FINDING NO: 2023-208 (Repeat Finding 2022-206) STATE AGENCY: Oklahoma Department of Health FEDERAL AGENCY: United States Department of Health and Human Services ALN: 93.268 FEDERAL PROGRAM NAME: Immunizations Cooperative Agreements FEDERAL AWARD NUMBER: 6 NH23IP922575-02-06, 6 NH23IP922575-02-05, 6 NH23IP922575-03-01 FEDERAL AWARD YEAR: 2021, 2022 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: Unknown Criteria: 7 CFR § 246.3 Administration. Delegation to the State agency states in part, “The State agency is responsible for the effective and efficient administration of the Program in accordance with the requirements of this part; the Department's regulations governing nondiscrimination (7 CFR parts 15, 15a, and 15b); governing administration of grants (2 CFR part 200, subparts A through F…).” 2 CFR §200.403 (a) Factors affecting allowability of costs states, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.” Condition: The Oklahoma State Department of Health (the “Department”) entered into a contract with a vendor, which included the following clause in its statement of work for the Department: “… development and implementation of a communications strategy around OSDH legislative priorities leading up to and during the 2022 session.” In accordance with applicable law, direct lobbying communications by award recipients are prohibited. Direct lobbying includes any attempt to influence legislative or other similar deliberations at all levels of government through communications that directly express a view on proposed or pending legislation and other orders and which are directed to members, staff, or other employees of a legislative body or to government officials or employees who participate in the formulation of legislation or other orders. The amount indicated in the statement of work provided for payment of up to $100,000 in lobbying activity. Cause and Effect: As a result of the unallowable activities being included in the statement of work, the Department charged lobbying costs against federal funds. Immunizations Cooperative assistance listing 93.268: Voucher Supplier Date Account Activity PO ID Amount 467138 221538 9/20/2022 541130 FEES 3409024811 1,429.73 The Department’s support for the above invoices did not include an itemized detail of specific services provided. Thus, we are unable to determine how much, if any, of these charges related to possible lobbying activity. Due to the qualitative impact of utilizing federal funds for a statement of work containing lobbying activities and not clearly being able to decipher which invoices the cited $100,000 of lobbying activity was paid, the Department is considered noncompliant with 2 CFR §200.403. Recommendation: We recommend a more thorough review of the statements of work occur to prevent unallowable activities when authorizing a purchase order funded by federal sources. Views of Responsible Official(s) Contact Person: Stefan Von Dollen Anticipated Completion Date: 6/30/24 Corrective Action Planned: The Oklahoma State Department of Health agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-209 (Repeat Finding 2022-206) STATE AGENCY: Oklahoma Department of Health FEDERAL AGENCY: United States Department of Health and Human Services ALN: 93.323 FEDERAL PROGRAM NAME: Epidemiology and Laboratory Capacity for Infectious Diseases FEDERAL AWARD NUMBER: NU50CK000535-02-06 FEDERAL AWARD YEAR: 2021, 2022 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: Unknown Criteria: 7 CFR § 246.3 Administration. Delegation to the State agency states in part, “The State agency is responsible for the effective and efficient administration of the Program in accordance with the requirements of this part; the Department's regulations governing nondiscrimination (7 CFR parts 15, 15a, and 15b); governing administration of grants (2 CFR part 200, subparts A through F…).” 2 CFR §200.403 (a) Factors affecting allowability of costs states, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.” Condition: The Oklahoma State Department of Health (the “Department”) entered into a contract with a vendor, which included the following clause in its statement of work for the Department: “… development and implementation of a communications strategy around OSDH legislative priorities leading up to and during the 2022 session.” In accordance with applicable law, direct lobbying communications by award recipients are prohibited. Direct lobbying includes any attempt to influence legislative or other similar deliberations at all levels of government through communications that directly express a view on proposed or pending legislation and other orders and which are directed to members, staff, or other employees of a legislative body or to government officials or employees who participate in the formulation of legislation or other orders. The amount indicated in the statement of work provided for payment of up to $100,000 in lobbying activity. Cause and Effect: As a result of the unallowable activities being included in the statement of work, the Department charged lobbying costs against federal funds. Through inspection of the invoices provided by the Department relating to this vendor, it was also discovered that voucher 463351, for $3,000 was included in federal expenditures in duplicate, once in fiscal year 2022’s SEFA and again in fiscal year 2023’s SEFA. Due to not receiving detailed supporting schedules of related FFR’s it is not known if the Department was reimbursed twice for this single voucher. Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) assistance listing 93.323: Voucher Supplier Date Account Activity PO ID Amount 465771 221538 8/29/2022 515490 FEES 3409024811 5,614.00 462826 221538 7/11/2022 515490 FEES 3409024811 18,000.50 463350 221538 7/20/2022 515490 FEES 3409024811 172,009.16 463351 221538 7/20/2022 515490 FEES 3409024811 3,000.00 465481 221538 8/24/2022 515490 FEES 3409024811 270,313.14 Voucher 465771 invoice included line items discussing campaign check ins, and it cannot be determined whether this could relate to lobbying activities. The invoice also includes various client communications and consulting. Voucher 462826’s invoice detail is similarly vague with consulting and project updates. Vouchers 463350 and 465481 appear to be solely for radio and television advertising, thus these invoices appear allowable based on the compliance supplement stating “recruiting and enrolling providers” along with the language which identifies key activities of 93.268 to include implementing community engagement strategies to promote COVID vaccination; however, lobbying activities could exist within the invoicing that is not specifically called out. Due to the qualitative impact of utilizing federal funds for a statement of work containing lobbying activities and not clearly being able to decipher which invoices the cited $100,000 of lobbying activity was paid, the Department is considered noncompliant with 2 CFR §200.403. Recommendation: We recommend a more thorough review of the statements of work occur to prevent unallowable activities when authorizing a purchase order funded by federal sources. Views of Responsible Official(s) Contact Person: Stefan Von Dollen Anticipated Completion Date: 6/30/24 Corrective Action Planned: The Oklahoma State Department of Health agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-209 (Repeat Finding 2022-206) STATE AGENCY: Oklahoma Department of Health FEDERAL AGENCY: United States Department of Health and Human Services ALN: 93.323 FEDERAL PROGRAM NAME: Epidemiology and Laboratory Capacity for Infectious Diseases FEDERAL AWARD NUMBER: NU50CK000535-02-06 FEDERAL AWARD YEAR: 2021, 2022 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: Unknown Criteria: 7 CFR § 246.3 Administration. Delegation to the State agency states in part, “The State agency is responsible for the effective and efficient administration of the Program in accordance with the requirements of this part; the Department's regulations governing nondiscrimination (7 CFR parts 15, 15a, and 15b); governing administration of grants (2 CFR part 200, subparts A through F…).” 2 CFR §200.403 (a) Factors affecting allowability of costs states, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.” Condition: The Oklahoma State Department of Health (the “Department”) entered into a contract with a vendor, which included the following clause in its statement of work for the Department: “… development and implementation of a communications strategy around OSDH legislative priorities leading up to and during the 2022 session.” In accordance with applicable law, direct lobbying communications by award recipients are prohibited. Direct lobbying includes any attempt to influence legislative or other similar deliberations at all levels of government through communications that directly express a view on proposed or pending legislation and other orders and which are directed to members, staff, or other employees of a legislative body or to government officials or employees who participate in the formulation of legislation or other orders. The amount indicated in the statement of work provided for payment of up to $100,000 in lobbying activity. Cause and Effect: As a result of the unallowable activities being included in the statement of work, the Department charged lobbying costs against federal funds. Through inspection of the invoices provided by the Department relating to this vendor, it was also discovered that voucher 463351, for $3,000 was included in federal expenditures in duplicate, once in fiscal year 2022’s SEFA and again in fiscal year 2023’s SEFA. Due to not receiving detailed supporting schedules of related FFR’s it is not known if the Department was reimbursed twice for this single voucher. Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) assistance listing 93.323: Voucher Supplier Date Account Activity PO ID Amount 465771 221538 8/29/2022 515490 FEES 3409024811 5,614.00 462826 221538 7/11/2022 515490 FEES 3409024811 18,000.50 463350 221538 7/20/2022 515490 FEES 3409024811 172,009.16 463351 221538 7/20/2022 515490 FEES 3409024811 3,000.00 465481 221538 8/24/2022 515490 FEES 3409024811 270,313.14 Voucher 465771 invoice included line items discussing campaign check ins, and it cannot be determined whether this could relate to lobbying activities. The invoice also includes various client communications and consulting. Voucher 462826’s invoice detail is similarly vague with consulting and project updates. Vouchers 463350 and 465481 appear to be solely for radio and television advertising, thus these invoices appear allowable based on the compliance supplement stating “recruiting and enrolling providers” along with the language which identifies key activities of 93.268 to include implementing community engagement strategies to promote COVID vaccination; however, lobbying activities could exist within the invoicing that is not specifically called out. Due to the qualitative impact of utilizing federal funds for a statement of work containing lobbying activities and not clearly being able to decipher which invoices the cited $100,000 of lobbying activity was paid, the Department is considered noncompliant with 2 CFR §200.403. Recommendation: We recommend a more thorough review of the statements of work occur to prevent unallowable activities when authorizing a purchase order funded by federal sources. Views of Responsible Official(s) Contact Person: Stefan Von Dollen Anticipated Completion Date: 6/30/24 Corrective Action Planned: The Oklahoma State Department of Health agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-209 (Repeat Finding 2022-206) STATE AGENCY: Oklahoma Department of Health FEDERAL AGENCY: United States Department of Health and Human Services ALN: 93.323 FEDERAL PROGRAM NAME: Epidemiology and Laboratory Capacity for Infectious Diseases FEDERAL AWARD NUMBER: NU50CK000535-02-06 FEDERAL AWARD YEAR: 2021, 2022 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: Unknown Criteria: 7 CFR § 246.3 Administration. Delegation to the State agency states in part, “The State agency is responsible for the effective and efficient administration of the Program in accordance with the requirements of this part; the Department's regulations governing nondiscrimination (7 CFR parts 15, 15a, and 15b); governing administration of grants (2 CFR part 200, subparts A through F…).” 2 CFR §200.403 (a) Factors affecting allowability of costs states, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.” Condition: The Oklahoma State Department of Health (the “Department”) entered into a contract with a vendor, which included the following clause in its statement of work for the Department: “… development and implementation of a communications strategy around OSDH legislative priorities leading up to and during the 2022 session.” In accordance with applicable law, direct lobbying communications by award recipients are prohibited. Direct lobbying includes any attempt to influence legislative or other similar deliberations at all levels of government through communications that directly express a view on proposed or pending legislation and other orders and which are directed to members, staff, or other employees of a legislative body or to government officials or employees who participate in the formulation of legislation or other orders. The amount indicated in the statement of work provided for payment of up to $100,000 in lobbying activity. Cause and Effect: As a result of the unallowable activities being included in the statement of work, the Department charged lobbying costs against federal funds. Through inspection of the invoices provided by the Department relating to this vendor, it was also discovered that voucher 463351, for $3,000 was included in federal expenditures in duplicate, once in fiscal year 2022’s SEFA and again in fiscal year 2023’s SEFA. Due to not receiving detailed supporting schedules of related FFR’s it is not known if the Department was reimbursed twice for this single voucher. Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) assistance listing 93.323: Voucher Supplier Date Account Activity PO ID Amount 465771 221538 8/29/2022 515490 FEES 3409024811 5,614.00 462826 221538 7/11/2022 515490 FEES 3409024811 18,000.50 463350 221538 7/20/2022 515490 FEES 3409024811 172,009.16 463351 221538 7/20/2022 515490 FEES 3409024811 3,000.00 465481 221538 8/24/2022 515490 FEES 3409024811 270,313.14 Voucher 465771 invoice included line items discussing campaign check ins, and it cannot be determined whether this could relate to lobbying activities. The invoice also includes various client communications and consulting. Voucher 462826’s invoice detail is similarly vague with consulting and project updates. Vouchers 463350 and 465481 appear to be solely for radio and television advertising, thus these invoices appear allowable based on the compliance supplement stating “recruiting and enrolling providers” along with the language which identifies key activities of 93.268 to include implementing community engagement strategies to promote COVID vaccination; however, lobbying activities could exist within the invoicing that is not specifically called out. Due to the qualitative impact of utilizing federal funds for a statement of work containing lobbying activities and not clearly being able to decipher which invoices the cited $100,000 of lobbying activity was paid, the Department is considered noncompliant with 2 CFR §200.403. Recommendation: We recommend a more thorough review of the statements of work occur to prevent unallowable activities when authorizing a purchase order funded by federal sources. Views of Responsible Official(s) Contact Person: Stefan Von Dollen Anticipated Completion Date: 6/30/24 Corrective Action Planned: The Oklahoma State Department of Health agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-209 (Repeat Finding 2022-206) STATE AGENCY: Oklahoma Department of Health FEDERAL AGENCY: United States Department of Health and Human Services ALN: 93.323 FEDERAL PROGRAM NAME: Epidemiology and Laboratory Capacity for Infectious Diseases FEDERAL AWARD NUMBER: NU50CK000535-02-06 FEDERAL AWARD YEAR: 2021, 2022 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: Unknown Criteria: 7 CFR § 246.3 Administration. Delegation to the State agency states in part, “The State agency is responsible for the effective and efficient administration of the Program in accordance with the requirements of this part; the Department's regulations governing nondiscrimination (7 CFR parts 15, 15a, and 15b); governing administration of grants (2 CFR part 200, subparts A through F…).” 2 CFR §200.403 (a) Factors affecting allowability of costs states, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.” Condition: The Oklahoma State Department of Health (the “Department”) entered into a contract with a vendor, which included the following clause in its statement of work for the Department: “… development and implementation of a communications strategy around OSDH legislative priorities leading up to and during the 2022 session.” In accordance with applicable law, direct lobbying communications by award recipients are prohibited. Direct lobbying includes any attempt to influence legislative or other similar deliberations at all levels of government through communications that directly express a view on proposed or pending legislation and other orders and which are directed to members, staff, or other employees of a legislative body or to government officials or employees who participate in the formulation of legislation or other orders. The amount indicated in the statement of work provided for payment of up to $100,000 in lobbying activity. Cause and Effect: As a result of the unallowable activities being included in the statement of work, the Department charged lobbying costs against federal funds. Through inspection of the invoices provided by the Department relating to this vendor, it was also discovered that voucher 463351, for $3,000 was included in federal expenditures in duplicate, once in fiscal year 2022’s SEFA and again in fiscal year 2023’s SEFA. Due to not receiving detailed supporting schedules of related FFR’s it is not known if the Department was reimbursed twice for this single voucher. Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) assistance listing 93.323: Voucher Supplier Date Account Activity PO ID Amount 465771 221538 8/29/2022 515490 FEES 3409024811 5,614.00 462826 221538 7/11/2022 515490 FEES 3409024811 18,000.50 463350 221538 7/20/2022 515490 FEES 3409024811 172,009.16 463351 221538 7/20/2022 515490 FEES 3409024811 3,000.00 465481 221538 8/24/2022 515490 FEES 3409024811 270,313.14 Voucher 465771 invoice included line items discussing campaign check ins, and it cannot be determined whether this could relate to lobbying activities. The invoice also includes various client communications and consulting. Voucher 462826’s invoice detail is similarly vague with consulting and project updates. Vouchers 463350 and 465481 appear to be solely for radio and television advertising, thus these invoices appear allowable based on the compliance supplement stating “recruiting and enrolling providers” along with the language which identifies key activities of 93.268 to include implementing community engagement strategies to promote COVID vaccination; however, lobbying activities could exist within the invoicing that is not specifically called out. Due to the qualitative impact of utilizing federal funds for a statement of work containing lobbying activities and not clearly being able to decipher which invoices the cited $100,000 of lobbying activity was paid, the Department is considered noncompliant with 2 CFR §200.403. Recommendation: We recommend a more thorough review of the statements of work occur to prevent unallowable activities when authorizing a purchase order funded by federal sources. Views of Responsible Official(s) Contact Person: Stefan Von Dollen Anticipated Completion Date: 6/30/24 Corrective Action Planned: The Oklahoma State Department of Health agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-209 (Repeat Finding 2022-206) STATE AGENCY: Oklahoma Department of Health FEDERAL AGENCY: United States Department of Health and Human Services ALN: 93.323 FEDERAL PROGRAM NAME: Epidemiology and Laboratory Capacity for Infectious Diseases FEDERAL AWARD NUMBER: NU50CK000535-02-06 FEDERAL AWARD YEAR: 2021, 2022 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: Unknown Criteria: 7 CFR § 246.3 Administration. Delegation to the State agency states in part, “The State agency is responsible for the effective and efficient administration of the Program in accordance with the requirements of this part; the Department's regulations governing nondiscrimination (7 CFR parts 15, 15a, and 15b); governing administration of grants (2 CFR part 200, subparts A through F…).” 2 CFR §200.403 (a) Factors affecting allowability of costs states, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.” Condition: The Oklahoma State Department of Health (the “Department”) entered into a contract with a vendor, which included the following clause in its statement of work for the Department: “… development and implementation of a communications strategy around OSDH legislative priorities leading up to and during the 2022 session.” In accordance with applicable law, direct lobbying communications by award recipients are prohibited. Direct lobbying includes any attempt to influence legislative or other similar deliberations at all levels of government through communications that directly express a view on proposed or pending legislation and other orders and which are directed to members, staff, or other employees of a legislative body or to government officials or employees who participate in the formulation of legislation or other orders. The amount indicated in the statement of work provided for payment of up to $100,000 in lobbying activity. Cause and Effect: As a result of the unallowable activities being included in the statement of work, the Department charged lobbying costs against federal funds. Through inspection of the invoices provided by the Department relating to this vendor, it was also discovered that voucher 463351, for $3,000 was included in federal expenditures in duplicate, once in fiscal year 2022’s SEFA and again in fiscal year 2023’s SEFA. Due to not receiving detailed supporting schedules of related FFR’s it is not known if the Department was reimbursed twice for this single voucher. Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) assistance listing 93.323: Voucher Supplier Date Account Activity PO ID Amount 465771 221538 8/29/2022 515490 FEES 3409024811 5,614.00 462826 221538 7/11/2022 515490 FEES 3409024811 18,000.50 463350 221538 7/20/2022 515490 FEES 3409024811 172,009.16 463351 221538 7/20/2022 515490 FEES 3409024811 3,000.00 465481 221538 8/24/2022 515490 FEES 3409024811 270,313.14 Voucher 465771 invoice included line items discussing campaign check ins, and it cannot be determined whether this could relate to lobbying activities. The invoice also includes various client communications and consulting. Voucher 462826’s invoice detail is similarly vague with consulting and project updates. Vouchers 463350 and 465481 appear to be solely for radio and television advertising, thus these invoices appear allowable based on the compliance supplement stating “recruiting and enrolling providers” along with the language which identifies key activities of 93.268 to include implementing community engagement strategies to promote COVID vaccination; however, lobbying activities could exist within the invoicing that is not specifically called out. Due to the qualitative impact of utilizing federal funds for a statement of work containing lobbying activities and not clearly being able to decipher which invoices the cited $100,000 of lobbying activity was paid, the Department is considered noncompliant with 2 CFR §200.403. Recommendation: We recommend a more thorough review of the statements of work occur to prevent unallowable activities when authorizing a purchase order funded by federal sources. Views of Responsible Official(s) Contact Person: Stefan Von Dollen Anticipated Completion Date: 6/30/24 Corrective Action Planned: The Oklahoma State Department of Health agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-209 (Repeat Finding 2022-206) STATE AGENCY: Oklahoma Department of Health FEDERAL AGENCY: United States Department of Health and Human Services ALN: 93.323 FEDERAL PROGRAM NAME: Epidemiology and Laboratory Capacity for Infectious Diseases FEDERAL AWARD NUMBER: NU50CK000535-02-06 FEDERAL AWARD YEAR: 2021, 2022 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: Unknown Criteria: 7 CFR § 246.3 Administration. Delegation to the State agency states in part, “The State agency is responsible for the effective and efficient administration of the Program in accordance with the requirements of this part; the Department's regulations governing nondiscrimination (7 CFR parts 15, 15a, and 15b); governing administration of grants (2 CFR part 200, subparts A through F…).” 2 CFR §200.403 (a) Factors affecting allowability of costs states, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.” Condition: The Oklahoma State Department of Health (the “Department”) entered into a contract with a vendor, which included the following clause in its statement of work for the Department: “… development and implementation of a communications strategy around OSDH legislative priorities leading up to and during the 2022 session.” In accordance with applicable law, direct lobbying communications by award recipients are prohibited. Direct lobbying includes any attempt to influence legislative or other similar deliberations at all levels of government through communications that directly express a view on proposed or pending legislation and other orders and which are directed to members, staff, or other employees of a legislative body or to government officials or employees who participate in the formulation of legislation or other orders. The amount indicated in the statement of work provided for payment of up to $100,000 in lobbying activity. Cause and Effect: As a result of the unallowable activities being included in the statement of work, the Department charged lobbying costs against federal funds. Through inspection of the invoices provided by the Department relating to this vendor, it was also discovered that voucher 463351, for $3,000 was included in federal expenditures in duplicate, once in fiscal year 2022’s SEFA and again in fiscal year 2023’s SEFA. Due to not receiving detailed supporting schedules of related FFR’s it is not known if the Department was reimbursed twice for this single voucher. Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) assistance listing 93.323: Voucher Supplier Date Account Activity PO ID Amount 465771 221538 8/29/2022 515490 FEES 3409024811 5,614.00 462826 221538 7/11/2022 515490 FEES 3409024811 18,000.50 463350 221538 7/20/2022 515490 FEES 3409024811 172,009.16 463351 221538 7/20/2022 515490 FEES 3409024811 3,000.00 465481 221538 8/24/2022 515490 FEES 3409024811 270,313.14 Voucher 465771 invoice included line items discussing campaign check ins, and it cannot be determined whether this could relate to lobbying activities. The invoice also includes various client communications and consulting. Voucher 462826’s invoice detail is similarly vague with consulting and project updates. Vouchers 463350 and 465481 appear to be solely for radio and television advertising, thus these invoices appear allowable based on the compliance supplement stating “recruiting and enrolling providers” along with the language which identifies key activities of 93.268 to include implementing community engagement strategies to promote COVID vaccination; however, lobbying activities could exist within the invoicing that is not specifically called out. Due to the qualitative impact of utilizing federal funds for a statement of work containing lobbying activities and not clearly being able to decipher which invoices the cited $100,000 of lobbying activity was paid, the Department is considered noncompliant with 2 CFR §200.403. Recommendation: We recommend a more thorough review of the statements of work occur to prevent unallowable activities when authorizing a purchase order funded by federal sources. Views of Responsible Official(s) Contact Person: Stefan Von Dollen Anticipated Completion Date: 6/30/24 Corrective Action Planned: The Oklahoma State Department of Health agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-099 STATE AGENCY: Oklahoma Department of Human Services FEDERAL AGENCY: Department of Health and Human Services ALN: 93.575 FEDERAL PROGRAM NAME: CCDF Cluster FEDERAL AWARD NUMBER: 2101OKCSC6 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility, Special Tests and Provisions – Child Care Provider Eligibility for ARP Act Stabilization QUESTIONED COSTS: $2,110,487 Criteria: American Rescue Plan Act of 2021 (ARP) § 2202(e)(1) states in part, USES OF FUNDS-, ”In GENERAL - A qualified child care provider that receives funds through such a subgrant shall use the funds for at least one of the following: (A) Personnel costs, including payroll and salaries or similar compensation for an employee (including any sole proprietor or independent contractor), employee benefits, premium pay, or costs for employee recruitment and retention. (B) Rent (including rent under a lease agreement) or payment on any mortgage obligation, utilities, facility maintenance or improvements, or insurance. (C) Personal protective equipment, cleaning and sanitization supplies and services, or training and professional development related to health and safety practices. (D) Purchases of or updates to equipment and supplies to respond to the COVID–19 public health emergency. (E) Goods and services necessary to maintain or resume child care services. (F) Mental health supports for children and employees.” 2 CFR § 200.303(a) – Internal Controls states in part, “The Non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.403 Factors affecting allowability of costs states in part, “Costs must…(a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, … and (g) Be adequately documented.” Condition and Context: DHS (Department) began implementing a new Quality Rating and Improvement System (QRIS), also known as Stars, that became effective January 1, 2023. Under the new system, the State of Oklahoma has five levels (1-5) of quality ratings for all licensed childcare programs. All licensed programs immediately qualify as a 1 Star. In preparation of the new system, all daycares were asked to submit an updated Stars application (also called reapplication period). A Stars resource booklet, applicable to the daycare type, facility, small home, or large home, and a cover letter was e-mailed to each daycare on June 1, 2022, to provide guidance when requesting a Stars level. The Department offered a financial incentive to those daycares who submitted an application on or before November 30, 2022. The application asked each daycare to provide Stars Level Requested; the higher the Stars level approved the greater the grant funding and subsidy payments. For example, if you were a 1 Star facility for cycles 5 & 6 and you requested and were approved to become a 5 Star facility for cycles 7 & 8, you would receive approximately 3 times more funding for those cycles. Daycares were informed that Stars criteria reviews would not be performed during the reapplication period unless a serious non-compliance was observed during a regular monitoring visit. Also, the Stars yearly monitoring visit, and two partial visits, were waived by the Department for calendar year 2023. The Department provided Childcare ARP Act Stabilization grant funding to daycare homes and centers for SFY 2023 (July 1, 2022 to June 30, 2023) based on an approved grant application per cycle. For cycles 5 & 6 (July 2022 – December 2022) the award was based on licensed capacity. Stabilization grant funding for cycles 7 & 8 (January 2023 – June 2023) were awarded based on licensed capacity and Stars rating. When attempting to obtain the supporting documentation for discretionary stabilization benefit payments, we were informed by the Department that no financial documentation was requested from the homes or centers for the funding provided in SFY 2023. As a result, we requested the documentation directly from the homes and centers. We tested a total of 89 daycare homes and centers that received ARP Act Discretionary stabilization funds during SFY 2023 (July 1, 2022 – June 30, 2023). The universe included 8,994 providers with $227,904,150 in total awards. Tested awards for daycare homes and centers totaled $8,672,400. We noted the following issues for the 89 grant recipients tested: • For 16 (17.98%) of 89 daycare providers tested, stabilization funds were not expended on allowable activities. Expenditures for unallowable activities totaled $633,361.47. • For 19 (21.35%) of 89 daycare providers tested, stabilization funds could not be supported with adequate documentation; therefore, we could not determine whether the stabilization funds were expended on allowable activities. Expenditures for unsupported activities totaled $1,477,125.62. • For 42 (53.84%) of 78 (excluded 11 providers that only received one cycle payment) daycare providers tested, the Stars rating increased by at least 2 from cycles 5-6 to cycles 7-8. Cause: The Department had no process or internal controls in place to ensure they monitor stabilization funds expended by childcare providers. Also, the Department did not have adequate controls in place to support the increase in Stars rating for homes and centers since there were no reviews and/or monitoring performed on which to quantify their assessments. Finally, most daycare homes and centers commingled their regular and grant funds, making it difficult to determine whether homes and centers used the daycare stabilization funds for allowable activities. Effect: Stabilization funds were not expended in compliance with Section 2202(e)(1) of the ARP Act of 2021. Further, allowing daycares to request their own Star level increase dramatically increased the amount of funding most daycare homes or centers received, and the increased Star level may not have been appropriate based on the actual performance, or quality and safety level, of the daycare. Lastly, with no Department monitoring of stabilization funds expended by providers, and most daycare providers having commingled grant funds with their regular funds, grant funds could continue to be expended on unallowable activities. Recommendation: We recommend the Department develop and implement financial daycare controls to ensure stabilization funds are expended by daycares according to grant guidelines. Further, we recommend the Department ensure adequate Stars reviews and/or monitoring have been performed, prior to increasing grant funding and subsidy payments. Lastly, we recommend Department work with daycare homes and centers to ensure grant funds are maintained in separate bank accounts, from personal funds. Views of Responsible Official(s) Contact Person: Kayla Urtz Anticipated Completion Date: N/A Corrective Action Planned: The Department of Human Services does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of this report. Auditor Response: The Department of Human Services advanced all CCDF Stabilization funds without having proper controls in place to ensure the funds were spent on allowable CCDF costs. Federal regulations state the lead agency (i.e., DHS) is responsible for fiscal controls and accounting procedures sufficient to permit the tracing of funds to a level adequate to establish that CCDF funds have not been used in violation of this grant.
