal award. Cause: The office believes there was sufficient detail on the cash requests for the office to decide on the reasonableness, necessity, and allowability under ESSER regulations. The office agrees that subrecipient monitoring was not sufficient during the audit period, but since there are three funding sources that all have the same allowable uses, personnel decided they would monitor all phases of the grant using one self-assessment. The office sent out a monitoring survey at the end of the audit period, but no responses had been received during fiscal year 2023. The office noted that they will conduct additional monitoring, particularly for unique activities like construction projects, to ensure ESSER compliance. ESSER is defined in the compliance supplement as a “higher risk” federal program, because of the additional risk associated with certain COVID-19 funding. We believe the office’s decision to monitor three years into the grant is not sufficient for the following reasons: • LEAs spent funds on unusual activity, like construction projects. These projects have different compliance requirements than the other federal grants most LEAs receive. • Less than 20 percent of LEA ESSER subrecipients will receive an audit that requires any federal compliance testing. • If the office finds issues this late in the grant process, it will be difficult to recover funds from LEAs. We believe federal requirements direct the office to use a combination of sufficient documentation at the time of disbursement and strong monitoring procedures to ensure LEAs properly comply with applicable allowable cost requirements. Recommendation: We recommend the Office of Public Instruction: A. Strengthen internal controls to ensure subrecipient grant expenditures comply with federal program requirements. B. Obtain sufficient documentation of subrecipient expenditures to ensure costs are related to the pandemic and are reasonable and necessary for performance of the federal award. C. Monitor subrecipients’ compliance with construction and equipment requirements, including reviewing wage certifications for construction projects. Views of Responsible Officials: The office concurs with the recommendation. For additional information regarding the office’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-032: U.S. Department of Education ALN #84.425D and #84.425U, Education Stabilization Fund (ESF) (COVID-19) Grant #S425D200006, S425D210006, and S452U210006-21A Criteria: Federal regulation, 2CFR 200.332(d), requires pass through entities to "Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved." The Office of Management and Budget 2022 Compliance Supplement (compliance supplement), ESF Program (Section III, Part F-Equipment /Real Property Management) explains that construction projects using Elementary and Secondary School Emergency Relief Fund (ESSER funds) must meet Davis-Bacon prevailing wage requirements, meaning they must pay wages based on federal requirements. A memo from the Department of Education related to Davis-Bacon released April 2023 further clarified that states should be collecting and monitoring all Local Educational Agencies’ (LEA) wage certifications. The compliance supplement (Section III, Part A Activities Allowed or Unallowed) also requires costs to be consistent with the purpose of the ESF, “to prevent, prepare for, and respond to COVID-19”. Federal regulation, 2 CFR 200.403 (a) and (g), requires allowable costs to be “necessary and reasonable for the performance of the Federal award” and to be “adequately documented”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: ESSER is part of the ESF. The Office of Public Instruction’s (office) controls were not sufficient to prevent, or detect and correct, noncompliance with federal requirements during the audit period. The office assessed subrecipients risk, reviewed audit reports for LEAs whose audits included ESSER as a major program, and required subrecipients to document their use of ESSER funds on cash requests. However, the office did not comply with federal allowable cost regulations. This is because they did not require documentation beyond the cash requests to ensure those expenditures followed ESSER program requirements. Examples include being related to the COVID-19 pandemic, being reasonable and necessary, and complying with equipment and construction requirements. In addition, the office did not complete any after the award monitoring, including collecting Davis-Bacon wage certifications related to subrecipients’ construction projects as required by federal regulations. Questioned Costs: We question costs of over $52 million. Specifically, $19,748,561 for 84.425D (ESSER I and II) and $32,288,058 for 84.425U (ESSER III). We calculated this amount by summing the payments from the cash draws we tested that lacked sufficient documentation. The potential questioned costs could be higher since our testing was limited to cash requests over $1 million. Context: During the audit period, over $257 million of ESSER grants were paid to LEAs. We tested 27 ESSER cash requests over $1 million each in fiscal years 2022 and 2023. Total payments made to subrecipients from these cash draws exceeded $77 million. We first considered support retained at the office. We also requested further support from LEAs in an attempt to consider all information available. Not all requested support was provided. We reviewed what was provided as part of our testing. This was not a sample as we tested all cash requests above $1 million. Each cash request contained a variety of items on the same request. We noted the following: • Documentation in 12 out of the 27 cash requests tested did not indicate how the expenses related to preventing, preparing for, and responding to COVID-19 pandemic. • 14 out of the 27 cash requests tested did not have enough detail to determine if the costs were reasonable and necessary. • 12 of the cash requests reviewed involved construction and the office did not review any wage certifications during the audit period. In addition, there was no monitoring of LEAs’ compliance related to equipment and real property management requirements beyond compliance certifications by the LEAs. • Descriptions on two cash requests indicated ESSER funds were spent on items we believe are unreasonable or have no clear connection to the pandemic. These costs include t-shirts for a new teacher event and massage chairs for a teacher’s lounge. Overall, the cash requests are more detailed than in the prior audit, but they still are not sufficient to meet the office’s obligation to ensure subrecipients’ compliance with federal regulations. In addition, fiscal year 2023 was the third year of ESSER spending, indicating there has been time to set up an after the award subrecipient monitoring program. Repeat Finding: This is a repeat finding and was reported as Single Audit finding 2021-036 in the audit for the two fiscal years ended June 30, 2021. Effect: The office is not in compliance with federal regulations and subrecipients may have spent ESSER funds on activities not allowed by federal requirements, to prevent, prepare for, and respond to the coronavirus pandemic, or on items that are not necessary and reasonable for the performance of the federal award. Cause: The office believes there was sufficient detail on the cash requests for the office to decide on the reasonableness, necessity, and allowability under ESSER regulations. The office agrees that subrecipient monitoring was not sufficient during the audit period, but since there are three funding sources that all have the same allowable uses, personnel decided they would monitor all phases of the grant using one self-assessment. The office sent out a monitoring survey at the end of the audit period, but no responses had been received during fiscal year 2023. The office noted that they will conduct additional monitoring, particularly for unique activities like construction projects, to ensure ESSER compliance. ESSER is defined in the compliance supplement as a “higher risk” federal program, because of the additional risk associated with certain COVID-19 funding. We believe the office’s decision to monitor three years into the grant is not sufficient for the following reasons: • LEAs spent funds on unusual activity, like construction projects. These projects have different compliance requirements than the other federal grants most LEAs receive. • Less than 20 percent of LEA ESSER subrecipients will receive an audit that requires any federal compliance testing. • If the office finds issues this late in the grant process, it will be difficult to recover funds from LEAs. We believe federal requirements direct the office to use a combination of sufficient documentation at the time of disbursement and strong monitoring procedures to ensure LEAs properly comply with applicable allowable cost requirements. Recommendation: We recommend the Office of Public Instruction: A. Strengthen internal controls to ensure subrecipient grant expenditures comply with federal program requirements. B. Obtain sufficient documentation of subrecipient expenditures to ensure costs are related to the pandemic and are reasonable and necessary for performance of the federal award. C. Monitor subrecipients’ compliance with construction and equipment requirements, including reviewing wage certifications for construction projects. Views of Responsible Officials: The office concurs with the recommendation. For additional information regarding the office’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-032: U.S. Department of Education ALN #84.425D and #84.425U, Education Stabilization Fund (ESF) (COVID-19) Grant #S425D200006, S425D210006, and S452U210006-21A Criteria: Federal regulation, 2CFR 200.332(d), requires pass through entities to "Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved." The Office of Management and Budget 2022 Compliance Supplement (compliance supplement), ESF Program (Section III, Part F-Equipment /Real Property Management) explains that construction projects using Elementary and Secondary School Emergency Relief Fund (ESSER funds) must meet Davis-Bacon prevailing wage requirements, meaning they must pay wages based on federal requirements. A memo from the Department of Education related to Davis-Bacon released April 2023 further clarified that states should be collecting and monitoring all Local Educational Agencies’ (LEA) wage certifications. The compliance supplement (Section III, Part A Activities Allowed or Unallowed) also requires costs to be consistent with the purpose of the ESF, “to prevent, prepare for, and respond to COVID-19”. Federal regulation, 2 CFR 200.403 (a) and (g), requires allowable costs to be “necessary and reasonable for the performance of the Federal award” and to be “adequately documented”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: ESSER is part of the ESF. The Office of Public Instruction’s (office) controls were not sufficient to prevent, or detect and correct, noncompliance with federal requirements during the audit period. The office assessed subrecipients risk, reviewed audit reports for LEAs whose audits included ESSER as a major program, and required subrecipients to document their use of ESSER funds on cash requests. However, the office did not comply with federal allowable cost regulations. This is because they did not require documentation beyond the cash requests to ensure those expenditures followed ESSER program requirements. Examples include being related to the COVID-19 pandemic, being reasonable and necessary, and complying with equipment and construction requirements. In addition, the office did not complete any after the award monitoring, including collecting Davis-Bacon wage certifications related to subrecipients’ construction projects as required by federal regulations. Questioned Costs: We question costs of over $52 million. Specifically, $19,748,561 for 84.425D (ESSER I and II) and $32,288,058 for 84.425U (ESSER III). We calculated this amount by summing the payments from the cash draws we tested that lacked sufficient documentation. The potential questioned costs could be higher since our testing was limited to cash requests over $1 million. Context: During the audit period, over $257 million of ESSER grants were paid to LEAs. We tested 27 ESSER cash requests over $1 million each in fiscal years 2022 and 2023. Total payments made to subrecipients from these cash draws exceeded $77 million. We first considered support retained at the office. We also requested further support from LEAs in an attempt to consider all information available. Not all requested support was provided. We reviewed what was provided as part of our testing. This was not a sample as we tested all cash requests above $1 million. Each cash request contained a variety of items on the same request. We noted the following: • Documentation in 12 out of the 27 cash requests tested did not indicate how the expenses related to preventing, preparing for, and responding to COVID-19 pandemic. • 14 out of the 27 cash requests tested did not have enough detail to determine if the costs were reasonable and necessary. • 12 of the cash requests reviewed involved construction and the office did not review any wage certifications during the audit period. In addition, there was no monitoring of LEAs’ compliance related to equipment and real property management requirements beyond compliance certifications by the LEAs. • Descriptions on two cash requests indicated ESSER funds were spent on items we believe are unreasonable or have no clear connection to the pandemic. These costs include t-shirts for a new teacher event and massage chairs for a teacher’s lounge. Overall, the cash requests are more detailed than in the prior audit, but they still are not sufficient to meet the office’s obligation to ensure subrecipients’ compliance with federal regulations. In addition, fiscal year 2023 was the third year of ESSER spending, indicating there has been time to set up an after the award subrecipient monitoring program. Repeat Finding: This is a repeat finding and was reported as Single Audit finding 2021-036 in the audit for the two fiscal years ended June 30, 2021. Effect: The office is not in compliance with federal regulations and subrecipients may have spent ESSER funds on activities not allowed by federal requirements, to prevent, prepare for, and respond to the coronavirus pandemic, or on items that are not necessary and reasonable for the performance of the federal award. Cause: The office believes there was sufficient detail on the cash requests for the office to decide on the reasonableness, necessity, and allowability under ESSER regulations. The office agrees that subrecipient monitoring was not sufficient during the audit period, but since there are three funding sources that all have the same allowable uses, personnel decided they would monitor all phases of the grant using one self-assessment. The office sent out a monitoring survey at the end of the audit period, but no responses had been received during fiscal year 2023. The office noted