FINDING NO: 2023-104 STATE AGENCY: Oklahoma Department of Human Services FEDERAL AGENCY: Department of Health and Human Services ALN: 93.575 FEDERAL PROGRAM NAME: CCDF Cluster FEDERAL AWARD NUMBER: 2101OKCDC6 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility QUESTIONED COSTS: $11,942,325 Condition and Context: DHS begam implementing a new Childcare Desert Grant program starting in August 2022 in order to help increase accessibility to quality childcare for working families living in a county where there is not enough licensed childcare to support the needs of the residents. The grants were available for new or existing daycare homes or centers seeking to increase licensed capacity. Funds awarded under this program were intended to be used for minor construction, program materials, or technology and software for business development necessary to meet licensing requirements. For new daycares, applicants could receive a total of $10,000 per child with an initial advance of $5,000 per child payment made at the time of approval based on the licensed capacity, and a second $5,000 per child payment made at 12 months based on the enrollment. For expansion/ existing daycares, applicants could receive a total of $10,000 per child with an initial advance of $5,000 per child payment made at the time of approval based on the number of expanded slots, and a second $5,000 per child payment made at 12 months based on the number of children enrolled in the expanded slots. We tested a sample of 73 (58 new and 15 existing sites) Child Care Centers (CCC) or Family Daycare Homes (FDCH) that received American Rescue Plan (ARP) Desert grant supplemental funds during SFY 2023 (July 1, 2022 – June 30, 2023). The universe included 348 Child Care providers with $43,725,000 in total awards. Tested awards for sampled providers totaled $16,180,000. We noted the following Desert grant Eligibility or Activities Allowed expenditure exceptions: ELIGIBILITY • The eligibility criteria per the 1st round Desert Grant Application was not met and the required qualifications were not provided prior to the application approval date for the following: o For 2 of 58 (3.45%) new facilities, the license K8 # issuance date and application visit date were not prior to the Childcare Desert Grant Application approval date. o For 6 of 58 (10.34%) new facilities, the CCC/FDCH did not complete and return the Desert Grant New Program Questionnaire. o For 1 of 58 (1.72%) new facilities, a Physical Plant description (which shows the facility layout, square footage and any proposed re-modeling) was obtained, however, it does not agree to the DHS monitoring visit form. o For 1 of 58 (1.72%) new facilities, the CCC had a change in ownership without a break in operations. • For 11 of 73 (15.07%) awards paid, the Desert grant award amount per CCC/FDCH was not calculated correctly and in compliance with program requirements: overpayments totaled $1,945,000. We questioned these costs. • The new/expanded CCC's/FDCH's did not comply with all post application approval eligibility criteria applicable to the SFY23 time period as follows: For 10 of 58 (17.24%) of new facilities, the permit date was not within 90 days of the grant fund payment. • For 67 of 73 (91.78%) Desert Grant awardees, OKDHS awarded STARS under the OKDHS Quality Rating Improvement System (QRIS) without any monitoring visits to verify the program met the requirements for the STAR level awarded. • For 18 of 73 (24.66%) Desert Grant awardees, the Program received Desert Grant Funds, Stabilization Funds and/or STARS Subsidies; however, no records were provided for review, therefore, it was not possible to ascertain if the awardee was tracking the expenditures for each grant separately, or if funds were comingled inappropriately. ACTIVITIES ALLOWED • For 1 of 73 (1.72%) Desert Grant CCC awardees, construction and remodeling costs significantly exceeded the $350,000 limit for minor remodeling and, failed to meet the requirement under 45 CFR § 98.2 (2) because the facility was extensively altered such as to significantly change its function and purpose. OKDHS appears to have approved the construction plans for this provider without any review of the actual costs. We questioned the Desert Grant funds expended over the $350,000 limit totaling $146,122.50 which is included in the $1,945,000 overpayments listed above. • For 2 of 73 (2.74%) Desert Grant awardees, it appears that the program is sectarian in nature and, expenditures were made for items not necessary to meet licensing requirements or were for sectarian instruction. The questioned costs are covered in other bullets since there is an overlap in some of the exceptions. • For 23 of 73 (31.51%) awardees paid a total $2,515,000 (15.54% of total award amount of $16,180,000), the CCC/FDCH did not provide any records, therefore, we are unable to verify these expenditures were allowable. We questioned these costs. • For 50 of 73 (68.49%) Desert Grant awardees that did provide records to SAI: o 47 of 50 (94%) awardees reported expenditures for unallowable activities totaling $6,413,783.04. We questioned these costs. o 36 of 50 (72%) awardees reported expenditures on tracking spreadsheet totaling $1,068,542 for which adequate supporting documentation (i.e., receipts, invoices) was not present. We questioned these costs. • For 8 of 73 (9.59%) Desert Grant awardees, it appears that possible misappropriation of funds has occurred including the following: o Large expenditures for non-childcare related activities o Remodeling and/or equipment purchases for other entities or sectarian organizations o Using funds to start up and operate other entities/nonprofits including paying employees for fulltime work when they are actually working for other entities o Excessive payroll costs and other unnecessary and unreasonable costs o Large transfers of grant funds into personal accounts or other entities’ accounts o Comingling of grant funds with sectarian related accounts • One awardee that received Desert Grant awards for elementary and middle school age children after school programs operated at two public schools received a combined total of $2,165,000 in first round funding (the largest Desert Grant recipient). The award amount received was based on the potential licensing capacity of the schools (per square footage of gym/cafeteria and classrooms, available restrooms, outdoor playgrounds, kitchens, etc.); however, the awardee was not the owner of the facility or renting the facility because the public school provided the space without charge and therefore was not actually running and operating an independent day care facility. The awardee also had significantly lower costs than a true day care facility would have but still received the same amount per child as facilities with significantly higher operating and start-up costs. In addition, the awardee’s spouse was the Director of the CCDF program at the time the awards were made. We questioned 100% of these two awards and the questioned costs are included the exceptions noted above. SAI noted that 20 of 73 (27.40%) Desert Grant Awardees paid a total of $2,000,000 in 1st round awards were no longer operating (no longer listed on the DHS Child Locator site) as of the end of March 2025. Cause: The Department did not design the Desert grant program to ensure ARP Act CCDF funds were only used to expand access to childcare assistance to more income eligible families and improve the quality and availability of childcare. • The Department allowed programs with the least restrictive licensing requirements (i.e., out of school, after school, summer programs) to receive the same amount per child as a program offering full time infant to school age childcare. • The Department did not award funds based on the actual costs necessary for each individual CCC or FDCH to meet licensing requirements which resulted in many providers that had large amounts of cash at their disposal even after meeting licensing requirements. • The Department advanced Desert grant funds to awardees in one lump sum instead of on an incremental basis ensuring planned remodeling work and program equipment and materials were being completed and/or acquired appropriately and, were reasonable and necessary to meet program requirements. • The Department awarded the first round of Desert Grant funds based solely on potential capacity and did not consider any other significant factors (i.e., business experience, number of children likely to be enrolled, ability to hire, train and retain qualified staff, etc.) essential to the operational sustainability of the new CCC or FDCH at the capacity level awarded. This contributed to many instances in which the CCC/ FDCH closed within two years of receiving the award or is currently operating at an enrollment level significantly below the awarded capacity. • The Desert Grant Application included language that was insufficient to adequately inform the Desert grant awardees of all unallowable uses of the funds, including remodeling funding limits, limitations for sectarian organizations and, expenditures that were only allowable under other ARP CCDF stabilization grants. • The Department did not have adequate safeguards in place to ensure Desert Grant funds were not inappropriately awarded to immediate family members of CCDF program administers. Many daycare homes and centers commingled their grant funds with personal accounts and/or other business accounts making it difficult to determine whether homes and centers used the daycare Desert Grant funds for allowable activities. The Desert Grant program may not effectively increase and/or sustain the increase in total capacity of childcare centers in low-income areas as intended. The Department has not established adequate policies and procedures to monitor Desert Grant funds expended by childcare providers. OKDHS CCDF did not normally create or administer new grant programs other than CCDF regular childcare subsidy program. In addition, the ARP CCDF Discretionary and supplemental funds had to be obligated by September 30, 2023, and liquidated by September 30, 2024, which reduced the timeline available to develop the new grant programs. However, OKDHS CCDF did have extensive experience with childcare licensing requirements and associated costs of operating the various types of childcare programs. Effect: Desert grant funds were not used by majority of CCC and FDCH to expand daycare attendance within desert regions, since there were no repercussions to not meeting the licensing capacity they paid on. The failure to monitor the use of Desert grant funds may lead to the Departments inability to recover grant funds not used in accordance with the grant requirements and/or used for non-childcare expenditures or misappropriated for other uses. The Desert Grant program may not effectively increase and/or sustain the increase in total capacity of childcare centers in low-income areas as intended. Recommendation: We recommend the Department develop policies and procedures to ensure Desert grant funds are monitored to ensure funds are expended properly to meet the objective of the grant. We recommend the Department perform a review of all Desert grant funds awarded and expended, identify all funds not used for the Desert grants intended purposes, and ensure remaining funds are expended appropriately or returned. We also recommend the Department recoup all funds for the following: o Funds awarded based on incorrect capacity counts o Expenditures for non-childcare purposes o Expenditures that benefited entities other than the facility awarded the desert grant o Excessive or unreasonable expenditures o Unexpended funds not needed to meet program requirements o Unaccounted for funds (i.e., funds transferred out or comingled with investment accounts, personal accounts, or other business/non-profit accounts) Criteria: 2 CFR § 200.303(a) – Internal Controls states in part, “The Non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.403 Factors affecting allowability of costs states in part, “Costs must…(a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, and (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, and (g) Be adequately documented.” The Desert grant FAQs state in part, …“How much are the Child Care Desert grants? For New Programs: Applicants may receive a total of $10,000 per child with an initial payment made at the time of approval based on license capacity, and a second $5,000 per child payment made at 12 months based on enrollment. The second payment cannot exceed the amount of the first payment. For Expansion Programs: Applicants may receive a total of $10,000 per child with an initial payment made at the time of approval based on the number of expanded slots, and a second $5,000 per child payment made at 12 months based on the number of children enrolled in the expansion slots. … What are the Qualifications for grant eligibility? … • Must accept subsidy payments • Must participate in the Quality Rating Improvement System (QRIS/STARS) • Must operate for a minimum of two years after date of initial award. • Be located in an identified child care desert. (A list of Child Care Desert counties can be reviewed at the end of this document.) • Make services available to families regardless of race, color, creed, religion, national origin, sex, marital status, disability, age, sexual orientation, or familial status. • Complete grant participation agreement, located at the end of the application. • Complete and return questionnaire that will be provided to you via email after you submit the grant application. • Be determined eligible by Oklahoma Human Services staff who review the applications. NOTE: Programs that have recently closed and reopen without an increase in capacity do not qualify OR Programs that have recently had a change in ownership without a break in operation do not qualify. … Child care providers must NOT use the funds for any of the following purposes: • Purchase of land or property • Major construction or renovations. Major renovation means: (1) structural changes to the foundation, roof, floor, exterior or load-bearing walls of a facility or the extension of a facility to increase its floor area; or (2) extensive alteration of a facility such as to significantly change its function and purpose, even if such renovation does not include any structural change. • Consumable supplies (diapers, wipes, soap, paper products) or office supplies (paper, staples, pens) • One-time field trips for children • Child care tuition (scholarships) • Items prohibited by licensing • Used items • Non-child care expenses … How long do I have to start operating my program after I receive the initial award? Child care programs will have 90 days from receipt of the awarded grant funds to complete the application process and be placed on a six-month permit. Once you have a permit, you can begin serving children. If you are not on permit within 90 days, you may be required to return the initial award amount. … You must be approved for a 2-star level or higher within 12 months of receipt of initial award. If you do not meet this requirement, you may be required to return the initial award and will not qualify for a second award. You must be approved for a subsidy contract within 12 months of receipt of initial award. If you do not meet this requirement, you may be required to return the initial award and will not qualify for a second award. Child care programs must participate in QRIS at two star or higher in order to receive a subsidy contract. The Desert Grant application states in part, “By signing this application, I understand that it is my responsibility to maintain records and other documentation to support the use of funds I receive, as well as to document my compliance with the requirements. I understand I must provide these documents to Oklahoma Human Services if requested. … Allowable uses of Grant Funds: Grant funds can be used to cover minor construction projects or program materials per application. All materials must be new, and must be purchased from a retail store, not a private party. In the event the grant recipient wishes to have the cost of assembly and/or installation covered by a grant, the labor must be performed by a licensed and bonded contractor. The grant may be used for technology and software to create and maintain business management systems. Provider Affirmation The following signature affirms that I will adhere to the qualifications listed above and will only spend the funds on allowable uses. I understand that I may be required to re-pay grant funds if I do not adhere to all the terms of this agreement. 42 U.S. Code § 9858 c(c)(2)(I) states in part, “In the case of a sectarian agency or organization, no funds made available under this subchapter may be used for the purposes described in paragraph (1) except to the extent that renovation or repair is necessary to bring the facility of such agency or organization into compliance with health and safety requirements…” 42 U.S. Code § 9858k(a) states, “No financial assistance provided under this subchapter, pursuant to the choice of a parent under section 9858c(c)(2)(A)(i)(I) of this title or through any other grant or contract under the State plan, shall be expended for any sectarian purpose or activity, including sectarian worship or instruction.” 42 U.S. Code § 9858k(b) states in part, “With regard to services provided to students enrolled in grades 1 through 12, no financial assistance provided under this subchapter shall be expended for— (1) any services provided to such students during the regular school day; (2) any services for which such students receive academic credit toward graduation.” 42 U.S. Code § 9858d(b) states in part, “…no funds shall be expended for the purchase or improvement of land, or for the purchase, construction, or permanent improvement (other than minor remodeling) of any building or facility. 45 CFR § 98.2, states in part, Definitions states in part, “Major renovation means any renovation that has a cost equal to or exceeding $350,000 in CCDF funds for child care centers and $50,000 in CCDF funds for family child care homes, which amount shall be adjusted annually for inflation and published on the Office of Child Care website. If renovation costs exceed these thresholds and do not include: (1) Structural changes to the foundation, roof, floor, exterior or load-bearing walls of a facility, or the extension of a facility to increase its floor area; or (2) Extensive alteration of a facility such as to significantly change its function and purpose for direct child care services, even if such renovation does not include any structural change; and improve the health, safety, and/or quality of child care, then it shall not be considered major renovation;” Views of Responsible Official(s) Contact Person: Kayla Urtz Anticipated Completion Date: N/A Corrective Action Planned: The Department of Human Services does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of this report. Auditor Response: The Department of Human Services advanced all Supplemental Desert grant funds without having proper controls in place to ensure the funds were spent on allowable CCDF costs. Federal regulations state the lead agency (i.e., DHS) is responsible for fiscal controls and accounting procedures sufficient to permit the tracing of funds to a level adequate to establish that CCDF funds have not been used in violation of this grant. The OKDHS stated we drew our conclusions from incomplete documentation, but that is not an accurate statement. We requested support from the sampled daycares to attempt to support costs for minor construction, program materials, or technology per the grant application. For most of the costs sampled, our conclusion was validated by either lack of adequate support, costs not being allowed, or no support provided.
FINDING NO: 2023-099 STATE AGENCY: Oklahoma Department of Human Services FEDERAL AGENCY: Department of Health and Human Services ALN: 93.575 FEDERAL PROGRAM NAME: CCDF Cluster FEDERAL AWARD NUMBER: 2101OKCSC6 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility, Special Tests and Provisions – Child Care Provider Eligibility for ARP Act Stabilization QUESTIONED COSTS: $2,110,487 Criteria: American Rescue Plan Act of 2021 (ARP) § 2202(e)(1) states in part, USES OF FUNDS-, ”In GENERAL - A qualified child care provider that receives funds through such a subgrant shall use the funds for at least one of the following: (A) Personnel costs, including payroll and salaries or similar compensation for an employee (including any sole proprietor or independent contractor), employee benefits, premium pay, or costs for employee recruitment and retention. (B) Rent (including rent under a lease agreement) or payment on any mortgage obligation, utilities, facility maintenance or improvements, or insurance. (C) Personal protective equipment, cleaning and sanitization supplies and services, or training and professional development related to health and safety practices. (D) Purchases of or updates to equipment and supplies to respond to the COVID–19 public health emergency. (E) Goods and services necessary to maintain or resume child care services. (F) Mental health supports for children and employees.” 2 CFR § 200.303(a) – Internal Controls states in part, “The Non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.403 Factors affecting allowability of costs states in part, “Costs must…(a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, … and (g) Be adequately documented.” Condition and Context: DHS (Department) began implementing a new Quality Rating and Improvement System (QRIS), also known as Stars, that became effective January 1, 2023. Under the new system, the State of Oklahoma has five levels (1-5) of quality ratings for all licensed childcare programs. All licensed programs immediately qualify as a 1 Star. In preparation of the new system, all daycares were asked to submit an updated Stars application (also called reapplication period). A Stars resource booklet, applicable to the daycare type, facility, small home, or large home, and a cover letter was e-mailed to each daycare on June 1, 2022, to provide guidance when requesting a Stars level. The Department offered a financial incentive to those daycares who submitted an application on or before November 30, 2022. The application asked each daycare to provide Stars Level Requested; the higher the Stars level approved the greater the grant funding and subsidy payments. For example, if you were a 1 Star facility for cycles 5 & 6 and you requested and were approved to become a 5 Star facility for cycles 7 & 8, you would receive approximately 3 times more funding for those cycles. Daycares were informed that Stars criteria reviews would not be performed during the reapplication period unless a serious non-compliance was observed during a regular monitoring visit. Also, the Stars yearly monitoring visit, and two partial visits, were waived by the Department for calendar year 2023. The Department provided Childcare ARP Act Stabilization grant funding to daycare homes and centers for SFY 2023 (July 1, 2022 to June 30, 2023) based on an approved grant application per cycle. For cycles 5 & 6 (July 2022 – December 2022) the award was based on licensed capacity. Stabilization grant funding for cycles 7 & 8 (January 2023 – June 2023) were awarded based on licensed capacity and Stars rating. When attempting to obtain the supporting documentation for discretionary stabilization benefit payments, we were informed by the Department that no financial documentation was requested from the homes or centers for the funding provided in SFY 2023. As a result, we requested the documentation directly from the homes and centers. We tested a total of 89 daycare homes and centers that received ARP Act Discretionary stabilization funds during SFY 2023 (July 1, 2022 – June 30, 2023). The universe included 8,994 providers with $227,904,150 in total awards. Tested awards for daycare homes and centers totaled $8,672,400. We noted the following issues for the 89 grant recipients tested: • For 16 (17.98%) of 89 daycare providers tested, stabilization funds were not expended on allowable activities. Expenditures for unallowable activities totaled $633,361.47. • For 19 (21.35%) of 89 daycare providers tested, stabilization funds could not be supported with adequate documentation; therefore, we could not determine whether the stabilization funds were expended on allowable activities. Expenditures for unsupported activities totaled $1,477,125.62. • For 42 (53.84%) of 78 (excluded 11 providers that only received one cycle payment) daycare providers tested, the Stars rating increased by at least 2 from cycles 5-6 to cycles 7-8. Cause: The Department had no process or internal controls in place to ensure they monitor stabilization funds expended by childcare providers. Also, the Department did not have adequate controls in place to support the increase in Stars rating for homes and centers since there were no reviews and/or monitoring performed on which to quantify their assessments. Finally, most daycare homes and centers commingled their regular and grant funds, making it difficult to determine whether homes and centers used the daycare stabilization funds for allowable activities. Effect: Stabilization funds were not expended in compliance with Section 2202(e)(1) of the ARP Act of 2021. Further, allowing daycares to request their own Star level increase dramatically increased the amount of funding most daycare homes or centers received, and the increased Star level may not have been appropriate based on the actual performance, or quality and safety level, of the daycare. Lastly, with no Department monitoring of stabilization funds expended by providers, and most daycare providers having commingled grant funds with their regular funds, grant funds could continue to be expended on unallowable activities. Recommendation: We recommend the Department develop and implement financial daycare controls to ensure stabilization funds are expended by daycares according to grant guidelines. Further, we recommend the Department ensure adequate Stars reviews and/or monitoring have been performed, prior to increasing grant funding and subsidy payments. Lastly, we recommend Department work with daycare homes and centers to ensure grant funds are maintained in separate bank accounts, from personal funds. Views of Responsible Official(s) Contact Person: Kayla Urtz Anticipated Completion Date: N/A Corrective Action Planned: The Department of Human Services does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of this report. Auditor Response: The Department of Human Services advanced all CCDF Stabilization funds without having proper controls in place to ensure the funds were spent on allowable CCDF costs. Federal regulations state the lead agency (i.e., DHS) is responsible for fiscal controls and accounting procedures sufficient to permit the tracing of funds to a level adequate to establish that CCDF funds have not been used in violation of this grant.
FINDING NO: 2023-104 STATE AGENCY: Oklahoma Department of Human Services FEDERAL AGENCY: Department of Health and Human Services ALN: 93.575 FEDERAL PROGRAM NAME: CCDF Cluster FEDERAL AWARD NUMBER: 2101OKCDC6 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility QUESTIONED COSTS: $11,942,325 Condition and Context: DHS begam implementing a new Childcare Desert Grant program starting in August 2022 in order to help increase accessibility to quality childcare for working families living in a county where there is not enough licensed childcare to support the needs of the residents. The grants were available for new or existing daycare homes or centers seeking to increase licensed capacity. Funds awarded under this program were intended to be used for minor construction, program materials, or technology and software for business development necessary to meet licensing requirements. For new daycares, applicants could receive a total of $10,000 per child with an initial advance of $5,000 per child payment made at the time of approval based on the licensed capacity, and a second $5,000 per child payment made at 12 months based on the enrollment. For expansion/ existing daycares, applicants could receive a total of $10,000 per child with an initial advance of $5,000 per child payment made at the time of approval based on the number of expanded slots, and a second $5,000 per child payment made at 12 months based on the number of children enrolled in the expanded slots. We tested a sample of 73 (58 new and 15 existing sites) Child Care Centers (CCC) or Family Daycare Homes (FDCH) that received American Rescue Plan (ARP) Desert grant supplemental funds during SFY 2023 (July 1, 2022 – June 30, 2023). The universe included 348 Child Care providers with $43,725,000 in total awards. Tested awards for sampled providers totaled $16,180,000. We noted the following Desert grant Eligibility or Activities Allowed expenditure exceptions: ELIGIBILITY • The eligibility criteria per the 1st round Desert Grant Application was not met and the required qualifications were not provided prior to the application approval date for the following: o For 2 of 58 (3.45%) new facilities, the license K8 # issuance date and application visit date were not prior to the Childcare Desert Grant Application approval date. o For 6 of 58 (10.34%) new facilities, the CCC/FDCH did not complete and return the Desert Grant New Program Questionnaire. o For 1 of 58 (1.72%) new facilities, a Physical Plant description (which shows the facility layout, square footage and any proposed re-modeling) was obtained, however, it does not agree to the DHS monitoring visit form. o For 1 of 58 (1.72%) new facilities, the CCC had a change in ownership without a break in operations. • For 11 of 73 (15.07%) awards paid, the Desert grant award amount per CCC/FDCH was not calculated correctly and in compliance with program requirements: overpayments totaled $1,945,000. We questioned these costs. • The new/expanded CCC's/FDCH's did not comply with all post application approval eligibility criteria applicable to the SFY23 time period as follows: For 10 of 58 (17.24%) of new facilities, the permit date was not within 90 days of the grant fund payment. • For 67 of 73 (91.78%) Desert Grant awardees, OKDHS awarded STARS under the OKDHS Quality Rating Improvement System (QRIS) without any monitoring visits to verify the program met the requirements for the STAR level awarded. • For 18 of 73 (24.66%) Desert Grant awardees, the Program received Desert Grant Funds, Stabilization Funds and/or STARS Subsidies; however, no records were provided for review, therefore, it was not possible to ascertain if the awardee was tracking the expenditures for each grant separately, or if funds were comingled inappropriately. ACTIVITIES ALLOWED • For 1 of 73 (1.72%) Desert Grant CCC awardees, construction and remodeling costs significantly exceeded the $350,000 limit for minor remodeling and, failed to meet the requirement under 45 CFR § 98.2 (2) because the facility was extensively altered such as to significantly change its function and purpose. OKDHS appears to have approved the construction plans for this provider without any review of the actual costs. We questioned the Desert Grant funds expended over the $350,000 limit totaling $146,122.50 which is included in the $1,945,000 overpayments listed above. • For 2 of 73 (2.74%) Desert Grant awardees, it appears that the program is sectarian in nature and, expenditures were made for items not necessary to meet licensing requirements or were for sectarian instruction. The questioned costs are covered in other bullets since there is an overlap in some of the exceptions. • For 23 of 73 (31.51%) awardees paid a total $2,515,000 (15.54% of total award amount of $16,180,000), the CCC/FDCH did not provide any records, therefore, we are unable to verify these expenditures were allowable. We questioned these costs. • For 50 of 73 (68.49%) Desert Grant awardees that did provide records to SAI: o 47 of 50 (94%) awardees reported expenditures for unallowable activities totaling $6,413,783.04. We questioned these costs. o 36 of 50 (72%) awardees reported expenditures on tracking spreadsheet totaling $1,068,542 for which adequate supporting documentation (i.e., receipts, invoices) was not present. We questioned these costs. • For 8 of 73 (9.59%) Desert Grant awardees, it appears that possible misappropriation of funds has occurred including the following: o Large expenditures for non-childcare related activities o Remodeling and/or equipment purchases for other entities or sectarian organizations o Using funds to start up and operate other entities/nonprofits including paying employees for fulltime work when they are actually working for other entities o Excessive payroll costs and other unnecessary and unreasonable costs o Large transfers of grant funds into personal accounts or other entities’ accounts o Comingling of grant funds with sectarian related accounts • One awardee that received Desert Grant awards for elementary and middle school age children after school programs operated at two public schools received a combined total of $2,165,000 in first round funding (the largest Desert Grant recipient). The award amount received was based on the potential licensing capacity of the schools (per square footage of gym/cafeteria and classrooms, available restrooms, outdoor playgrounds, kitchens, etc.); however, the awardee was not the owner of the facility or renting the facility because the public school provided the space without charge and therefore was not actually running and operating an independent day care facility. The awardee also had significantly lower costs than a true day care facility would have but still received the same amount per child as facilities with significantly higher operating and start-up costs. In addition, the awardee’s spouse was the Director of the CCDF program at the time the awards were made. We questioned 100% of these two awards and the questioned costs are included the exceptions noted above. SAI noted that 20 of 73 (27.40%) Desert Grant Awardees paid a total of $2,000,000 in 1st round awards were no longer operating (no longer listed on the DHS Child Locator site) as of the end of March 2025. Cause: The Department did not design the Desert grant program to ensure ARP Act CCDF funds were only used to expand access to childcare assistance to more income eligible families and improve the quality and availability of childcare. • The Department allowed programs with the least restrictive licensing requirements (i.e., out of school, after school, summer programs) to receive the same amount per child as a program offering full time infant to school age childcare. • The Department did not award funds based on the actual costs necessary for each individual CCC or FDCH to meet licensing requirements which resulted in many providers that had large amounts of cash at their disposal even after meeting licensing requirements. • The Department advanced Desert grant funds to awardees in one lump sum instead of on an incremental basis ensuring planned remodeling work and program equipment and materials were being completed and/or acquired appropriately and, were reasonable and necessary to meet program requirements. • The Department awarded the first round of Desert Grant funds based solely on potential capacity and did not consider any other significant factors (i.e., business experience, number of children likely to be enrolled, ability to hire, train and retain qualified staff, etc.) essential to the operational sustainability of the new CCC or FDCH at the capacity level awarded. This contributed to many instances in which the CCC/ FDCH closed within two years of receiving the award or is currently operating at an enrollment level significantly below the awarded capacity. • The Desert Grant Application included language that was insufficient to adequately inform the Desert grant awardees of all unallowable uses of the funds, including remodeling funding limits, limitations for sectarian organizations and, expenditures that were only allowable under other ARP CCDF stabilization grants. • The Department did not have adequate safeguards in place to ensure Desert Grant funds were not inappropriately awarded to immediate family members of CCDF program administers. Many daycare homes and centers commingled their grant funds with personal accounts and/or other business accounts making it difficult to determine whether homes and centers used the daycare Desert Grant funds for allowable activities. The Desert Grant program may not effectively increase and/or sustain the increase in total capacity of childcare centers in low-income areas as intended. The Department has not established adequate policies and procedures to monitor Desert Grant funds expended by childcare providers. OKDHS CCDF did not normally create or administer new grant programs other than CCDF regular childcare subsidy program. In addition, the ARP CCDF Discretionary and supplemental funds had to be obligated by September 30, 2023, and liquidated by September 30, 2024, which reduced the timeline