that they will conduct additional monitoring, particularly for unique activities like construction projects, to ensure ESSER compliance. ESSER is defined in the compliance supplement as a “higher risk” federal program, because of the additional risk associated with certain COVID-19 funding. We believe the office’s decision to monitor three years into the grant is not sufficient for the following reasons: • LEAs spent funds on unusual activity, like construction projects. These projects have different compliance requirements than the other federal grants most LEAs receive. • Less than 20 percent of LEA ESSER subrecipients will receive an audit that requires any federal compliance testing. • If the office finds issues this late in the grant process, it will be difficult to recover funds from LEAs. We believe federal requirements direct the office to use a combination of sufficient documentation at the time of disbursement and strong monitoring procedures to ensure LEAs properly comply with applicable allowable cost requirements. Recommendation: We recommend the Office of Public Instruction: A. Strengthen internal controls to ensure subrecipient grant expenditures comply with federal program requirements. B. Obtain sufficient documentation of subrecipient expenditures to ensure costs are related to the pandemic and are reasonable and necessary for performance of the federal award. C. Monitor subrecipients’ compliance with construction and equipment requirements, including reviewing wage certifications for construction projects. Views of Responsible Officials: The office concurs with the recommendation. For additional information regarding the office’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-032: U.S. Department of Education ALN #84.425D and #84.425U, Education Stabilization Fund (ESF) (COVID-19) Grant #S425D200006, S425D210006, and S452U210006-21A Criteria: Federal regulation, 2CFR 200.332(d), requires pass through entities to "Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved." The Office of Management and Budget 2022 Compliance Supplement (compliance supplement), ESF Program (Section III, Part F-Equipment /Real Property Management) explains that construction projects using Elementary and Secondary School Emergency Relief Fund (ESSER funds) must meet Davis-Bacon prevailing wage requirements, meaning they must pay wages based on federal requirements. A memo from the Department of Education related to Davis-Bacon released April 2023 further clarified that states should be collecting and monitoring all Local Educational Agencies’ (LEA) wage certifications. The compliance supplement (Section III, Part A Activities Allowed or Unallowed) also requires costs to be consistent with the purpose of the ESF, “to prevent, prepare for, and respond to COVID-19”. Federal regulation, 2 CFR 200.403 (a) and (g), requires allowable costs to be “necessary and reasonable for the performance of the Federal award” and to be “adequately documented”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: ESSER is part of the ESF. The Office of Public Instruction’s (office) controls were not sufficient to prevent, or detect and correct, noncompliance with federal requirements during the audit period. The office assessed subrecipients risk, reviewed audit reports for LEAs whose audits included ESSER as a major program, and required subrecipients to document their use of ESSER funds on cash requests. However, the office did not comply with federal allowable cost regulations. This is because they did not require documentation beyond the cash requests to ensure those expenditures followed ESSER program requirements. Examples include being related to the COVID-19 pandemic, being reasonable and necessary, and complying with equipment and construction requirements. In addition, the office did not complete any after the award monitoring, including collecting Davis-Bacon wage certifications related to subrecipients’ construction projects as required by federal regulations. Questioned Costs: We question costs of over $52 million. Specifically, $19,748,561 for 84.425D (ESSER I and II) and $32,288,058 for 84.425U (ESSER III). We calculated this amount by summing the payments from the cash draws we tested that lacked sufficient documentation. The potential questioned costs could be higher since our testing was limited to cash requests over $1 million. Context: During the audit period, over $257 million of ESSER grants were paid to LEAs. We tested 27 ESSER cash requests over $1 million each in fiscal years 2022 and 2023. Total payments made to subrecipients from these cash draws exceeded $77 million. We first considered support retained at the office. We also requested further support from LEAs in an attempt to consider all information available. Not all requested support was provided. We reviewed what was provided as part of our testing. This was not a sample as we tested all cash requests above $1 million. Each cash request contained a variety of items on the same request. We noted the following: • Documentation in 12 out of the 27 cash requests tested did not indicate how the expenses related to preventing, preparing for, and responding to COVID-19 pandemic. • 14 out of the 27 cash requests tested did not have enough detail to determine if the costs were reasonable and necessary. • 12 of the cash requests reviewed involved construction and the office did not review any wage certifications during the audit period. In addition, there was no monitoring of LEAs’ compliance related to equipment and real property management requirements beyond compliance certifications by the LEAs. • Descriptions on two cash requests indicated ESSER funds were spent on items we believe are unreasonable or have no clear connection to the pandemic. These costs include t-shirts for a new teacher event and massage chairs for a teacher’s lounge. Overall, the cash requests are more detailed than in the prior audit, but they still are not sufficient to meet the office’s obligation to ensure subrecipients’ compliance with federal regulations. In addition, fiscal year 2023 was the third year of ESSER spending, indicating there has been time to set up an after the award subrecipient monitoring program. Repeat Finding: This is a repeat finding and was reported as Single Audit finding 2021-036 in the audit for the two fiscal years ended June 30, 2021. Effect: The office is not in compliance with federal regulations and subrecipients may have spent ESSER funds on activities not allowed by federal requirements, to prevent, prepare for, and respond to the coronavirus pandemic, or on items that are not necessary and reasonable for the performance of the federal award. Cause: The office believes there was sufficient detail on the cash requests for the office to decide on the reasonableness, necessity, and allowability under ESSER regulations. The office agrees that subrecipient monitoring was not sufficient during the audit period, but since there are three funding sources that all have the same allowable uses, personnel decided they would monitor all phases of the grant using one self-assessment. The office sent out a monitoring survey at the end of the audit period, but no responses had been received during fiscal year 2023. The office noted that they will conduct additional monitoring, particularly for unique activities like construction projects, to ensure ESSER compliance. ESSER is defined in the compliance supplement as a “higher risk” federal program, because of the additional risk associated with certain COVID-19 funding. We believe the office’s decision to monitor three years into the grant is not sufficient for the following reasons: • LEAs spent funds on unusual activity, like construction projects. These projects have different compliance requirements than the other federal grants most LEAs receive. • Less than 20 percent of LEA ESSER subrecipients will receive an audit that requires any federal compliance testing. • If the office finds issues this late in the grant process, it will be difficult to recover funds from LEAs. We believe federal requirements direct the office to use a combination of sufficient documentation at the time of disbursement and strong monitoring procedures to ensure LEAs properly comply with applicable allowable cost requirements. Recommendation: We recommend the Office of Public Instruction: A. Strengthen internal controls to ensure subrecipient grant expenditures comply with federal program requirements. B. Obtain sufficient documentation of subrecipient expenditures to ensure costs are related to the pandemic and are reasonable and necessary for performance of the federal award. C. Monitor subrecipients’ compliance with construction and equipment requirements, including reviewing wage certifications for construction projects. Views of Responsible Officials: The office concurs with the recommendation. For additional information regarding the office’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-055: U.S. Department of Health and Human Services ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various Criteria: Federal regulation, 2 CFR 200.403(a) and (g), specify costs must be necessary and reasonable for the performance of the federal award and adequately documented to be allowable under federal awards. Federal regulation, 45 CFR 75.352(d), requires the Department of Public Health and Human Services (department) to monitor the activities of its subrecipients as necessary to ensure the subaward is used for authorized purposes, in compliance with federal statutes, regulations, and terms and conditions of the subaward, and subaward performance goals are achieved. Federal guidance from the Centers for Disease Control and Prevention, ELC Reopening Schools: Support for Screening Testing to Reopen & Keep Schools Operating Safely, and related Frequently Asked Questions documents specify allowable costs related to reopening schools. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: The department’s internal controls were not adequate to ensure subawards of federal ELC funds were expended on allowable costs, as required by federal regulations. Questioned Costs: We question $163,158, which represents the amount of federal funds distributed to counties in fiscal year 2022 that were not supported by actual county expenditures as of June 2024. Additionally, for school subrecipients, we project likely questioned costs of $3,194,292 in federal funds. Questioned costs related to school subrecipients were calculated by applying the percentage of unallowed or unsupported costs identified in our sample to the total amount distributed to schools in the audit period. Context: During the audit period, the department distributed federal ELC funds to 45 county or local governments (county) and to schools in 42 counties. County distributions, supporting localized preparedness for adequate staffing, totaled approximately $4.8 million and were supported by subaward agreements. School distributions, supporting efforts to safely re-open schools around the state during the public health emergency, totaled approximately $9.1 million. We conducted a sample of distributions to subrecipients. Of the 388 distributions, we reviewed 20 to county governments and 20 to schools to determine if the department’s post-award monitoring procedures were effective. The sample was not statistically valid. For 20 of the distributions tested, we determined the department’s monitoring procedures insufficient due to lack of supporting documentation or due to our identification of unallowed costs not identified in the department’s review. Additional details for each county and school distributions follows: Distributions to Counties In fiscal years 2021 and 2022, the department distributed funds to counties as advanced payments. During the prior audit, we reported fiscal year 2021 distributions as questioned costs. In response to our prior audit recommendation, in fiscal year 2023 the department implemented procedures to distribute funds to counties quarterly after the county attested the funds were used in accordance with federal regulations and provided receipts and other documentation for the department’s review and approval. The department also retroactively requested, received, and reviewed support for distributions to counties made in fiscal years 2021 and 2022. As part of our sample, we reviewed four county distributions from fiscal year 2023 and noted department procedures ensured costs incurred were for allowable purposes before distributing federal funds to the county. For the 16 county distributions from fiscal year 2022, we reviewed the department’s tracking spreadsheet and underlying support for four county agreements to determine whether advanced payments from fiscal years 2021 and 2022 were fully utilized. One of the 16 counties had a remaining balance of $54,378 in federal ELC funds for which the county had not incurred or reported expenses against as of June 2024, the month when we reviewed the report. We also considered all data on the department’s tracking spreadsheet and determined as of fiscal year end 2023 eight additional counties had not fully exhausted advanced distributions of federal ELC funds from fiscal year 2022. Of these counties, three had a remaining advanced balance as of June 2024. We consider these outstanding balances totaling $108,800 questioned costs, which is in addition to the $54,378 discussed above. Distributions to Schools School re-opening grants were distributed to schools as lump-sum payments at three different intervals during the audit period. The purpose for these grants was to support school testing, prevention, and mitigation activities intended to support open, in-person school environments during the COVID-19 pandemic. Subsequent to distributing funds to schools, at six-month intervals for fiscal year 2022 awards and at grant close-out for fiscal year 2023 awards, the department required the school to provide support for the use of federal ELC funds. This was documented on a School Budget Expenditure Report. The department required the school to list expenditures by category. Per department guidance, supporting invoices or payroll reports were required only when an individual expense exceeded $5,000. We reviewed documentation provided by the department for the 20 school distributions selected in our sample. In many cases, the documentation provided was intended to support multiple distributions to the schools, not only the distribution selected for sample testing. We identified only one school where supporting documentation was sufficient to conclude federal ELC funds had been fully used for allowable purposes. For the remaining 19 schools, we found: • Supporting documentation for nine schools either did not include support for payroll costs or lacked sufficient detail to support expenditures incurred by the school were for the purpose of the ELC federal program. For seven schools, the payroll reports were dated between November 2023 and April 2024, well after the department’s July 2023 subaward closeout deadline. • One school claimed costs for a school superintendent and a cook, while another school shifted 25% of regular custodial costs to the ELC award for June 2023 salaries. We consider these costs unallowable as they are regular costs associated with school operations and not temporary staff hired or redirected for purposes of school reopening efforts. • Support from schools showed federal ELC funds were spent on items such as ice melt, a kitchen warmer oven, drinking fountains, cameras, printers, paper, toner, and ink. We consider these costs unallowable as they do not align with an allowable cost in the federal school reopening guidance. • One school reported costs totaling $42,761 for Covid-19 testing supplies. Based on our review, the underlying costs were mainly related to purchasing $10 gift cards used to incentivize Covid testing. The school’s incentive plan specified 300 $10 gift cards would be purchased, and distributions of gift cards would be tracked, signed for, and subjected to data analysis to ensure incentives distributed did not outnumber the tests performed. The department did not provide documentation to support its consideration of the discrepancy between expected and actual incentives for the school. Absent additional documentation, we consider the approximately $39,000 unallowable as they are not reasonable or necessary for the performance of the federal award. Per discussion with department personnel, as questions came up in the review of school Budget Expenditures Reports they would reach out to schools for additional documentation or clarification. Turnover in the position responsible for following up with schools contributed to the level of documentation available at the time of audit. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included two findings related to this issue. Finding #2021-062 recommended the department implement internal controls over federal ELC contractor and subrecipient payments and to reimburse those entities only for activities allowed by federal regulations. Finding #2021-054 recommended the department establish and document internal controls for and to conduct monitoring of subrecipients of federal ELC funds. Effect: The department has not complied with federal regulations requiring post-award monitoring of its subrecipients, which means risk exists that federal funds were not expended in accordance with federal award requirements. As part of resolving the issue, the federal government may require the department to repay unallowed or unsupported costs. Cause: Department internal controls in place during the audit period did not consistently include a review and follow-up on subrecipient documentation to support the use of federal ELC funds. • Prior audit findings related to county subrecipients were identified more than half-way through fiscal year 2022. At that time department staff were unaware of the degree of subrecipient monitoring required for subaward agreements. • As discussed in Finding #2023-054, the program staff did not properly identify schools as subrecipients during the audit period. While the department had procedures in place to review subaward close-out documentation submitted by schools, staff turnover contributed to limited follow-up. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls for its Epidemiology and Laboratory Capacity for Infectious Diseases federal award to ensure adequate documentation for subrecipient payments is consistently obtained and reviewed to ensure funds were used for authorized purposes, and documentation of department decisions is maintained. B. Disburse funds to subrecipients for the ELC federal award only for activities allowed by federal regulations. C. Conduct post-award monitoring of subrecipients of federal ELC funds, as required by federal regulations. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department disagrees that funds were not paid to subrecipients for allowable activities. The department acknowledges documentation of their review of costs could be enhanced. However, they believe a large portion of the costs are allowable based on discussions with their federal partners and subrecipients and are confident that additional documentation obtained from the subrecipients would support the questioned costs. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. It is our position documentation available during the audit period or at the time of audit was not adequate to support that costs were allowable under the program. As such, our recommendation stands.
Finding 2023-055: U.S. Department of Health and Human Services ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various Criteria: Federal regulation, 2 CFR 200.403(a) and (g), specify costs must be necessary and reasonable for the performance of the federal award and adequately documented to be allowable under federal awards. Federal regulation, 45 CFR 75.352(d), requires the Department of Public Health and Human Services (department) to monitor the activities of its subrecipients as necessary to ensure the subaward is used for authorized purposes, in compliance with federal statutes, regulations, and terms and conditions of the subaward, and subaward performance goals are achieved. Federal guidance from the Centers for Disease Control and Prevention, ELC Reopening Schools: Support for Screening Testing to Reopen & Keep Schools Operating Safely, and related Frequently Asked Questions documents specify allowable costs related to reopening schools. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: The department’s internal controls were not adequate to ensure subawards of federal ELC funds were expended on allowable costs, as required by federal regulations. Questioned Costs: We question $163,158, which represents the amount of federal funds distributed to counties in fiscal year 2022 that were not supported by actual county expenditures as of June 2024. Additionally, for school subrecipients, we project likely questioned costs of $3,194,292 in federal funds. Questioned costs related to school subrecipients were calculated by applying the percentage of unallowed or unsupported costs identified in our sample to the total amount distributed to schools in the audit period. Context: During the audit period, the department distributed federal ELC funds to 45 county or local governments (county) and to schools in 42 counties. County distributions, supporting localized preparedness for adequate staffing, totaled approximately $4.8 million and were supported by subaward agreements. School distributions, supporting efforts to safely re-open schools around the state during the public health emergency, totaled approximately $9.1 million. We conducted a sample of distributions to subrecipients. Of the 388 distributions, we reviewed 20 to county governments and 20 to schools to determine if the department’s post-award monitoring procedures were effective. The sample was not statistically valid. For 20 of the distributions tested, we determined the department’s monitoring procedures insufficient due to lack of supporting documentation or due to our identification of unallowed costs not identified in the department’s review. Additional details for each county and school distributions follows: Distributions to Counties In fiscal years 2021 and 2022, the department distributed funds to counties as advanced payments. During the prior audit, we reported fiscal year 2021 distributions as questioned costs. In response to our prior audit recommendation, in fiscal year 2023 the department implemented procedures to distribute funds to counties quarterly after the county attested the funds were used in accordance with federal regulations and provided receipts and other documentation for the department’s review and approval. The department also retroactively requested, received, and reviewed support for distributions to counties made in fiscal years 2021 and 2022. As part of our sample, we reviewed four county distributions from fiscal year 2023 and noted department procedures ensured costs incurred were for allowable purposes before distributing federal funds to the county. For the 16 county distributions from fiscal year 2022, we reviewed the department’s tracking spreadsheet and underlying support for four county agreements to determine whether advanced payments from fiscal years 2021 and 2022 were fully utilized. One of the 16 counties had a remaining balance of $54,378 in federal ELC funds for which the county had not incurred or reported expenses against as of June 2024, the month when we reviewed the report. We also considered all data on the department’s tracking spreadsheet and determined as of fiscal year end 2023 eight additional counties had not fully exhausted advanced distributions of federal ELC funds from fiscal year 2022. Of these counties, three had a remaining advanced balance as of June 2024. We consider these outstanding balances totaling $108,800 questioned costs, which is in addition to the $54,378 discussed above. Distributions to Schools School re-opening grants were distributed to schools as lump-sum payments at three different intervals during the audit period. The purpose for these grants was to support school testing, prevention, and mitigation activities intended to support open, in-person school environments during the COVID-19 pandemic. Subsequent to distributing funds to schools, at six-month intervals for fiscal year 2022 awards and at grant close-out for fiscal year 2023 awards, the department required the school to provide support for the use of federal ELC funds. This was documented on a School Budget Expenditure Report. The department required the school to list expenditures by category. Per department guidance, supporting invoices or payroll reports were required only when an individual expense exceeded $5,000. We reviewed documentation provided by the department for the 20 school distributions selected in our sample. In many cases, the documentation provided was intended to support multiple distributions to the schools, not only the distribution selected for sample testing. We identified only one school where supporting documentation was sufficient to conclude federal ELC funds had been fully used for allowable purposes. For the remaining 19 schools, we found: • Supporting documentation for nine schools either did not include support for payroll costs or lacked sufficient detail to support expenditures incurred by the school were for the purpose of the ELC federal program. For seven schools, the payroll reports were dated between November 2023 and April 2024, well after the department’s July 2023 subaward closeout deadline. • One school claimed costs for a school superintendent and a cook, while another school shifted 25% of regular custodial costs to the ELC award for June 2023 salaries. We consider these costs unallowable as they are regular costs associated with school operations and not temporary staff hired or redirected for purposes of school reopening efforts. • Support from schools showed federal ELC funds were spent on items such as ice melt, a kitchen warmer oven, drinking fountains, cameras, printers, paper, toner, and ink. We consider these costs unallowable as they do not align with an allowable cost in the federal school reopening guidance. • One school reported costs totaling $42,761 for Covid-19 testing supplies. Based on our review, the underlying costs were mainly related to purchasing $10 gift cards used to incentivize Covid testing. The school’s incentive plan specified 300 $10 gift cards would be purchased, and distributions of gift cards would be tracked, signed for, and subjected to data analysis to ensure incentives distributed did not outnumber the tests performed. The department did not provide documentation to support its consideration of the discrepancy between expected and actual incentives for the school. Absent additional documentation, we consider the approximately $39,000 unallowable as they are not reasonable or necessary for the performance of the federal award. Per discussion with department personnel, as questions came up in the review of school Budget Expenditures Reports they would reach out to schools for additional documentation or clarification. Turnover in the position responsible for following up with schools contributed to the level of documentation available at the time of audit. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included two findings related to this issue. Finding #2021-062 recommended the department implement internal controls over federal ELC contractor and subrecipient payments and to reimburse those entities only for activities allowed by federal regulations. Finding #2021-054 recommended the department establish and document internal controls for and to conduct monitoring of subrecipients of federal ELC funds. Effect: The department has not complied with federal regulations requiring post-award monitoring of its subrecipients, which means risk exists that federal funds were not expended in accordance with federal award requirements. As part of resolving the issue, the federal government may require the department to repay unallowed or unsupported costs. Cause: Department internal controls in place during the audit period did not consistently include a review and follow-up on subrecipient documentation to support the use of federal ELC funds. • Prior audit findings related to county subrecipients were identified more than half-way through fiscal year 2022. At that time department staff were unaware of the degree of subrecipient monitoring required for subaward agreements. • As discussed in Finding #2023-054, the program staff did not properly identify schools as subrecipients during the audit period. While the department had procedures in place to review subaward close-out documentation submitted by schools, staff turnover contributed to limited follow-up. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls for its Epidemiology and Laboratory Capacity for Infectious Diseases federal award to ensure adequate documentation for subrecipient payments is consistently obtained and reviewed to ensure funds were used for authorized purposes, and documentation of department decisions is maintained. B. Disburse funds to subrecipients for the ELC federal award only for activities allowed by federal regulations. C. Conduct post-award monitoring of subrecipients of federal ELC funds, as required by federal regulations. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department disagrees that funds were not paid to subrecipients for allowable activities. The department acknowledges documentation of their review of costs could be enhanced. However, they believe a large portion of the costs are allowable based on discussions with their federal partners and subrecipients and are confident that additional documentation obtained from the subrecipients would support the questioned costs. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. It is our position documentation available during the audit period or at the time of audit was not adequate to support that costs were allowable under the program. As such, our recommendation stands.