available to develop the new grant programs. However, OKDHS CCDF did have extensive experience with childcare licensing requirements and associated costs of operating the various types of childcare programs. Effect: Desert grant funds were not used by majority of CCC and FDCH to expand daycare attendance within desert regions, since there were no repercussions to not meeting the licensing capacity they paid on. The failure to monitor the use of Desert grant funds may lead to the Departments inability to recover grant funds not used in accordance with the grant requirements and/or used for non-childcare expenditures or misappropriated for other uses. The Desert Grant program may not effectively increase and/or sustain the increase in total capacity of childcare centers in low-income areas as intended. Recommendation: We recommend the Department develop policies and procedures to ensure Desert grant funds are monitored to ensure funds are expended properly to meet the objective of the grant. We recommend the Department perform a review of all Desert grant funds awarded and expended, identify all funds not used for the Desert grants intended purposes, and ensure remaining funds are expended appropriately or returned. We also recommend the Department recoup all funds for the following: o Funds awarded based on incorrect capacity counts o Expenditures for non-childcare purposes o Expenditures that benefited entities other than the facility awarded the desert grant o Excessive or unreasonable expenditures o Unexpended funds not needed to meet program requirements o Unaccounted for funds (i.e., funds transferred out or comingled with investment accounts, personal accounts, or other business/non-profit accounts) Criteria: 2 CFR § 200.303(a) – Internal Controls states in part, “The Non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.403 Factors affecting allowability of costs states in part, “Costs must…(a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, and (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, and (g) Be adequately documented.” The Desert grant FAQs state in part, …“How much are the Child Care Desert grants? For New Programs: Applicants may receive a total of $10,000 per child with an initial payment made at the time of approval based on license capacity, and a second $5,000 per child payment made at 12 months based on enrollment. The second payment cannot exceed the amount of the first payment. For Expansion Programs: Applicants may receive a total of $10,000 per child with an initial payment made at the time of approval based on the number of expanded slots, and a second $5,000 per child payment made at 12 months based on the number of children enrolled in the expansion slots. … What are the Qualifications for grant eligibility? … • Must accept subsidy payments • Must participate in the Quality Rating Improvement System (QRIS/STARS) • Must operate for a minimum of two years after date of initial award. • Be located in an identified child care desert. (A list of Child Care Desert counties can be reviewed at the end of this document.) • Make services available to families regardless of race, color, creed, religion, national origin, sex, marital status, disability, age, sexual orientation, or familial status. • Complete grant participation agreement, located at the end of the application. • Complete and return questionnaire that will be provided to you via email after you submit the grant application. • Be determined eligible by Oklahoma Human Services staff who review the applications. NOTE: Programs that have recently closed and reopen without an increase in capacity do not qualify OR Programs that have recently had a change in ownership without a break in operation do not qualify. … Child care providers must NOT use the funds for any of the following purposes: • Purchase of land or property • Major construction or renovations. Major renovation means: (1) structural changes to the foundation, roof, floor, exterior or load-bearing walls of a facility or the extension of a facility to increase its floor area; or (2) extensive alteration of a facility such as to significantly change its function and purpose, even if such renovation does not include any structural change. • Consumable supplies (diapers, wipes, soap, paper products) or office supplies (paper, staples, pens) • One-time field trips for children • Child care tuition (scholarships) • Items prohibited by licensing • Used items • Non-child care expenses … How long do I have to start operating my program after I receive the initial award? Child care programs will have 90 days from receipt of the awarded grant funds to complete the application process and be placed on a six-month permit. Once you have a permit, you can begin serving children. If you are not on permit within 90 days, you may be required to return the initial award amount. … You must be approved for a 2-star level or higher within 12 months of receipt of initial award. If you do not meet this requirement, you may be required to return the initial award and will not qualify for a second award. You must be approved for a subsidy contract within 12 months of receipt of initial award. If you do not meet this requirement, you may be required to return the initial award and will not qualify for a second award. Child care programs must participate in QRIS at two star or higher in order to receive a subsidy contract. The Desert Grant application states in part, “By signing this application, I understand that it is my responsibility to maintain records and other documentation to support the use of funds I receive, as well as to document my compliance with the requirements. I understand I must provide these documents to Oklahoma Human Services if requested. … Allowable uses of Grant Funds: Grant funds can be used to cover minor construction projects or program materials per application. All materials must be new, and must be purchased from a retail store, not a private party. In the event the grant recipient wishes to have the cost of assembly and/or installation covered by a grant, the labor must be performed by a licensed and bonded contractor. The grant may be used for technology and software to create and maintain business management systems. Provider Affirmation The following signature affirms that I will adhere to the qualifications listed above and will only spend the funds on allowable uses. I understand that I may be required to re-pay grant funds if I do not adhere to all the terms of this agreement. 42 U.S. Code § 9858 c(c)(2)(I) states in part, “In the case of a sectarian agency or organization, no funds made available under this subchapter may be used for the purposes described in paragraph (1) except to the extent that renovation or repair is necessary to bring the facility of such agency or organization into compliance with health and safety requirements…” 42 U.S. Code § 9858k(a) states, “No financial assistance provided under this subchapter, pursuant to the choice of a parent under section 9858c(c)(2)(A)(i)(I) of this title or through any other grant or contract under the State plan, shall be expended for any sectarian purpose or activity, including sectarian worship or instruction.” 42 U.S. Code § 9858k(b) states in part, “With regard to services provided to students enrolled in grades 1 through 12, no financial assistance provided under this subchapter shall be expended for— (1) any services provided to such students during the regular school day; (2) any services for which such students receive academic credit toward graduation.” 42 U.S. Code § 9858d(b) states in part, “…no funds shall be expended for the purchase or improvement of land, or for the purchase, construction, or permanent improvement (other than minor remodeling) of any building or facility. 45 CFR § 98.2, states in part, Definitions states in part, “Major renovation means any renovation that has a cost equal to or exceeding $350,000 in CCDF funds for child care centers and $50,000 in CCDF funds for family child care homes, which amount shall be adjusted annually for inflation and published on the Office of Child Care website. If renovation costs exceed these thresholds and do not include: (1) Structural changes to the foundation, roof, floor, exterior or load-bearing walls of a facility, or the extension of a facility to increase its floor area; or (2) Extensive alteration of a facility such as to significantly change its function and purpose for direct child care services, even if such renovation does not include any structural change; and improve the health, safety, and/or quality of child care, then it shall not be considered major renovation;” Views of Responsible Official(s) Contact Person: Kayla Urtz Anticipated Completion Date: N/A Corrective Action Planned: The Department of Human Services does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of this report. Auditor Response: The Department of Human Services advanced all Supplemental Desert grant funds without having proper controls in place to ensure the funds were spent on allowable CCDF costs. Federal regulations state the lead agency (i.e., DHS) is responsible for fiscal controls and accounting procedures sufficient to permit the tracing of funds to a level adequate to establish that CCDF funds have not been used in violation of this grant. The OKDHS stated we drew our conclusions from incomplete documentation, but that is not an accurate statement. We requested support from the sampled daycares to attempt to support costs for minor construction, program materials, or technology per the grant application. For most of the costs sampled, our conclusion was validated by either lack of adequate support, costs not being allowed, or no support provided.
2023-005 Allowable Cost Documentation Federal Program: Research and Development Cluster (ALN 47.041-Engineering, Award 1940055, Award Period 9/1/19 – 3/31/25 and ALN 47.084-Technology, Innovation and Partnerships, Award 1940055, Award Period 9/19/22 – 3/31/25) Federal Agency: National Science Foundation Criteria: 2 CFR 200.403 requires that costs must be adequately documented. Condition: We selected 48 non-payroll expenses for testing. Of those 48, 21 were found to have insufficient documentation to determine if the cost were allowable or unallowable to the federal program. The 21 expenses found to have insufficient documentation were purchased on a credit card. Cause: The Organization did not maintain sufficient internal controls over credit card usage to ensure detailed receipts were available to support the expense charged to the federal program. Effect: The Organization was not compliance with 2 CFR 200.403 which requires that costs charged to federal programs are adequately documented. Without a policy that requires detailed receipts to be submitted for credit card charges, there is a risk that unallowable costs are charged to the program. Identification as a repeat finding, if applicable: The finding is a repeat of Finding 2022-007 in the prior year. Recommendation: We recommend the Organization implement internal controls that require detailed receipts to be submitted for all credit card charges. The charges listed on the receipts should be reviewed for allowability and approved by the appropriate personnel before charging to the federal program. View of Responsible Officials: The Organization has since implemented a formal credit card policy which requires that detailed receipts be submitted for review and approval for all credit card charges. Questioned Costs: $25,573. This is the total known cost from the 21 transactions identified in our sample to have insufficient documentation.
2023-009 – Subrecipient Monitoring – Internal Control and Compliance over Subrecipient Monitoring Identification of the Federal Program: Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants-Entitlement Grants Cluster Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: County of San Bernadino Community Development and Housing Federal Award Identification Number: ADEL-21-1-05M/5262, ADEL-23-2-05Z/3679 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): In accordance with 2 CFR 200.403 Factors affecting allowability of costs (g), the costs to be allowable must be adequately documented. Furthermore, pursuant to 2 CFR 200.332 Requirements for pass-through entities, the entities must monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must: a. Review financial and performance reports. b. Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. c. Issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. d. Resolve audit findings specifically related to the subaward. Condition: For the fiscal year ended June 30, 2023, the City was unable to provide the complete and accurate documentation for the subrecipient-related expenditures which include the reimbursement package and proof of cash receipts. In relation to project ADEL-21-1-05M/5262, the reported $14,020 subrecipient’s personnel-related expenditure was lifted from the monthly status of expenditures monitoring file with $14,067 verified as grant amount. It was noted that the expenditures were incurred through June 30, 2022, and the related reimbursements were received through June 30, 2023. The audit team vouched the supporting remittance advices provided and identified only $4,720 related to the project. The remaining amount of $9,300 was unverified. As for project ADEL-23-2-05Z/3679, no support related to fiscal year 2023 was received, therefore, the reported amount of $18,253 could not be verified. Cause: The City did not have sufficient subrecipient monitoring policy and record-keeping requirements established. Effect or Potential Effect: Due to the insufficient documentation provided, the auditor was unable to verify the amounts reported related to the City’s subrecipients, resulting in questioned costs and findings of non-compliance. Questioned Costs: $27,553. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommend the City enhance its subrecipient monitoring activities and establish a formal record-keeping policy to ensure complete and timely documentation of expenditures. Views of Responsible Officials: Management concurs with the finding.
U.S. Department of Health and Human Services Leading Edge Acceleration Projects (LEAP) in Health Information Technology - 93.345 Award# 90AX0034/01-00 Criteria or Specific Requirement – Allowable Costs/Cost Principles/Cash Management Federal regulations state that “charges to federal awards for salaries and wages, must be based on records that accurately reflect the work performed.” The regulations also state that “the records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated” and “budget estimates alone do not qualify as support for charges to federal awards” (2 CFR 200.430(i)). Additionally, costs may not be included as a cost of any other federally-financed program in either the current or a prior period (2 CFR 200.403(f)). Non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR Section 200.305(b)).issuance or redemption of checks, warrants, or payment by other means (2 CFR Section 200.305(b)). Condition – During our test work over the LEAP grant, we noted the Organization did not have time and activity records with sufficient detail per federal regulations to support its compensation and fringe benefit expenses. Additionally, it appeared a substantial portion of certain employee's time was 100% charged to the LEAP award; however, may have also been included on other federal awards and been reimbursed. Lastly, indirect costs were charged to the federal program on the salary expenses which were not fully supported as required by the Uniform Guidance. Cause – There is a lack of understanding of the requirements of the time and activity reports and a lack of detail tracking by project of personnel time. Effect – Based on testing completed, the Organization did not have sufficient procedures to record and verify employees time and activity throughout fiscal year 2023. This resulted in the Organization drawing down funds for unsupported expenses. Questioned Costs – Total questioned costs are $278,735. This includes $192,231 of all salaries and benefits charged to the award which lacked documentation to support the charge and allocation to the grant and $86,504 in indirect costs charged on these related expenses. Context - There was a total of $192,231 in salaries and fringe benefits charged to the LEAP award during the year ended June 30, 2023 which encompassed six employees. One hundred percent of the employees were reviewed and none had proper documentation to support the charge and allocation to the grant (e.g ., daily time and activity records, etc.). Per discussions with management and further review, the amounts charged to the grant were based on the approved budget for the position and the internal allocation performed each payroll period. Additionally, it is uncertain how much of these employees' were also charged to other federally financed programs during the year. Identification as a Repeat Finding, if applicable – Not applicable Recommendation – We recommend that management utilize a time and activity method which meets the requirements of federal regulations. We also recommend employees and their supervisors are provided training on the requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with finding. See corrective action plan.