Finding 2023-055: U.S. Department of Health and Human Services ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various Criteria: Federal regulation, 2 CFR 200.403(a) and (g), specify costs must be necessary and reasonable for the performance of the federal award and adequately documented to be allowable under federal awards. Federal regulation, 45 CFR 75.352(d), requires the Department of Public Health and Human Services (department) to monitor the activities of its subrecipients as necessary to ensure the subaward is used for authorized purposes, in compliance with federal statutes, regulations, and terms and conditions of the subaward, and subaward performance goals are achieved. Federal guidance from the Centers for Disease Control and Prevention, ELC Reopening Schools: Support for Screening Testing to Reopen & Keep Schools Operating Safely, and related Frequently Asked Questions documents specify allowable costs related to reopening schools. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: The department’s internal controls were not adequate to ensure subawards of federal ELC funds were expended on allowable costs, as required by federal regulations. Questioned Costs: We question $163,158, which represents the amount of federal funds distributed to counties in fiscal year 2022 that were not supported by actual county expenditures as of June 2024. Additionally, for school subrecipients, we project likely questioned costs of $3,194,292 in federal funds. Questioned costs related to school subrecipients were calculated by applying the percentage of unallowed or unsupported costs identified in our sample to the total amount distributed to schools in the audit period. Context: During the audit period, the department distributed federal ELC funds to 45 county or local governments (county) and to schools in 42 counties. County distributions, supporting localized preparedness for adequate staffing, totaled approximately $4.8 million and were supported by subaward agreements. School distributions, supporting efforts to safely re-open schools around the state during the public health emergency, totaled approximately $9.1 million. We conducted a sample of distributions to subrecipients. Of the 388 distributions, we reviewed 20 to county governments and 20 to schools to determine if the department’s post-award monitoring procedures were effective. The sample was not statistically valid. For 20 of the distributions tested, we determined the department’s monitoring procedures insufficient due to lack of supporting documentation or due to our identification of unallowed costs not identified in the department’s review. Additional details for each county and school distributions follows: Distributions to Counties In fiscal years 2021 and 2022, the department distributed funds to counties as advanced payments. During the prior audit, we reported fiscal year 2021 distributions as questioned costs. In response to our prior audit recommendation, in fiscal year 2023 the department implemented procedures to distribute funds to counties quarterly after the county attested the funds were used in accordance with federal regulations and provided receipts and other documentation for the department’s review and approval. The department also retroactively requested, received, and reviewed support for distributions to counties made in fiscal years 2021 and 2022. As part of our sample, we reviewed four county distributions from fiscal year 2023 and noted department procedures ensured costs incurred were for allowable purposes before distributing federal funds to the county. For the 16 county distributions from fiscal year 2022, we reviewed the department’s tracking spreadsheet and underlying support for four county agreements to determine whether advanced payments from fiscal years 2021 and 2022 were fully utilized. One of the 16 counties had a remaining balance of $54,378 in federal ELC funds for which the county had not incurred or reported expenses against as of June 2024, the month when we reviewed the report. We also considered all data on the department’s tracking spreadsheet and determined as of fiscal year end 2023 eight additional counties had not fully exhausted advanced distributions of federal ELC funds from fiscal year 2022. Of these counties, three had a remaining advanced balance as of June 2024. We consider these outstanding balances totaling $108,800 questioned costs, which is in addition to the $54,378 discussed above. Distributions to Schools School re-opening grants were distributed to schools as lump-sum payments at three different intervals during the audit period. The purpose for these grants was to support school testing, prevention, and mitigation activities intended to support open, in-person school environments during the COVID-19 pandemic. Subsequent to distributing funds to schools, at six-month intervals for fiscal year 2022 awards and at grant close-out for fiscal year 2023 awards, the department required the school to provide support for the use of federal ELC funds. This was documented on a School Budget Expenditure Report. The department required the school to list expenditures by category. Per department guidance, supporting invoices or payroll reports were required only when an individual expense exceeded $5,000. We reviewed documentation provided by the department for the 20 school distributions selected in our sample. In many cases, the documentation provided was intended to support multiple distributions to the schools, not only the distribution selected for sample testing. We identified only one school where supporting documentation was sufficient to conclude federal ELC funds had been fully used for allowable purposes. For the remaining 19 schools, we found: • Supporting documentation for nine schools either did not include support for payroll costs or lacked sufficient detail to support expenditures incurred by the school were for the purpose of the ELC federal program. For seven schools, the payroll reports were dated between November 2023 and April 2024, well after the department’s July 2023 subaward closeout deadline. • One school claimed costs for a school superintendent and a cook, while another school shifted 25% of regular custodial costs to the ELC award for June 2023 salaries. We consider these costs unallowable as they are regular costs associated with school operations and not temporary staff hired or redirected for purposes of school reopening efforts. • Support from schools showed federal ELC funds were spent on items such as ice melt, a kitchen warmer oven, drinking fountains, cameras, printers, paper, toner, and ink. We consider these costs unallowable as they do not align with an allowable cost in the federal school reopening guidance. • One school reported costs totaling $42,761 for Covid-19 testing supplies. Based on our review, the underlying costs were mainly related to purchasing $10 gift cards used to incentivize Covid testing. The school’s incentive plan specified 300 $10 gift cards would be purchased, and distributions of gift cards would be tracked, signed for, and subjected to data analysis to ensure incentives distributed did not outnumber the tests performed. The department did not provide documentation to support its consideration of the discrepancy between expected and actual incentives for the school. Absent additional documentation, we consider the approximately $39,000 unallowable as they are not reasonable or necessary for the performance of the federal award. Per discussion with department personnel, as questions came up in the review of school Budget Expenditures Reports they would reach out to schools for additional documentation or clarification. Turnover in the position responsible for following up with schools contributed to the level of documentation available at the time of audit. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included two findings related to this issue. Finding #2021-062 recommended the department implement internal controls over federal ELC contractor and subrecipient payments and to reimburse those entities only for activities allowed by federal regulations. Finding #2021-054 recommended the department establish and document internal controls for and to conduct monitoring of subrecipients of federal ELC funds. Effect: The department has not complied with federal regulations requiring post-award monitoring of its subrecipients, which means risk exists that federal funds were not expended in accordance with federal award requirements. As part of resolving the issue, the federal government may require the department to repay unallowed or unsupported costs. Cause: Department internal controls in place during the audit period did not consistently include a review and follow-up on subrecipient documentation to support the use of federal ELC funds. • Prior audit findings related to county subrecipients were identified more than half-way through fiscal year 2022. At that time department staff were unaware of the degree of subrecipient monitoring required for subaward agreements. • As discussed in Finding #2023-054, the program staff did not properly identify schools as subrecipients during the audit period. While the department had procedures in place to review subaward close-out documentation submitted by schools, staff turnover contributed to limited follow-up. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls for its Epidemiology and Laboratory Capacity for Infectious Diseases federal award to ensure adequate documentation for subrecipient payments is consistently obtained and reviewed to ensure funds were used for authorized purposes, and documentation of department decisions is maintained. B. Disburse funds to subrecipients for the ELC federal award only for activities allowed by federal regulations. C. Conduct post-award monitoring of subrecipients of federal ELC funds, as required by federal regulations. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department disagrees that funds were not paid to subrecipients for allowable activities. The department acknowledges documentation of their review of costs could be enhanced. However, they believe a large portion of the costs are allowable based on discussions with their federal partners and subrecipients and are confident that additional documentation obtained from the subrecipients would support the questioned costs. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. It is our position documentation available during the audit period or at the time of audit was not adequate to support that costs were allowable under the program. As such, our recommendation stands.