FA 2023-001 Improve/Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Procurement and Suspension and Debarment Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education Assistance Listing Number and Title: 84.371C – Comprehensive Literacy Development Federal Award Number: S371C190016-19A (Years: 2017-21) Questioned Costs: $124,399.84 Repeat of Prior Year Finding: FA 2022-002 Description: A review of expenditures and journal entries related to the Comprehensive Literacy Development program revealed that the School District’s internal control procedures were not operating to ensure that appropriate reviews and approvals occurred and the School District’s procurement procedures were followed. Background Information: The Comprehensive Literacy Development Program (CLD) was authorized under Sections 2222-2225 of the Elementary and Secondary Education Act of 1965 to create a comprehensive literacy program to advance literacy skills, including pre-literacy skills, reading, and writing, for children from birth to grade 12, with an emphasis on disadvantaged children, including children living in poverty, English learners, and children with disabilities. CLD funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the expenditure of funds by LEAs. CLD funds totaling $802,825.69 were expended and reported on the Burke County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2023. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented, (h) Cost must be incurred during the approved budget period…” Additionally, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state in part that “(a) the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations and… (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Methods of Procurement to Be Followed provide guidance for procurement through small purchase procedures and state “If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.” Condition: Auditors performed a review of various expenditure activity associated with the CLD program to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were identified: • A sample of 60 expenditures was randomly selected for testing using a non-statistical sampling approach. Evidence of review and approval was not reflected for 11 expenditures, and adequate evidence of receipt was not maintained for 14 expenditures. • A sample of two journal entries was randomly selected for testing using a non-statistical sampling approach. Evidence of review to ensure that the activity was allowable and occurred during the period of performance was not reflected for either journal entry tested. • A sample of 43 procurement transactions was randomly selected for testing using a nonstatistical sampling approach. Four procurement transactions did not reflect evidence of supervisory review and approval, and the School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources for 13 small purchase procurements reviewed. Questioned Costs: Upon testing a sample of $157,184.97 in procurement transactions, known questioned costs of $124,399.84 were identified for expenditures that did not follow the School District’s procurement procedures. Using the total population of $743,095.26 in procurement transactions, we project the likely questioned costs to be approximately $588,102.87. Cause: The School District did not maintain evidence of review and approval of expenditures, journal entries, and procurement transactions as a result of oversight. Small purchase procurement transactions did not follow the School District’s procurement policy because the Federal Programs Directors was unaware that it was necessary to follow these procedures for the purchase of instructional materials. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to review expenditures for allowability, and journal entries for allowability and period of performance compliance exposes the School District to unnecessary risk of error and misuse of federal funds. In addition, failure to appropriately follow applicable procurement procedures exposes the School District to unnecessary risk of error and misuse of federal funds. Lastly, this deficiency could lead to the return of grant funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to the CLD program. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures, journal entries, and procurement transactions reflect evidence of review for associated compliance requirements. In addition, expenditure voucher packages should contain all required components. Furthermore, the School District should evaluate and improve internal control procedures to ensure that required procurement methods are properly identified and followed and required procurement documentation is properly identified, safeguarded, and retained. Management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding. The finding states evidence of review and approval was not reflected for 11 expenditures. While 11 invoices were not approved by the Director in charge of the grant, 10 were approved by the building level Principal or Central Office Director and the Superintendent, and 1 was approved by the Superintendent. Additionally, all expenditures charged to the grant were submitted to the Georgia Department of Education for review and approval for reimbursement of expenditures. All expenditures were approved and reimbursed. The finding states adequate evidence of receipt was not maintained for 14 expenditures. While packing slips weren’t provided for 14 voucher packages, 13 of the packages were reviewed and approved for payment by the Director in charge of the grant, and 1 was approved by the Principal and Superintendent. Approval for payment isn’t granted unless items are received. The finding states evidence of review to ensure that the activity was allowable and occurred during the period of performance was not reflected for 2 journal entries. The journal entry to record indirect costs in the amount of $3,572 did not exceed the indirect costs budgeted amount of $20,000 included in the grant budget submitted by the School District and approved by the Georgia Department of Education. While not approved by the Director in charge of the grant, the journal entry was accurate and properly recorded indirect costs. Additionally, the journal entry was submitted to the Georgia Department of Education for review and approval for reimbursement of expenditures. As stated above, all expenditures were approved and reimbursed. The journal entry to reverse salary and benefit accruals is an annual, standard journal entry utilized for operational efficiency and best practice to reverse salary and benefit accruals that are required under Generally Accepted Accounting Principles. While not approved by the Director in charge of the grant, the journal entry was appropriate and necessary to ensure expenditures were accurately recorded in the proper accounting period and only included reversals related to personnel the Director approved to be paid from the grant. The finding states 3 procurement transactions did not reflect evidence of supervisory review and approval. While 3 transactions included invoices that were not approved by the Director in charge of the grant, 2 invoices were approved by the building level Principal and the Superintendent, and 1 was approved by the Superintendent. All 3 of the transactions included purchase orders that were properly approved by the Director in charge of the grant. Auditor’s Concluding Remarks: Under the Uniform Guidance, auditees are required to implement internal controls over federal awards. Upon completing procedures over internal controls associated with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, and Procurement and Suspension and Debarment compliance requirements, auditors obtained an understanding of internal controls put in place and subsequently tested those controls. Auditors noted that the internal controls described by the School District were not in place for the transactions identified. Based on this information, we reaffirm our finding and will review the status of the finding during our next audit.
FA 2023-003 Strengthen Controls over Expenditures Compliance Requirements: Period of Performance Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 84.027 – Special Education Grants to States 84.173 – Special Education Preschool Grants Federal Award Numbers: HO27A210073(Year: 2022), HO27A220073 (Year: 2023), HO27X220073 (Year: 2023) Questioned Costs: None Identified Repeat of Prior Year Finding: FA 2022-003 Description: A review of journal entries charged to the Special Education Cluster revealed that the School District’s internal control procedures were not operating to ensure that appropriate reviews and approvals occurred. Background Information: The Special Education Cluster (SEC), which is comprised of the Special Education Grants to States (IDEA, Part B) and Special Education Preschool Grants (IDEA Preschool) programs, was authorized under the Individuals with Disabilities Education Act (IDEA). Special Education Cluster funding is available to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs and prepares them for further education, employment, and independent living; ensure that the rights of children with disabilities and their parents are protected; assist states, localities, educational service agencies, and federal agencies to provide for the education of all children with disabilities; and assess and ensure the effectiveness of efforts to educate children with disabilities. SEC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. SEC funds totaling $1,053,381.74 were expended and reported on the Burke County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2023. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented, (h) Cost must be incurred during the approved budget period…” Condition: A sample of four journal entries was randomly selected for testing using a non-statistical sampling approach. These journal entries were reviewed to determine if appropriate internal controls were implemented and applicable period of performance compliance requirements were met. Evidence of review to ensure that the activity was allowable and occurred during the period of performance was not reflected for those journal entries tested. Cause: The School District did not maintain evidence of review and approval of journal entries as a result of oversight. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to review journal entries for allowability and period of performance compliance exposes the School District to unnecessary risk of error and misuse of federal funds Lastly, this deficiency could lead to the return of grant funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to the Special Education Cluster. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all journal entries reflect evidence of review for associated compliance requirements. Additionally,, management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding. The finding states evidence of review to ensure that the activity was allowable and occurred during the period of performance was not reflected for 4 journal entries. While not approved by the Director in charge of the grant, one journal entry, in the amount of $1.52, was made to eliminate fund balance which cannot exist in any federal grant. While not approved by the Director in charge of the grant, one journal entry was necessary to accurately match revenues and expenditures to the appropriate grant years as two grants were operating simultaneously during the period from July 1, 2022, through September 30, 2022. A reclassification journal entry was made to reclassify grant revenue from account number 404-2838-4535-00000-8010-0 (2023 grant) to account number 404-2838-4535- 00000-8010-1 (2022 grant). Two journal entries to reverse salary and benefit accruals are annual, standard journal entries utilized for operational efficiency and best practice to reverse salary and benefit accruals that are required under Generally Accepted Accounting Principles. While not approved by the Director in charge of the grant, the journal entries were appropriate and necessary to ensure expenditures were accurately recorded in the proper accounting period and only included reversals related to personnel the Director approved to be paid from the grant. Auditor’s Concluding Remarks: Under the Uniform Guidance, auditees are required to implement internal controls over federal awards. Upon completing procedures over internal controls associated with the Period of Performance and Procurement and Suspension and Debarment compliance requirements, auditors obtained an understanding of internal controls put in place and subsequently tested those controls. Auditors noted that the internal controls described by the School District were not in place for the transactions identified. Based on this information, we reaffirm our finding and will review the status of the finding during our next audit.
Federal Program: Head Start Cluster (CFDA 93.600) Federal Agency: U.S. Department of Health and Human Services Federal Award Number(s): 08CH012021-02-01 Compliance Requirement: Allowable Costs/Cost Principles Questioned Costs: $125 Condition – During testing of expenditures charged to the Head Start program several transactions were identified for which adequate supporting documentation such as invoices, receipts, or other evidence demonstrating the nature and purpose of the expenditures could not be provided. Criteria – Under 2 CFR 200.403(g) costs charged to federal awards must be adequately documented to be allowable. Additionally, 2 CFR 200.302(b)(3) requires non-federal entities to maintain records that “identify adequately the source and application of funds” for federally funded activities. Cause – Internal control procedures were not consistently followed related to retaining supporting documentation for federal program expenditures. Control over documentation retention was not sufficiently designed or monitored to ensure that all required records were maintained and readily available. Effect – Inadequate documentation increases the risk that unallowable costs may be charged to the federal program and may result in disallowed costs or repayment to the federal awarding agency. Recommendation – We recommend that the government strengthen its internal controls over documentation retention for federal program expenditures and ensure staff is knowledgeable regarding Uniform Guidance documentation requirements. Client Response – Management acknowledges this finding. We no longer service this program. In the future if we take a grant of this size on, training will be held for any employees involved with the grant. Status of Finding – This is not a repeat finding from the prior year.
2023-011 Improve Controls and Compliance with Approval of Allowable Costs Federal Program Information Federal Agency: U.S. Department of Housing and Urban Development Award Name(s): CDBG Entitlement Grants Cluster Assistance Listing Number(s): 14.218 Award Year: 2023 Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Type of Finding Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement Per Uniform Guidance (2 CFR § 200.403, 200.405), recipients of federal funds must ensure that costs charged to federal awards are allowable, properly approved, and supported by adequate documentation. Effective internal controls should be in place to verify that all expenditures, including vendor invoices, are reviewed and approved prior to payment and charging to federal grants. SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) Condition and Context During testing of 34 vendor invoices charged to the Community Development Block Grants/Entitlement Grants program, 2 invoices were identified that had not been approved prior to payment or being charged to the grant. Cause The City did not consistently enforce controls requiring the review and approval of all invoices before they were processed as federal expenditures. Effect or Potential Effect The lack of proper invoice approval increases the risk of unauthorized, erroneous, or unallowable costs being charged to the federal program. Questioned Costs No questioned costs are reported. Identification as a Repeat Finding This was not a finding in the prior year. Recommendation The City should strengthen its internal controls by requiring documented approval for all invoices prior to payment and charging to federal programs, and perform periodic reviews to ensure ongoing compliance with allowable cost procedures. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
Finding 2023-006 – Activities Allowed or Unallowed/Allowable Costs/Cost Principles – Material Weakness in Internal Controls over Compliance and Instance of Noncompliance Head Start ALN# 93.600 (Repeat 2022-008) U.S. Department of Health & Human Services Federal Grant/Contract Number: 10CH011215-03-03; 10CH011215-03-C3; 10CH011215-04; 10HE000901-01-C6 Grant period – 2022 & 2023 Criteria – Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should follow guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.403 – Factors affecting allowability of costs – Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: paragraph (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles; paragraph (g) Be adequately documented. Per 2 CFR section 200.404 – Reasonable costs – A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. Per 2 CFR section 200.405 – Allocable costs –focuses on how costs are allocable, ensuring they are directly tied to the federal award or its benefits. Per 2 CFR 200.430(i), charges to Federal awards for salaries and wages must be based on records that are supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated and that are incorporated into the official records of the non-Federal entity. Condition – From the population of all disbursements charged to the grant, we selected 25 program disbursements, of which 9 invoices could not be located. Cause – Turnover in staff and the passage of time since the period under audit has caused documentation to be misplaced. Effect – Inadequate or inconsistent documentation of expenses may result in erroneous or fraudulent transactions occurring, loss of funding, or disallowed costs. Questioned Costs – Known questioned costs totaling $121 were identified related to 10 invoices could not be located. In addition, likely questioned costs are estimated at $34,616, based on the projection of the error identified in the tested transactions to the applicable population. Recommendation – Documentation should be prepared, reviewed, and retained to support the expense. Management’s Response – Management has reviewed and accepted the finding. See “Corrective Action Plan”.
INELIGIBLE COSTS / CRITERIA / UNIFORM GUIDANCE 2 CFR PART 200 UNIFORM ADMINSTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS, SUBPART E: COST PRINCIPLES SECTION 200.403(F) STATES "EXCEPT WHERE OTHERWISE AUTHORIZED BY STATUTE, COSTS MUST MEET THE FOLLOWING CRITERIA IN ORDER TO BE ALLOWABLE UNDER FEDERAL AWARDS: (F) NOT BE INCLUDED AS A COST OR USED TO MEET COST SHARING OR MATCHING REQUIREMENTS OF ANY OTHER FEDERALLY-FINANCED PROGRAM IN EITHER THE CURRENT OR PRIOR PERIOD. / CONDITION / ON MAY 11, 2022 THE CITY WAS AWARDED AN ARPA GRANT THROUGH MISSISSIPPI COUNTY, MISSOURI FOR THE DEMOLITION OF A HAZARDOUS SCHOOL STRUCTURE IN ORDER TO FACILITATE THE CONSTRUCTION OF A PUBLIC HEALTH FACILITY. COSTS OF DEMOLITION WERE SUBMITTED AND REIMBURSED BY THE MISSISSIPPI COUNTY, MISSOURI ARPA GRANT IN AUGUST AND SEPTEMBER 2022. ON DECEMBER 12, 2022, THE CITY WAS AWARDED AN ARPA GRANT THROUGH THE MISSOURI DEPARTMENT OF ELEMENTARY AND SECONDARY EDUCATION (DESE) FOR THE SAME PROJECT. THE GRANT REQUIRED A 50% MATCH. THE BUDGET SUBMITTED TO DESE INDICATED THAT THE GRANT FROM MISSISSIPPI COUNTY, MISSOURI WOULD BE USED AS A MATCH. ON DECEMBER 14, 2022, THE CITY SUBMITTED INVOICES TO DESE FOR REIMBURSEMENT IN THE AMOUNT OF $94,921.26. THE INVOICES SUBMITTED HAD PREVIOUSLY BEEN REIMBURSED BY THE MISSISSIPPI COUNTY ARPA GRANT. THUS, THE CLAIM FOR REIMBURSEMENT WAS DUPLICATED, AND THE CITY WAS REIMBURSED TWICE FOR THE SAME COSTS. / CAUSE / THE CITY RECEIVED A MISCOMMUNICATION REGARDING THE ELIGIBILITY OF COSTS. ALSO, THE CITY WAS NO FULLY AWARE OF THE COST STANDARDS CONTAINED IN UNIFORM GUIDANCE. / EFFECT / THE CITY HAS DUPLICATED THE REQUEST FOR REIMBURSEMENT OF COSTS SUBMITTED TO THE DEPARTMENT OF ELEMENTARY AND SECONDARY EDUCATION AND THE MISSISSIPPI COUNTY, MISSOURI IN THE AMOUNT OF $94,921.26. / QUESTIONED COSTS / THE AMOUNT OF $94,921.26 IS BEING QUESTIONED, SINCE THE COST HAS PREVIOUSLY BEEN REPORTED AS A COST OF ANOTHER PROGRAM. / PERSPECTIVE / THE FINDING IS AN ISOLATED INSTANCE, IN THAT THE QUESTIONED COSTS PERTAINED TO A SINGLE INVOICE. / PRIOR FINDING / THE CITY DID NOT HAVE A SINGLE AUDIT IN THE PRIOR YEAR, AND THEREFORE PRIOR AUDIT FINDINGS DO NOT APPLY TO THIS MATTER. / RECOMMENDATIONS / I WOULD RECOMMEND CONTACTING THE MISSOURI DEPARTMENT OF ELEMENTARY AND SECONDARY EDUCATION AND MISSISSIPPI COUNTY, MISSOURI, AND ADVISE THEM OF THE QUESTIONED COSTS. I WOULD RECOMMEND FILING AMENDED REPORTS AS NEEDED. ALSO, I WOULD RECOMMEND REQUESTING THAT OTHER ELIGIBLE COSTS BE SUBSTITUTED FOR THE REIMBURSEMENT. I WOULD ALSO RECOMMEND THAT THE CITY ADMINISTRATIVE STAFF FULLY REVIEW THE ADMINISTRATIVE AND COST STANDARDS CONTAINED IN UNIFORM GUIDANCE. FURTHER, THE CITY SHOULD CONSULT WITH AN OUTSIDE PROFESSIONAL AS NEEDED. / MANAGEMENT RESPONSE / MANAGEMENT AGREES WITH THE FINDING. MANAGEMENT WILL CONTACT THE GRANTOR AGENCIES TO RESOLVE THE MATTER AS QUICKLY AS POSSIBLE. FURTHER, THE ADMINISTRATIVE STAFF WILL RECEIVE TRAINING IN REGARDS TO THE ADMINISTRATIVE AND COST STANDARDS OF THE UNIFORM GUIDANCE. ALSO, OUTSIDE PROFESSIONALS WILL BE CONSULTED AS NEEDED.
INELIGIBLE COSTS / CRITERIA / UNIFORM GUIDANCE 2 CFR PART 200 UNIFORM ADMINSTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS, SUBPART E: COST PRINCIPLES SECTION 200.403(F) STATES "EXCEPT WHERE OTHERWISE AUTHORIZED BY STATUTE, COSTS MUST MEET THE FOLLOWING CRITERIA IN ORDER TO BE ALLOWABLE UNDER FEDERAL AWARDS: (F) NOT BE INCLUDED AS A COST OR USED TO MEET COST SHARING OR MATCHING REQUIREMENTS OF ANY OTHER FEDERALLY-FINANCED PROGRAM IN EITHER THE CURRENT OR PRIOR PERIOD. / CONDITION / ON MAY 11, 2022 THE CITY WAS AWARDED AN ARPA GRANT THROUGH MISSISSIPPI COUNTY, MISSOURI FOR THE DEMOLITION OF A HAZARDOUS SCHOOL STRUCTURE IN ORDER TO FACILITATE THE CONSTRUCTION OF A PUBLIC HEALTH FACILITY. COSTS OF DEMOLITION WERE SUBMITTED AND REIMBURSED BY THE MISSISSIPPI COUNTY, MISSOURI ARPA GRANT IN AUGUST AND SEPTEMBER 2022. ON DECEMBER 12, 2022, THE CITY WAS AWARDED AN ARPA GRANT THROUGH THE MISSOURI DEPARTMENT OF ELEMENTARY AND SECONDARY EDUCATION (DESE) FOR THE SAME PROJECT. THE GRANT REQUIRED A 50% MATCH. THE BUDGET SUBMITTED TO DESE INDICATED THAT THE GRANT FROM MISSISSIPPI COUNTY, MISSOURI WOULD BE USED AS A MATCH. ON DECEMBER 14, 2022, THE CITY SUBMITTED INVOICES TO DESE FOR REIMBURSEMENT IN THE AMOUNT OF $94,921.26. THE INVOICES SUBMITTED HAD PREVIOUSLY BEEN REIMBURSED BY THE MISSISSIPPI COUNTY ARPA GRANT. THUS, THE CLAIM FOR REIMBURSEMENT WAS DUPLICATED, AND THE CITY WAS REIMBURSED TWICE FOR THE SAME COSTS. / CAUSE / THE CITY RECEIVED A MISCOMMUNICATION REGARDING THE ELIGIBILITY OF COSTS. ALSO, THE CITY WAS NO FULLY AWARE OF THE COST STANDARDS CONTAINED IN UNIFORM GUIDANCE. / EFFECT / THE CITY HAS DUPLICATED THE REQUEST FOR REIMBURSEMENT OF COSTS SUBMITTED TO THE DEPARTMENT OF ELEMENTARY AND SECONDARY EDUCATION AND THE MISSISSIPPI COUNTY, MISSOURI IN THE AMOUNT OF $94,921.26. / QUESTIONED COSTS / THE AMOUNT OF $94,921.26 IS BEING QUESTIONED, SINCE THE COST HAS PREVIOUSLY BEEN REPORTED AS A COST OF ANOTHER PROGRAM. / PERSPECTIVE / THE FINDING IS AN ISOLATED INSTANCE, IN THAT THE QUESTIONED COSTS PERTAINED TO A SINGLE INVOICE. / PRIOR FINDING / THE CITY DID NOT HAVE A SINGLE AUDIT IN THE PRIOR YEAR, AND THEREFORE PRIOR AUDIT FINDINGS DO NOT APPLY TO THIS MATTER. / RECOMMENDATIONS / I WOULD RECOMMEND CONTACTING THE MISSOURI DEPARTMENT OF ELEMENTARY AND SECONDARY EDUCATION AND MISSISSIPPI COUNTY, MISSOURI, AND ADVISE THEM OF THE QUESTIONED COSTS. I WOULD RECOMMEND FILING AMENDED REPORTS AS NEEDED. ALSO, I WOULD RECOMMEND REQUESTING THAT OTHER ELIGIBLE COSTS BE SUBSTITUTED FOR THE REIMBURSEMENT. I WOULD ALSO RECOMMEND THAT THE CITY ADMINISTRATIVE STAFF FULLY REVIEW THE ADMINISTRATIVE AND COST STANDARDS CONTAINED IN UNIFORM GUIDANCE. FURTHER, THE CITY SHOULD CONSULT WITH AN OUTSIDE PROFESSIONAL AS NEEDED. / MANAGEMENT RESPONSE / MANAGEMENT AGREES WITH THE FINDING. MANAGEMENT WILL CONTACT THE GRANTOR AGENCIES TO RESOLVE THE MATTER AS QUICKLY AS POSSIBLE. FURTHER, THE ADMINISTRATIVE STAFF WILL RECEIVE TRAINING IN REGARDS TO THE ADMINISTRATIVE AND COST STANDARDS OF THE UNIFORM GUIDANCE. ALSO, OUTSIDE PROFESSIONALS WILL BE CONSULTED AS NEEDED.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: COVID-19 Vaccines Community-Based Education & Outreach (IVAX) Assistance Listing Number: 93.268 Pass-Through Entity: Illinois Primary Health Care Association Pass-Through Number: N/A Award Periods: July 1, 2022 – March 31, 2023 Type of Finding: Immaterial Noncompliance and Significant deficiency in internal control over compliance Criteria: A non-Federal entity that does not have a current negotiated indirect cost rate, may elect to charge a de minimis rate of 10% of modified total direct costs (MTDC) which may be used indefinitely. No documentation is required to justify the 10% de minimis indirect cost rate. As described in § 200.403, costs must be consistently charged as either indirect or direct costs, but may not be double charged or inconsistently charged as both. If chosen, this methodology once elected must be used consistently for all Federal awards until such time as a non-Federal entity chooses to negotiate for a rate, which the non-Federal entity may apply to do at any time. Condition: Legacy incorrectly calculated the reimbursement of in-direct costs when using the de minimis rate of 10%. Questioned Costs: $3,404. Context: Three (3) of three (3) in-direct cost transactions selected for testing. Cause: Unknown. Effect: Calculating indirect costs incorrectly could result in unallowable costs being charged to the grant. Repeat Finding: No. Recommendation: We recommend that a member of management review the monthly calculation of indirect costs to ensure it is calculated correctly. Views of Responsible Officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: COVID-19 Vaccines Community-Based Education & Outreach (IVAX) Assistance Listing Number: 93.268 Pass-Through Entity: Illinois Primary Health Care Association Pass-Through Number: N/A Award Periods: July 1, 2022 – March 31, 2023 Type of Finding: Immaterial Noncompliance and Significant deficiency in internal control 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)). A period of performance may contain one or more budget periods. Condition: Costs outside of the period of performance were charged to the grant. Questioned Costs: $4,279 Context: Four (4) of seven (7) transactions tested. Cause: Unknown Effect: Legacy may allocate unallowable costs to the federal grant. Repeat Finding: Yes. Prior Year Finding: 2022-004. Recommendation: We recommend that only costs incurred during the period of performance be charged to the grant. For payroll in which periods extend over multiple budget periods, we recommend prorating the amount charged to the grant by days worked within the grant period. Views of Responsible Officials: There is no disagreement with the audit finding.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 66.458, Environmental Protection Agency. Capitalization Grants for Clean Water State Revolving Funds Federal Award Identification Number and Year: 5749-01, Loan Period 06/18/2022-11/15/2024 Pass-through Entity: Michigan Department of Environment, Great Lakes, and Energy Finance Division - Water Infrastructure Financing Section Type: Material weakness in internal control and material noncompliance with laws and regulations Repeat Finding: No Criteria: As a precondition to receive federal awards, prospective recipients must have effective internal controls over the federal award. As described in 2 CFR, Part 200.303, nonfederal entities must have certain written policies and procedures surrounding the management of their federal awards. Such policies should include procedures for collecting payments of federal funds per 2 CRF 200.305, cash management (i.e., minimizing the time between draws and actual disbursing of federal awards) per 2 CFR 200.302(b)(6), allowable cost per 2 CFR 200.403, and conflict of interest per 2 CFR 200.318. Per 2 CFR 200.319 (d), the non-Federal entity must have written procedures for procurement transactions. Condition: The Township did not have written procedures for cash management, allowable cost or conflict of interest. In addition, the Township procurement policy did not include all necessary items specified in the Uniform Guidance. Identification of How Likely Questioned Costs Were Computed: N/A Known Questioned Costs: None Context: N/A Cause/Effect: The Township was not aware that they were required to have written policies and procedures for the items noted above and was using the grant agreement requirements for guidelines. The Township's controls were not adequate to ensure it followed the federal requirement over these processes. Recommendation: We recommend the Township adopt written policies and procedures over cash management, allowable costs, and conflicts of interest. In addition, we recommend that management review and modify the procedure policy to include all the necessary items outline in the Uniform Guidance. View of responsible officials and planned corrective action plan: See attached corrective action plan.