Finding 2023-055: U.S. Department of Health and Human Services ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various Criteria: Federal regulation, 2 CFR 200.403(a) and (g), specify costs must be necessary and reasonable for the performance of the federal award and adequately documented to be allowable under federal awards. Federal regulation, 45 CFR 75.352(d), requires the Department of Public Health and Human Services (department) to monitor the activities of its subrecipients as necessary to ensure the subaward is used for authorized purposes, in compliance with federal statutes, regulations, and terms and conditions of the subaward, and subaward performance goals are achieved. Federal guidance from the Centers for Disease Control and Prevention, ELC Reopening Schools: Support for Screening Testing to Reopen & Keep Schools Operating Safely, and related Frequently Asked Questions documents specify allowable costs related to reopening schools. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: The department’s internal controls were not adequate to ensure subawards of federal ELC funds were expended on allowable costs, as required by federal regulations. Questioned Costs: We question $163,158, which represents the amount of federal funds distributed to counties in fiscal year 2022 that were not supported by actual county expenditures as of June 2024. Additionally, for school subrecipients, we project likely questioned costs of $3,194,292 in federal funds. Questioned costs related to school subrecipients were calculated by applying the percentage of unallowed or unsupported costs identified in our sample to the total amount distributed to schools in the audit period. Context: During the audit period, the department distributed federal ELC funds to 45 county or local governments (county) and to schools in 42 counties. County distributions, supporting localized preparedness for adequate staffing, totaled approximately $4.8 million and were supported by subaward agreements. School distributions, supporting efforts to safely re-open schools around the state during the public health emergency, totaled approximately $9.1 million. We conducted a sample of distributions to subrecipients. Of the 388 distributions, we reviewed 20 to county governments and 20 to schools to determine if the department’s post-award monitoring procedures were effective. The sample was not statistically valid. For 20 of the distributions tested, we determined the department’s monitoring procedures insufficient due to lack of supporting documentation or due to our identification of unallowed costs not identified in the department’s review. Additional details for each county and school distributions follows: Distributions to Counties In fiscal years 2021 and 2022, the department distributed funds to counties as advanced payments. During the prior audit, we reported fiscal year 2021 distributions as questioned costs. In response to our prior audit recommendation, in fiscal year 2023 the department implemented procedures to distribute funds to counties quarterly after the county attested the funds were used in accordance with federal regulations and provided receipts and other documentation for the department’s review and approval. The department also retroactively requested, received, and reviewed support for distributions to counties made in fiscal years 2021 and 2022. As part of our sample, we reviewed four county distributions from fiscal year 2023 and noted department procedures ensured costs incurred were for allowable purposes before distributing federal funds to the county. For the 16 county distributions from fiscal year 2022, we reviewed the department’s tracking spreadsheet and underlying support for four county agreements to determine whether advanced payments from fiscal years 2021 and 2022 were fully utilized. One of the 16 counties had a remaining balance of $54,378 in federal ELC funds for which the county had not incurred or reported expenses against as of June 2024, the month when we reviewed the report. We also considered all data on the department’s tracking spreadsheet and determined as of fiscal year end 2023 eight additional counties had not fully exhausted advanced distributions of federal ELC funds from fiscal year 2022. Of these counties, three had a remaining advanced balance as of June 2024. We consider these outstanding balances totaling $108,800 questioned costs, which is in addition to the $54,378 discussed above. Distributions to Schools School re-opening grants were distributed to schools as lump-sum payments at three different intervals during the audit period. The purpose for these grants was to support school testing, prevention, and mitigation activities intended to support open, in-person school environments during the COVID-19 pandemic. Subsequent to distributing funds to schools, at six-month intervals for fiscal year 2022 awards and at grant close-out for fiscal year 2023 awards, the department required the school to provide support for the use of federal ELC funds. This was documented on a School Budget Expenditure Report. The department required the school to list expenditures by category. Per department guidance, supporting invoices or payroll reports were required only when an individual expense exceeded $5,000. We reviewed documentation provided by the department for the 20 school distributions selected in our sample. In many cases, the documentation provided was intended to support multiple distributions to the schools, not only the distribution selected for sample testing. We identified only one school where supporting documentation was sufficient to conclude federal ELC funds had been fully used for allowable purposes. For the remaining 19 schools, we found: • Supporting documentation for nine schools either did not include support for payroll costs or lacked sufficient detail to support expenditures incurred by the school were for the purpose of the ELC federal program. For seven schools, the payroll reports were dated between November 2023 and April 2024, well after the department’s July 2023 subaward closeout deadline. • One school claimed costs for a school superintendent and a cook, while another school shifted 25% of regular custodial costs to the ELC award for June 2023 salaries. We consider these costs unallowable as they are regular costs associated with school operations and not temporary staff hired or redirected for purposes of school reopening efforts. • Support from schools showed federal ELC funds were spent on items such as ice melt, a kitchen warmer oven, drinking fountains, cameras, printers, paper, toner, and ink. We consider these costs unallowable as they do not align with an allowable cost in the federal school reopening guidance. • One school reported costs totaling $42,761 for Covid-19 testing supplies. Based on our review, the underlying costs were mainly related to purchasing $10 gift cards used to incentivize Covid testing. The school’s incentive plan specified 300 $10 gift cards would be purchased, and distributions of gift cards would be tracked, signed for, and subjected to data analysis to ensure incentives distributed did not outnumber the tests performed. The department did not provide documentation to support its consideration of the discrepancy between expected and actual incentives for the school. Absent additional documentation, we consider the approximately $39,000 unallowable as they are not reasonable or necessary for the performance of the federal award. Per discussion with department personnel, as questions came up in the review of school Budget Expenditures Reports they would reach out to schools for additional documentation or clarification. Turnover in the position responsible for following up with schools contributed to the level of documentation available at the time of audit. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included two findings related to this issue. Finding #2021-062 recommended the department implement internal controls over federal ELC contractor and subrecipient payments and to reimburse those entities only for activities allowed by federal regulations. Finding #2021-054 recommended the department establish and document internal controls for and to conduct monitoring of subrecipients of federal ELC funds. Effect: The department has not complied with federal regulations requiring post-award monitoring of its subrecipients, which means risk exists that federal funds were not expended in accordance with federal award requirements. As part of resolving the issue, the federal government may require the department to repay unallowed or unsupported costs. Cause: Department internal controls in place during the audit period did not consistently include a review and follow-up on subrecipient documentation to support the use of federal ELC funds. • Prior audit findings related to county subrecipients were identified more than half-way through fiscal year 2022. At that time department staff were unaware of the degree of subrecipient monitoring required for subaward agreements. • As discussed in Finding #2023-054, the program staff did not properly identify schools as subrecipients during the audit period. While the department had procedures in place to review subaward close-out documentation submitted by schools, staff turnover contributed to limited follow-up. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls for its Epidemiology and Laboratory Capacity for Infectious Diseases federal award to ensure adequate documentation for subrecipient payments is consistently obtained and reviewed to ensure funds were used for authorized purposes, and documentation of department decisions is maintained. B. Disburse funds to subrecipients for the ELC federal award only for activities allowed by federal regulations. C. Conduct post-award monitoring of subrecipients of federal ELC funds, as required by federal regulations. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department disagrees that funds were not paid to subrecipients for allowable activities. The department acknowledges documentation of their review of costs could be enhanced. However, they believe a large portion of the costs are allowable based on discussions with their federal partners and subrecipients and are confident that additional documentation obtained from the subrecipients would support the questioned costs. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. It is our position documentation available during the audit period or at the time of audit was not adequate to support that costs were allowable under the program. As such, our recommendation stands.
Finding 2023-013: U.S. Department of Transportation ALN #20.509, Formula Grants for Rural Areas (COVID-19) Grant #MT-2022-022-00 and MT-2023-011-00 Criteria: Federal regulation, 2 CFR 200.317, requires the Montana Department of Transportation (department) to follow state procurement policy when procuring property and services with federal funds. Federal regulation, 2 CFR 200.403, indicates costs must meet certain criteria to be allowable, such as being consistent with policies and procedures that apply uniformly to both federally and state financed activities of the department. Federal regulation, 2 CFR 200.332(d), requires the state to perform monitoring of subrecipients sufficient to ensure subrecipients have complied with federal requirements. Federal regulation, 2 CFR 200.313(d), requires the department to maintain accurate property records and have adequate internal controls to safeguard equipment purchased with federal funds. State policy in the Montana Operations Manual (MOM) policy requires all procurements either have a purchase order or contract. The purchase order or contract must include all elements negotiated and required for the purchase. Department policy and procedures require an inspection on each received vehicle be documented by a post-delivery certification. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: The department’s internal controls did not ensure vehicle procurement, funded by federal funds, followed state policy and procedures. Further, the department did not adequately review and monitor vehicle records to ensure compliance with federal requirements. Questioned Costs: We question $37,990 of costs charged to the program related to the vehicle purchase made without a contract. Context: In administering the Formula Grants for Rural Areas program, the department provides capital grants to subrecipients for purchase of equipment. The department utilizes a data processing system to obtain and store information from the subrecipients to assist in monitoring compliance with various requirements of the program. We reviewed the system information regarding equipment records, procurements, and subrecipient monitoring for the subrecipient’s equipment and procurement federal requirements. We sampled five of the department’s 15 vehicle purchases as part of our audit. This sample was not statistically valid. Our review identified: • Three purchases did not contain evidence of post-delivery certifications. • One purchase with inaccurate vehicle information in the system. • One purchase without a contract, totaling $37,990. The information maintained in the system is necessary to demonstrate compliance with federal procurement and equipment requirements. We analyzed the population of 127 vehicle records in the system and identified the records did not contain all the elements necessary to track and monitor vehicles purchased with federal funds properly. We conducted a sample of 23 vehicle records. The sample was not statistically valid. Our sample identified: • 11 vehicle records did not contain complete and accurate system information, including inaccurate VIN numbers and the condition of vehicle at time of inspection. • Three vehicles did not contain mileage reported. This information is used during the department’s biennial inspections of subrecipient fleet vehicles to determine reasonableness of mileage reimbursements. Repeat Finding: This is a repeat finding and was reported as Single Audit finding #2021-003 in the audit for the two fiscal years ended June 30, 2021. Effect: The department is not in compliance with state procurement policies and procedures. Additionally, the vehicle purchased without a contract resulted in questioned costs which the department may be required to repay to the federal government. Failure to complete post-delivery certifications may mean vehicles do not meet program specifications. Cause: The post-delivery certifications were overlooked by staff who completed the vehicle inspections at the time of delivery. Further, staff turnover and lack of necessary training contributed to the internal control deficiencies and noncompliance. Recommendation: We recommend the Montana Department of Transportation: A. Enhance internal controls and provide training to staff to ensure vehicle procurements follow state policy to comply with federal requirements. B. Enhance internal controls and provide training to staff to ensure information maintained in the system is complete and accurate. C. Comply with state procurement policy by using a contract agreement for all vehicle purchases. D. Complete and submit the post-delivery certifications, as required by department policy. E. Review and update the system vehicle records to ensure they are complete and accurate. Views of Responsible Officials: The department concurs with this recommendation. For additional information regarding the department’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-013: U.S. Department of Transportation ALN #20.509, Formula Grants for Rural Areas (COVID-19) Grant #MT-2022-022-00 and MT-2023-011-00 Criteria: Federal regulation, 2 CFR 200.317, requires the Montana Department of Transportation (department) to follow state procurement policy when procuring property and services with federal funds. Federal regulation, 2 CFR 200.403, indicates costs must meet certain criteria to be allowable, such as being consistent with policies and procedures that apply uniformly to both federally and state financed activities of the department. Federal regulation, 2 CFR 200.332(d), requires the state to perform monitoring of subrecipients sufficient to ensure subrecipients have complied with federal requirements. Federal regulation, 2 CFR 200.313(d), requires the department to maintain accurate property records and have adequate internal controls to safeguard equipment purchased with federal funds. State policy in the Montana Operations Manual (MOM) policy requires all procurements either have a purchase order or contract. The purchase order or contract must include all elements negotiated and required for the purchase. Department policy and procedures require an inspection on each received vehicle be documented by a post-delivery certification. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: The department’s internal controls did not ensure vehicle procurement, funded by federal funds, followed state policy and procedures. Further, the department did not adequately review and monitor vehicle records to ensure compliance with federal requirements. Questioned Costs: We question $37,990 of costs charged to the program related to the vehicle purchase made without a contract. Context: In administering the Formula Grants for Rural Areas program, the department provides capital grants to subrecipients for purchase of equipment. The department utilizes a data processing system to obtain and store information from the subrecipients to assist in monitoring compliance with various requirements of the program. We reviewed the system information regarding equipment records, procurements, and subrecipient monitoring for the subrecipient’s equipment and procurement federal requirements. We sampled five of the department’s 15 vehicle purchases as part of our audit. This sample was not statistically valid. Our review identified: • Three purchases did not contain evidence of post-delivery certifications. • One purchase with inaccurate vehicle information in the system. • One purchase without a contract, totaling $37,990. The information maintained in the system is necessary to demonstrate compliance with federal procurement and equipment requirements. We analyzed the population of 127 vehicle records in the system and identified the records did not contain all the elements necessary to track and monitor vehicles purchased with federal funds properly. We conducted a sample of 23 vehicle records. The sample was not statistically valid. Our sample identified: • 11 vehicle records did not contain complete and accurate system information, including inaccurate VIN numbers and the condition of vehicle at time of inspection. • Three vehicles did not contain mileage reported. This information is used during the department’s biennial inspections of subrecipient fleet vehicles to determine reasonableness of mileage reimbursements. Repeat Finding: This is a repeat finding and was reported as Single Audit finding #2021-003 in the audit for the two fiscal years ended June 30, 2021. Effect: The department is not in compliance with state procurement policies and procedures. Additionally, the vehicle purchased without a contract resulted in questioned costs which the department may be required to repay to the federal government. Failure to complete post-delivery certifications may mean vehicles do not meet program specifications. Cause: The post-delivery certifications were overlooked by staff who completed the vehicle inspections at the time of delivery. Further, staff turnover and lack of necessary training contributed to the internal control deficiencies and noncompliance. Recommendation: We recommend the Montana Department of Transportation: A. Enhance internal controls and provide training to staff to ensure vehicle procurements follow state policy to comply with federal requirements. B. Enhance internal controls and provide training to staff to ensure information maintained in the system is complete and accurate. C. Comply with state procurement policy by using a contract agreement for all vehicle purchases. D. Complete and submit the post-delivery certifications, as required by department policy. E. Review and update the system vehicle records to ensure they are complete and accurate. Views of Responsible Officials: The department concurs with this recommendation. For additional information regarding the department’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-013: U.S. Department of Transportation ALN #20.509, Formula Grants for Rural Areas (COVID-19) Grant #MT-2022-022-00 and MT-2023-011-00 Criteria: Federal regulation, 2 CFR 200.317, requires the Montana Department of Transportation (department) to follow state procurement policy when procuring property and services with federal funds. Federal regulation, 2 CFR 200.403, indicates costs must meet certain criteria to be allowable, such as being consistent with policies and procedures that apply uniformly to both federally and state financed activities of the department. Federal regulation, 2 CFR 200.332(d), requires the state to perform monitoring of subrecipients sufficient to ensure subrecipients have complied with federal requirements. Federal regulation, 2 CFR 200.313(d), requires the department to maintain accurate property records and have adequate internal controls to safeguard equipment purchased with federal funds. State policy in the Montana Operations Manual (MOM) policy requires all procurements either have a purchase order or contract. The purchase order or contract must include all elements negotiated and required for the purchase. Department policy and procedures require an inspection on each received vehicle be documented by a post-delivery certification. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: The department’s internal controls did not ensure vehicle procurement, funded by federal funds, followed state policy and procedures. Further, the department did not adequately review and monitor vehicle records to ensure compliance with federal requirements. Questioned Costs: We question $37,990 of costs charged to the program related to the vehicle purchase made without a contract. Context: In administering the Formula Grants for Rural Areas program, the department provides capital grants to subrecipients for purchase of equipment. The department utilizes a data processing system to obtain and store information from the subrecipients to assist in monitoring compliance with various requirements of the program. We reviewed the system information regarding equipment records, procurements, and subrecipient monitoring for the subrecipient’s equipment and procurement federal requirements. We sampled five of the department’s 15 vehicle purchases as part of our audit. This sample was not statistically valid. Our review identified: • Three purchases did not contain evidence of post-delivery certifications. • One purchase with inaccurate vehicle information in the system. • One purchase without a contract, totaling $37,990. The information maintained in the system is necessary to demonstrate compliance with federal procurement and equipment requirements. We analyzed the population of 127 vehicle records in the system and identified the records did not contain all the elements necessary to track and monitor vehicles purchased with federal funds properly. We conducted a sample of 23 vehicle records. The sample was not statistically valid. Our sample identified: • 11 vehicle records did not contain complete and accurate system information, including inaccurate VIN numbers and the condition of vehicle at time of inspection. • Three vehicles did not contain mileage reported. This information is used during the department’s biennial inspections of subrecipient fleet vehicles to determine reasonableness of mileage reimbursements. Repeat Finding: This is a repeat finding and was reported as Single Audit finding #2021-003 in the audit for the two fiscal years ended June 30, 2021. Effect: The department is not in compliance with state procurement policies and procedures. Additionally, the vehicle purchased without a contract resulted in questioned costs which the department may be required to repay to the federal government. Failure to complete post-delivery certifications may mean vehicles do not meet program specifications. Cause: The post-delivery certifications were overlooked by staff who completed the vehicle inspections at the time of delivery. Further, staff turnover and lack of necessary training contributed to the internal control deficiencies and noncompliance. Recommendation: We recommend the Montana Department of Transportation: A. Enhance internal controls and provide training to staff to ensure vehicle procurements follow state policy to comply with federal requirements. B. Enhance internal controls and provide training to staff to ensure information maintained in the system is complete and accurate. C. Comply with state procurement policy by using a contract agreement for all vehicle purchases. D. Complete and submit the post-delivery certifications, as required by department policy. E. Review and update the system vehicle records to ensure they are complete and accurate. Views of Responsible Officials: The department concurs with this recommendation. For additional information regarding the department’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-013: U.S. Department of Transportation ALN #20.509, Formula Grants for Rural Areas (COVID-19) Grant #MT-2022-022-00 and MT-2023-011-00 Criteria: Federal regulation, 2 CFR 200.317, requires the Montana Department of Transportation (department) to follow state procurement policy when procuring property and services with federal funds. Federal regulation, 2 CFR 200.403, indicates costs must meet certain criteria to be allowable, such as being consistent with policies and procedures that apply uniformly to both federally and state financed activities of the department. Federal regulation, 2 CFR 200.332(d), requires the state to perform monitoring of subrecipients sufficient to ensure subrecipients have complied with federal requirements. Federal regulation, 2 CFR 200.313(d), requires the department to maintain accurate property records and have adequate internal controls to safeguard equipment purchased with federal funds. State policy in the Montana Operations Manual (MOM) policy requires all procurements either have a purchase order or contract. The purchase order or contract must include all elements negotiated and required for the purchase. Department policy and procedures require an inspection on each received vehicle be documented by a post-delivery certification. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: The department’s internal controls did not ensure vehicle procurement, funded by federal funds, followed state policy and procedures. Further, the department did not adequately review and monitor vehicle records to ensure compliance with federal requirements. Questioned Costs: We question $37,990 of costs charged to the program related to the vehicle purchase made without a contract. Context: In administering the Formula Grants for Rural Areas program, the department provides capital grants to subrecipients for purchase of equipment. The department utilizes a data processing system to obtain and store information from the subrecipients to assist in monitoring compliance with various requirements of the program. We reviewed the system information regarding equipment records, procurements, and subrecipient monitoring for the subrecipient’s equipment and procurement federal requirements. We sampled five of the department’s 15 vehicle purchases as part of our audit. This sample was not statistically valid. Our review identified: • Three purchases did not contain evidence of post-delivery certifications. • One purchase with inaccurate vehicle information in the system. • One purchase without a contract, totaling $37,990. The information maintained in the system is necessary to demonstrate compliance with federal procurement and equipment requirements. We analyzed the population of 127 vehicle records in the system and identified the records did not contain all the elements necessary to track and monitor vehicles purchased with federal funds properly. We conducted a sample of 23 vehicle records. The sample was not statistically valid. Our sample identified: • 11 vehicle records did not contain complete and accurate system information, including inaccurate VIN numbers and the condition of vehicle at time of inspection. • Three vehicles did not contain mileage reported. This information is used during the department’s biennial inspections of subrecipient fleet vehicles to determine reasonableness of mileage reimbursements. Repeat Finding: This is a repeat finding and was reported as Single Audit finding #2021-003 in the audit for the two fiscal years ended June 30, 2021. Effect: The department is not in compliance with state procurement policies and procedures. Additionally, the vehicle purchased without a contract resulted in questioned costs which the department may be required to repay to the federal government. Failure to complete post-delivery certifications may mean vehicles do not meet program specifications. Cause: The post-delivery certifications were overlooked by staff who completed the vehicle inspections at the time of delivery. Further, staff turnover and lack of necessary training contributed to the internal control deficiencies and noncompliance. Recommendation: We recommend the Montana Department of Transportation: A. Enhance internal controls and provide training to staff to ensure vehicle procurements follow state policy to comply with federal requirements. B. Enhance internal controls and provide training to staff to ensure information maintained in the system is complete and accurate. C. Comply with state procurement policy by using a contract agreement for all vehicle purchases. D. Complete and submit the post-delivery certifications, as required by department policy. E. Review and update the system vehicle records to ensure they are complete and accurate. Views of Responsible Officials: The department concurs with this recommendation. For additional information regarding the department’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-057: U.S. Department of Health and Human Services ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST Criteria: Federal regulation, 2 CFR 200.403(a), specifies costs must be necessary and reasonable for the performance of the award. Federal regulation, 2 CFR 200.403(g), specifies costs must be adequately documented to be allowable under the award. Federal regulation, 45 CFR 1356.60(b)(2), requires all training activities and costs funded under Title IV-E be included in the department’s training plan for Title IV-B. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Department of Public Health and Human Services (department) staff did not obtain and review appropriate supporting documentation for payments to subrecipients to ensure costs were necessary and adequately documented as required by federal regulations, indicating internal controls are ineffective. Questioned Costs: Based on transactions reviewed in our sample, we question costs in the amounts of $17,167 as summarized in the table below. The department paid approximately $2.7 million to tribes and universities in fiscal years 2022 and 2023 combined. Based on overall level of activity, likely questioned costs exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: The department maintains subrecipient agreements with the seven tribes located within the state and two college/universities (colleges). The department provides federal funds to these entities to either help administer the Foster Care program, provide stipends to college students studying social work, or provide training to department staff. From a sample of 12 invoices from 115 invoices submitted by tribes or colleges, we identified nine cases of unsupported operating expenses and two items lacking wage support. Five of the invoices were related to training costs. The sample was not statistically valid. Inadequate supporting documentation from colleges hindered our ability to determine whether training costs were specified or allowable in the department’s training plan. Our observations of inadequate documentation include: • One college invoice submitted for reimbursement was for $42,344. A general ledger listing the expenses was provided including operating expenses totaling $3,237. These expenses were only listed in the general ledger and not supported by receipts. Without receipts or other support, we were unable to verify whether costs were properly classified as operating expenses on the general ledger and were allowable for reimbursement from federal funds. • Tribal invoices were supported by a general ledger and the department’s standardized billing invoices. The department uses time studies to support the allocation of wages for time spent on a project. Time studies were incomplete or inconsistent with the allocation of wages used in payment to the tribes. Similar to the operating expenses for the colleges, there were no receipts to support the operating expenses from the request for reimbursement. Additionally, from the work performed, we identified nine instances where the IV-E Indirect Costs that subrecipients requested reimbursement for were not properly calculated due to unsupported expenses mentioned above. Also, there was one instance where indirect costs were calculated incorrectly from total expenses, not IV-E allowable expenses. Repeat Finding: Montana’s Single Audit reports for the two fiscal years ended June 30, 2019, and the two fiscal years ended June 30, 2021, included related findings (#2019-017 and #2021-061). These findings recommended the department reimburse subrecipients only for activities allowed by federal regulations and to design and implement internal controls to ensure adequate documentation is obtained, reviewed, and approved prior to payment. Effect: Without adequate supporting documentation, the department cannot demonstrate compliance with internal control requirements in federal regulation. Additionally, for payments that lack adequate support, the department may have incurred costs for unallowable activities under the federal award or for costs that were not reasonable or necessary. Without adequate documentation for training costs, the department cannot demonstrate the activity was in the training plan. As noted in Finding #2023-056, the department does not complete risk assessments of its subrecipients as required. By performing risk assessments, the department may be able to support a different level of payment monitoring and review for lower risk subrecipients. Cause: Overall, the department believes its controls for review of supporting documentation are effective for subrecipient payment activities. Department personnel also noted the federal government only partially sustained the last two audit findings, indicating the department provided additional support to the federal government to support the payments we previously questioned. However, it is unclear to us what additional information was provided and when it was obtained by the department, and the federal grantor agency communicated the importance of retaining adequate documentation. Because we are not responsible for resolving federal findings, we did not review any additional documentation the department provided to the federal government. The support the department provided to us for payments during the current audit does not contain enough detail to confirm the payments were appropriate and necessary for the grant at the time the reimbursements were made. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls for its Foster Care federal awards to ensure adequate documentation for subrecipient payments is obtained, reviewed, and approved prior to payment. B. Reimburse Foster Care federal award subrecipients only for activities allowed by federal regulations. Views of Responsible Officials: The department partially concurs with this recommendation. The department represented they enhanced internal controls in fiscal year 2023. They also indicated they started completing risk assessments of subrecipients and believe the subrecipients that have the questioned costs are low risk. Additionally, in fiscal year 2024, the department has requested receipt-level documentation of all questioned costs and believe this documentation indicates costs are allowable activities. Rebuttal of Views of Responsible Officials: We considered the department’s partial concurrence. Based on the documentation reviewed and obtained during the audit period and at the time of audit, it is our position documentation was not adequate to support that costs were allowable under the federal program. As such, our recommendation stands.
Finding 2023-057: U.S. Department of Health and Human Services ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST Criteria: Federal regulation, 2 CFR 200.403(a), specifies costs must be necessary and reasonable for the performance of the award. Federal regulation, 2 CFR 200.403(g), specifies costs must be adequately documented to be allowable under the award. Federal regulation, 45 CFR 1356.60(b)(2), requires all training activities and costs funded under Title IV-E be included in the department’s training plan for Title IV-B. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Department of Public Health and Human Services (department) staff did not obtain and review appropriate supporting documentation for payments to subrecipients to ensure costs were necessary and adequately documented as required by federal regulations, indicating internal controls are ineffective. Questioned Costs: Based on transactions reviewed in our sample, we question costs in the amounts of $17,167 as summarized in the table below. The department paid approximately $2.7 million to tribes and universities in fiscal years 2022 and 2023 combined. Based on overall level of activity, likely questioned costs exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: The department maintains subrecipient agreements with the seven tribes located within the state and two college/universities (colleges). The department provides federal funds to these entities to either help administer the Foster Care program, provide stipends to college students studying social work, or provide training to department staff. From a sample of 12 invoices from 115 invoices submitted by tribes or colleges, we identified nine cases of unsupported operating expenses and two items lacking wage support. Five of the invoices were related to training costs. The sample was not statistically valid. Inadequate supporting documentation from colleges hindered our ability to determine whether training costs were specified or allowable in the department’s training plan. Our observations of inadequate documentation include: • One college invoice submitted for reimbursement was for $42,344. A general ledger listing the expenses was provided including operating expenses totaling $3,237. These expenses were only listed in the general ledger and not supported by receipts. Without receipts or other support, we were unable to verify whether costs were properly classified as operating expenses on the general ledger and were allowable for reimbursement from federal funds. • Tribal invoices were supported by a general ledger and the department’s standardized billing invoices. The department uses time studies to support the allocation of wages for time spent on a project. Time studies were incomplete or inconsistent with the allocation of wages used in payment to the tribes. Similar to the operating expenses for the colleges, there were no receipts to support the operating expenses from the request for reimbursement. Additionally, from the work performed, we identified nine instances where the IV-E Indirect Costs that subrecipients requested reimbursement for were not properly calculated due to unsupported expenses mentioned above. Also, there was one instance where indirect costs were calculated incorrectly from total expenses, not IV-E allowable expenses. Repeat Finding: Montana’s Single Audit reports for the two fiscal years ended June 30, 2019, and the two fiscal years ended June 30, 2021, included related findings (#2019-017 and #2021-061). These findings recommended the department reimburse subrecipients only for activities allowed by federal regulations and to design and implement internal controls to ensure adequate documentation is obtained, reviewed, and approved prior to payment. Effect: Without adequate supporting documentation, the department cannot demonstrate compliance with internal control requirements in federal regulation. Additionally, for payments that lack adequate support, the department may have incurred costs for unallowable activities under the federal award or for costs that were not reasonable or necessary. Without adequate documentation for training costs, the department cannot demonstrate the activity was in the training plan. As noted in Finding #2023-056, the department does not complete risk assessments of its subrecipients as required. By performing risk assessments, the department may be able to support a different level of payment monitoring and review for lower risk subrecipients. Cause: Overall, the department believes its controls for review of supporting documentation are effective for subrecipient payment activities. Department personnel also noted the federal government only partially sustained the last two audit findings, indicating the department provided additional support to the federal government to support the payments we previously questioned. However, it is unclear to us what additional information was provided and when it was obtained by the department, and the federal grantor agency communicated the importance of retaining adequate documentation. Because we are not responsible for resolving federal findings, we did not review any additional documentation the department provided to the federal government. The support the department provided to us for payments during the current audit does not contain enough detail to confirm the payments were appropriate and necessary for the grant at the time the reimbursements were made. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls for its Foster Care federal awards to ensure adequate documentation for subrecipient payments is obtained, reviewed, and approved prior to payment. B. Reimburse Foster Care federal award subrecipients only for activities allowed by federal regulations. Views of Responsible Officials: The department partially concurs with this recommendation. The department represented they enhanced internal controls in fiscal year 2023. They also indicated they started completing risk assessments of subrecipients and believe the subrecipients that have the questioned costs are low risk. Additionally, in fiscal year 2024, the department has requested receipt-level documentation of all questioned costs and believe this documentation indicates costs are allowable activities. Rebuttal of Views of Responsible Officials: We considered the department’s partial concurrence. Based on the documentation reviewed and obtained during the audit period and at the time of audit, it is our position documentation was not adequate to support that costs were allowable under the federal program. As such, our recommendation stands.
Finding 2023-057: U.S. Department of Health and Human Services ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST Criteria: Federal regulation, 2 CFR 200.403(a), specifies costs must be necessary and reasonable for the performance of the award. Federal regulation, 2 CFR 200.403(g), specifies costs must be adequately documented to be allowable under the award. Federal regulation, 45 CFR 1356.60(b)(2), requires all training activities and costs funded under Title IV-E be included in the department’s training plan for Title IV-B. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Department of Public Health and Human Services (department) staff did not obtain and review appropriate supporting documentation for payments to subrecipients to ensure costs were necessary and adequately documented as required by federal regulations, indicating internal controls are ineffective. Questioned Costs: Based on transactions reviewed in our sample, we question costs in the amounts of $17,167 as summarized in the table below. The department paid approximately $2.7 million to tribes and universities in fiscal years 2022 and 2023 combined. Based on overall level of activity, likely questioned costs exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: The department maintains subrecipient agreements with the seven tribes located within the state and two college/universities (colleges). The department provides federal funds to these entities to either help administer the Foster Care program, provide stipends to college students studying social work, or provide training to department staff. From a sample of 12 invoices from 115 invoices submitted by tribes or colleges, we identified nine cases of unsupported operating expenses and two items lacking wage support. Five of the invoices were related to training costs. The sample was not statistically valid. Inadequate supporting documentation from colleges hindered our ability to determine whether training costs were specified or allowable in the department’s training plan. Our observations of inadequate documentation include: • One college invoice submitted for reimbursement was for $42,344. A general ledger listing the expenses was provided including operating expenses totaling $3,237. These expenses were only listed in the general ledger and not supported by receipts. Without receipts or other support, we were unable to verify whether costs were properly classified as operating expenses on the general ledger and were allowable for reimbursement from federal funds. • Tribal invoices were supported by a general ledger and the department’s standardized billing invoices. The department uses time studies to support the allocation of wages for time spent on a project. Time studies were incomplete or inconsistent with the allocation of wages used in payment to the tribes. Similar to the operating expenses for the colleges, there were no receipts to support the operating expenses from the request for reimbursement. Additionally, from the work performed, we identified nine instances where the IV-E Indirect Costs that subrecipients requested reimbursement for were not properly calculated due to unsupported expenses mentioned above. Also, there was one instance where indirect costs were calculated incorrectly from total expenses, not IV-E allowable expenses. Repeat Finding: Montana’s Single Audit reports for the two fiscal years ended June 30, 2019, and the two fiscal years ended June 30, 2021, included related findings (#2019-017 and #2021-061). These findings recommended the department reimburse subrecipients only for activities allowed by federal regulations and to design and implement internal controls to ensure adequate documentation is obtained, reviewed, and approved prior to payment. Effect: Without adequate supporting documentation, the department cannot demonstrate compliance with internal control requirements in federal regulation. Additionally, for payments that lack adequate support, the department may have incurred costs for unallowable activities under the federal award or for costs that were not reasonable or necessary. Without adequate documentation for training costs, the department cannot demonstrate the activity was in the training plan. As noted in Finding #2023-056, the department does not complete risk assessments of its subrecipients as required. By performing risk assessments, the department may be able to support a different level of payment monitoring and review for lower risk subrecipients. Cause: Overall, the department believes its controls for review of supporting documentation are effective for subrecipient payment activities. Department personnel also noted the federal government only partially sustained the last two audit findings, indicating the department provided additional support to the federal government to support the payments we previously questioned. However, it is unclear to us what additional information was provided and when it was obtained by the department, and the federal grantor agency communicated the importance of retaining adequate documentation. Because we are not responsible for resolving federal findings, we did not review any additional documentation the department provided to the federal government. The support the department provided to us for payments during the current audit does not contain enough detail to confirm the payments were appropriate and necessary for the grant at the time the reimbursements were made. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls for its Foster Care federal awards to ensure adequate documentation for subrecipient payments is obtained, reviewed, and approved prior to payment. B. Reimburse Foster Care federal award subrecipients only for activities allowed by federal regulations. Views of Responsible Officials: The department partially concurs with this recommendation. The department represented they enhanced internal controls in fiscal year 2023. They also indicated they started completing risk assessments of subrecipients and believe the subrecipients that have the questioned costs are low risk. Additionally, in fiscal year 2024, the department has requested receipt-level documentation of all questioned costs and believe this documentation indicates costs are allowable activities. Rebuttal of Views of Responsible Officials: We considered the department’s partial concurrence. Based on the documentation reviewed and obtained during the audit period and at the time of audit, it is our position documentation was not adequate to support that costs were allowable under the federal program. As such, our recommendation stands.
Finding 2023-057: U.S. Department of Health and Human Services ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST Criteria: Federal regulation, 2 CFR 200.403(a), specifies costs must be necessary and reasonable for the performance of the award. Federal regulation, 2 CFR 200.403(g), specifies costs must be adequately documented to be allowable under the award. Federal regulation, 45 CFR 1356.60(b)(2), requires all training activities and costs funded under Title IV-E be included in the department’s training plan for Title IV-B. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Department of Public Health and Human Services (department) staff did not obtain and review appropriate supporting documentation for payments to subrecipients to ensure costs were necessary and adequately documented as required by federal regulations, indicating internal controls are ineffective. Questioned Costs: Based on transactions reviewed in our sample, we question costs in the amounts of $17,167 as summarized in the table below. The department paid approximately $2.7 million to tribes and universities in fiscal years 2022 and 2023 combined. Based on overall level of activity, likely questioned costs exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: The department maintains subrecipient agreements with the seven tribes located within the state and two college/universities (colleges). The department provides federal funds to these entities to either help administer the Foster Care program, provide stipends to college students studying social work, or provide training to department staff. From a sample of 12 invoices from 115 invoices submitted by tribes or colleges, we identified nine cases of unsupported operating expenses and two items lacking wage support. Five of the invoices were related to training costs. The sample was not statistically valid. Inadequate supporting documentation from colleges hindered our ability to determine whether training costs were specified or allowable in the department’s training plan. Our observations of inadequate documentation include: • One college invoice submitted for reimbursement was for $42,344. A general ledger listing the expenses was provided including operating expenses totaling $3,237. These expenses were only listed in the general ledger and not supported by receipts. Without receipts or other support, we were unable to verify whether costs were properly classified as operating expenses on the general ledger and were allowable for reimbursement from federal funds. • Tribal invoices were supported by a general ledger and the department’s standardized billing invoices. The department uses time studies to support the allocation of wages for time spent on a project. Time studies were incomplete or inconsistent with the allocation of wages used in payment to the tribes. Similar to the operating expenses for the colleges, there were no receipts to support the operating expenses from the request for reimbursement. Additionally, from the work performed, we identified nine instances where the IV-E Indirect Costs that subrecipients requested reimbursement for were not properly calculated due to unsupported expenses mentioned above. Also, there was one instance where indirect costs were calculated incorrectly from total expenses, not IV-E allowable expenses. Repeat Finding: Montana’s Single Audit reports for the two fiscal years ended June 30, 2019, and the two fiscal years ended June 30, 2021, included related findings (#2019-017 and #2021-061). These findings recommended the department reimburse subrecipients only for activities allowed by federal regulations and to design and implement internal controls to ensure adequate documentation is obtained, reviewed, and approved prior to payment. Effect: Without adequate supporting documentation, the department cannot demonstrate compliance with internal control requirements in federal regulation. Additionally, for payments that lack adequate support, the department may have incurred costs for unallowable activities under the federal award or for costs that were not reasonable or necessary. Without adequate documentation for training costs, the department cannot demonstrate the activity was in the training plan. As noted in Finding #2023-056, the department does not complete risk assessments of its subrecipients as required. By performing risk assessments, the department may be able to support a different level of payment monitoring and review for lower risk subrecipients. Cause: Overall, the department believes its controls for review of supporting documentation are effective for subrecipient payment activities. Department personnel also noted the federal government only partially sustained the last two audit findings, indicating the department provided additional support to the federal government to support the payments we previously questioned. However, it is unclear to us what additional information was provided and when it was obtained by the department, and the federal grantor agency communicated the importance of retaining adequate documentation. Because we are not responsible for resolving federal findings, we did not review any additional documentation the department provided to the federal government. The support the department provided to us for payments during the current audit does not contain enough detail to confirm the payments were appropriate and necessary for the grant at the time the reimbursements were made. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls for its Foster Care federal awards to ensure adequate documentation for subrecipient payments is obtained, reviewed, and approved prior to payment. B. Reimburse Foster Care federal award subrecipients only for activities allowed by federal regulations. Views of Responsible Officials: The department partially concurs with this recommendation. The department represented they enhanced internal controls in fiscal year 2023. They also indicated they started completing risk assessments of subrecipients and believe the subrecipients that have the questioned costs are low risk. Additionally, in fiscal year 2024, the department has requested receipt-level documentation of all questioned costs and believe this documentation indicates costs are allowable activities. Rebuttal of Views of Responsible Officials: We considered the department’s partial concurrence. Based on the documentation reviewed and obtained during the audit period and at the time of audit, it is our position documentation was not adequate to support that costs were allowable under the federal program. As such, our recommendation stands.