INELIGIBLE COSTS / CRITERIA / UNIFORM GUIDANCE 2 CFR PART 200 UNIFORM ADMINSTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS, SUBPART E: COST PRINCIPLES SECTION 200.403(F) STATES "EXCEPT WHERE OTHERWISE AUTHORIZED BY STATUTE, COSTS MUST MEET THE FOLLOWING CRITERIA IN ORDER TO BE ALLOWABLE UNDER FEDERAL AWARDS: (F) NOT BE INCLUDED AS A COST OR USED TO MEET COST SHARING OR MATCHING REQUIREMENTS OF ANY OTHER FEDERALLY-FINANCED PROGRAM IN EITHER THE CURRENT OR PRIOR PERIOD. / CONDITION / ON MAY 11, 2022 THE CITY WAS AWARDED AN ARPA GRANT THROUGH MISSISSIPPI COUNTY, MISSOURI FOR THE DEMOLITION OF A HAZARDOUS SCHOOL STRUCTURE IN ORDER TO FACILITATE THE CONSTRUCTION OF A PUBLIC HEALTH FACILITY. COSTS OF DEMOLITION WERE SUBMITTED AND REIMBURSED BY THE MISSISSIPPI COUNTY, MISSOURI ARPA GRANT IN AUGUST AND SEPTEMBER 2022. ON DECEMBER 12, 2022, THE CITY WAS AWARDED AN ARPA GRANT THROUGH THE MISSOURI DEPARTMENT OF ELEMENTARY AND SECONDARY EDUCATION (DESE) FOR THE SAME PROJECT. THE GRANT REQUIRED A 50% MATCH. THE BUDGET SUBMITTED TO DESE INDICATED THAT THE GRANT FROM MISSISSIPPI COUNTY, MISSOURI WOULD BE USED AS A MATCH. ON DECEMBER 14, 2022, THE CITY SUBMITTED INVOICES TO DESE FOR REIMBURSEMENT IN THE AMOUNT OF $94,921.26. THE INVOICES SUBMITTED HAD PREVIOUSLY BEEN REIMBURSED BY THE MISSISSIPPI COUNTY ARPA GRANT. THUS, THE CLAIM FOR REIMBURSEMENT WAS DUPLICATED, AND THE CITY WAS REIMBURSED TWICE FOR THE SAME COSTS. / CAUSE / THE CITY RECEIVED A MISCOMMUNICATION REGARDING THE ELIGIBILITY OF COSTS. ALSO, THE CITY WAS NO FULLY AWARE OF THE COST STANDARDS CONTAINED IN UNIFORM GUIDANCE. / EFFECT / THE CITY HAS DUPLICATED THE REQUEST FOR REIMBURSEMENT OF COSTS SUBMITTED TO THE DEPARTMENT OF ELEMENTARY AND SECONDARY EDUCATION AND THE MISSISSIPPI COUNTY, MISSOURI IN THE AMOUNT OF $94,921.26. / QUESTIONED COSTS / THE AMOUNT OF $94,921.26 IS BEING QUESTIONED, SINCE THE COST HAS PREVIOUSLY BEEN REPORTED AS A COST OF ANOTHER PROGRAM. / PERSPECTIVE / THE FINDING IS AN ISOLATED INSTANCE, IN THAT THE QUESTIONED COSTS PERTAINED TO A SINGLE INVOICE. / PRIOR FINDING / THE CITY DID NOT HAVE A SINGLE AUDIT IN THE PRIOR YEAR, AND THEREFORE PRIOR AUDIT FINDINGS DO NOT APPLY TO THIS MATTER. / RECOMMENDATIONS / I WOULD RECOMMEND CONTACTING THE MISSOURI DEPARTMENT OF ELEMENTARY AND SECONDARY EDUCATION AND MISSISSIPPI COUNTY, MISSOURI, AND ADVISE THEM OF THE QUESTIONED COSTS. I WOULD RECOMMEND FILING AMENDED REPORTS AS NEEDED. ALSO, I WOULD RECOMMEND REQUESTING THAT OTHER ELIGIBLE COSTS BE SUBSTITUTED FOR THE REIMBURSEMENT. I WOULD ALSO RECOMMEND THAT THE CITY ADMINISTRATIVE STAFF FULLY REVIEW THE ADMINISTRATIVE AND COST STANDARDS CONTAINED IN UNIFORM GUIDANCE. FURTHER, THE CITY SHOULD CONSULT WITH AN OUTSIDE PROFESSIONAL AS NEEDED. / MANAGEMENT RESPONSE / MANAGEMENT AGREES WITH THE FINDING. MANAGEMENT WILL CONTACT THE GRANTOR AGENCIES TO RESOLVE THE MATTER AS QUICKLY AS POSSIBLE. FURTHER, THE ADMINISTRATIVE STAFF WILL RECEIVE TRAINING IN REGARDS TO THE ADMINISTRATIVE AND COST STANDARDS OF THE UNIFORM GUIDANCE. ALSO, OUTSIDE PROFESSIONALS WILL BE CONSULTED AS NEEDED.
INELIGIBLE COSTS / CRITERIA / UNIFORM GUIDANCE 2 CFR PART 200 UNIFORM ADMINSTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS, SUBPART E: COST PRINCIPLES SECTION 200.403(F) STATES "EXCEPT WHERE OTHERWISE AUTHORIZED BY STATUTE, COSTS MUST MEET THE FOLLOWING CRITERIA IN ORDER TO BE ALLOWABLE UNDER FEDERAL AWARDS: (F) NOT BE INCLUDED AS A COST OR USED TO MEET COST SHARING OR MATCHING REQUIREMENTS OF ANY OTHER FEDERALLY-FINANCED PROGRAM IN EITHER THE CURRENT OR PRIOR PERIOD. / CONDITION / ON MAY 11, 2022 THE CITY WAS AWARDED AN ARPA GRANT THROUGH MISSISSIPPI COUNTY, MISSOURI FOR THE DEMOLITION OF A HAZARDOUS SCHOOL STRUCTURE IN ORDER TO FACILITATE THE CONSTRUCTION OF A PUBLIC HEALTH FACILITY. COSTS OF DEMOLITION WERE SUBMITTED AND REIMBURSED BY THE MISSISSIPPI COUNTY, MISSOURI ARPA GRANT IN AUGUST AND SEPTEMBER 2022. ON DECEMBER 12, 2022, THE CITY WAS AWARDED AN ARPA GRANT THROUGH THE MISSOURI DEPARTMENT OF ELEMENTARY AND SECONDARY EDUCATION (DESE) FOR THE SAME PROJECT. THE GRANT REQUIRED A 50% MATCH. THE BUDGET SUBMITTED TO DESE INDICATED THAT THE GRANT FROM MISSISSIPPI COUNTY, MISSOURI WOULD BE USED AS A MATCH. ON DECEMBER 14, 2022, THE CITY SUBMITTED INVOICES TO DESE FOR REIMBURSEMENT IN THE AMOUNT OF $94,921.26. THE INVOICES SUBMITTED HAD PREVIOUSLY BEEN REIMBURSED BY THE MISSISSIPPI COUNTY ARPA GRANT. THUS, THE CLAIM FOR REIMBURSEMENT WAS DUPLICATED, AND THE CITY WAS REIMBURSED TWICE FOR THE SAME COSTS. / CAUSE / THE CITY RECEIVED A MISCOMMUNICATION REGARDING THE ELIGIBILITY OF COSTS. ALSO, THE CITY WAS NO FULLY AWARE OF THE COST STANDARDS CONTAINED IN UNIFORM GUIDANCE. / EFFECT / THE CITY HAS DUPLICATED THE REQUEST FOR REIMBURSEMENT OF COSTS SUBMITTED TO THE DEPARTMENT OF ELEMENTARY AND SECONDARY EDUCATION AND THE MISSISSIPPI COUNTY, MISSOURI IN THE AMOUNT OF $94,921.26. / QUESTIONED COSTS / THE AMOUNT OF $94,921.26 IS BEING QUESTIONED, SINCE THE COST HAS PREVIOUSLY BEEN REPORTED AS A COST OF ANOTHER PROGRAM. / PERSPECTIVE / THE FINDING IS AN ISOLATED INSTANCE, IN THAT THE QUESTIONED COSTS PERTAINED TO A SINGLE INVOICE. / PRIOR FINDING / THE CITY DID NOT HAVE A SINGLE AUDIT IN THE PRIOR YEAR, AND THEREFORE PRIOR AUDIT FINDINGS DO NOT APPLY TO THIS MATTER. / RECOMMENDATIONS / I WOULD RECOMMEND CONTACTING THE MISSOURI DEPARTMENT OF ELEMENTARY AND SECONDARY EDUCATION AND MISSISSIPPI COUNTY, MISSOURI, AND ADVISE THEM OF THE QUESTIONED COSTS. I WOULD RECOMMEND FILING AMENDED REPORTS AS NEEDED. ALSO, I WOULD RECOMMEND REQUESTING THAT OTHER ELIGIBLE COSTS BE SUBSTITUTED FOR THE REIMBURSEMENT. I WOULD ALSO RECOMMEND THAT THE CITY ADMINISTRATIVE STAFF FULLY REVIEW THE ADMINISTRATIVE AND COST STANDARDS CONTAINED IN UNIFORM GUIDANCE. FURTHER, THE CITY SHOULD CONSULT WITH AN OUTSIDE PROFESSIONAL AS NEEDED. / MANAGEMENT RESPONSE / MANAGEMENT AGREES WITH THE FINDING. MANAGEMENT WILL CONTACT THE GRANTOR AGENCIES TO RESOLVE THE MATTER AS QUICKLY AS POSSIBLE. FURTHER, THE ADMINISTRATIVE STAFF WILL RECEIVE TRAINING IN REGARDS TO THE ADMINISTRATIVE AND COST STANDARDS OF THE UNIFORM GUIDANCE. ALSO, OUTSIDE PROFESSIONALS WILL BE CONSULTED AS NEEDED.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: COVID-19 Vaccines Community-Based Education & Outreach (IVAX) Assistance Listing Number: 93.268 Pass-Through Entity: Illinois Primary Health Care Association Pass-Through Number: N/A Award Periods: July 1, 2022 – March 31, 2023 Type of Finding: Immaterial Noncompliance and Significant deficiency in internal control over compliance Criteria: A non-Federal entity that does not have a current negotiated indirect cost rate, may elect to charge a de minimis rate of 10% of modified total direct costs (MTDC) which may be used indefinitely. No documentation is required to justify the 10% de minimis indirect cost rate. As described in § 200.403, costs must be consistently charged as either indirect or direct costs, but may not be double charged or inconsistently charged as both. If chosen, this methodology once elected must be used consistently for all Federal awards until such time as a non-Federal entity chooses to negotiate for a rate, which the non-Federal entity may apply to do at any time. Condition: Legacy incorrectly calculated the reimbursement of in-direct costs when using the de minimis rate of 10%. Questioned Costs: $3,404. Context: Three (3) of three (3) in-direct cost transactions selected for testing. Cause: Unknown. Effect: Calculating indirect costs incorrectly could result in unallowable costs being charged to the grant. Repeat Finding: No. Recommendation: We recommend that a member of management review the monthly calculation of indirect costs to ensure it is calculated correctly. Views of Responsible Officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: COVID-19 Vaccines Community-Based Education & Outreach (IVAX) Assistance Listing Number: 93.268 Pass-Through Entity: Illinois Primary Health Care Association Pass-Through Number: N/A Award Periods: July 1, 2022 – March 31, 2023 Type of Finding: Immaterial Noncompliance and Significant deficiency in internal control 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)). A period of performance may contain one or more budget periods. Condition: Costs outside of the period of performance were charged to the grant. Questioned Costs: $4,279 Context: Four (4) of seven (7) transactions tested. Cause: Unknown Effect: Legacy may allocate unallowable costs to the federal grant. Repeat Finding: Yes. Prior Year Finding: 2022-004. Recommendation: We recommend that only costs incurred during the period of performance be charged to the grant. For payroll in which periods extend over multiple budget periods, we recommend prorating the amount charged to the grant by days worked within the grant period. Views of Responsible Officials: There is no disagreement with the audit finding.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 66.458, Environmental Protection Agency. Capitalization Grants for Clean Water State Revolving Funds Federal Award Identification Number and Year: 5749-01, Loan Period 06/18/2022-11/15/2024 Pass-through Entity: Michigan Department of Environment, Great Lakes, and Energy Finance Division - Water Infrastructure Financing Section Type: Material weakness in internal control and material noncompliance with laws and regulations Repeat Finding: No Criteria: As a precondition to receive federal awards, prospective recipients must have effective internal controls over the federal award. As described in 2 CFR, Part 200.303, nonfederal entities must have certain written policies and procedures surrounding the management of their federal awards. Such policies should include procedures for collecting payments of federal funds per 2 CRF 200.305, cash management (i.e., minimizing the time between draws and actual disbursing of federal awards) per 2 CFR 200.302(b)(6), allowable cost per 2 CFR 200.403, and conflict of interest per 2 CFR 200.318. Per 2 CFR 200.319 (d), the non-Federal entity must have written procedures for procurement transactions. Condition: The Township did not have written procedures for cash management, allowable cost or conflict of interest. In addition, the Township procurement policy did not include all necessary items specified in the Uniform Guidance. Identification of How Likely Questioned Costs Were Computed: N/A Known Questioned Costs: None Context: N/A Cause/Effect: The Township was not aware that they were required to have written policies and procedures for the items noted above and was using the grant agreement requirements for guidelines. The Township's controls were not adequate to ensure it followed the federal requirement over these processes. Recommendation: We recommend the Township adopt written policies and procedures over cash management, allowable costs, and conflicts of interest. In addition, we recommend that management review and modify the procedure policy to include all the necessary items outline in the Uniform Guidance. View of responsible officials and planned corrective action plan: See attached corrective action plan.
Criteria: 2 CFR 200.403 (g) requires adequate documentation to be retained to support allowable activities/costs. Condition and Context: We selected a sample of 20 different payroll entries related to time allocated to the Housing Choice Voucher program and requested supporting documentation for costs allocated to the grant. Our sample was not statistically valid. We reviewed payroll summary reports and paycheck detail to various programs, but noted that there were no timecards available for review or approval for any selection. It was noted that the payroll administrator was reviewing and approving the timecards, rather than a direct supervisor over the Section 8 program. Additionally, management indicated that timecards and payroll reports were not universally available due to system limitations and employee turnover. Cause and Effect: As described in 2022-001 and 2022-003, the Agency has not maintained appropriate internal controls over compliance. Lack of appropriate supervisory review and approval, along with managements review of record retention resulted in the noncompliance. Recommendation: We recommend the review and approval of timecards be completed by a direct supervisor, that payroll records be regularly reviewed against timecards, and all supporting documentation for program costs be retained internally. Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date
Criteria: 2 CFR 200.403 (g) requires adequate documentation to be retained to support allowable activities/costs. Condition and Context: During our testing of expenditures obligated during the year, we were made aware of the fact that management had invertedly duplicated a draw of funds totaling $303,024.92. This error was not discovered until several months after the fact. Cause and Effect: As described in 2022-001 and 2022-003, the Agency has not maintained appropriate internal controls over compliance. Lack of appropriate supervisory review and approval, along with managements review of record retention resulted in the noncompliance. Recommendation: See finding 2022-001, specifically the recommendation relating to appropriate oversight in the finance department. We recommend that the finance department continue to hire and train its employees on various programmatic requirements and resources, to ensure compliance with both existing and new federal compliance requirements. Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.
Criteria: 2 CFR 200.403 (g) requires adequate documentation to be retained to support allowable activities/costs. Condition and Context: We selected a sample of 12 different program related disbursement and requested supporting documentation for costs allocated to the grant. Our sample was not statistically valid. We reviewed invoice and payment detail to for each selection, but noted that there were no POs available for review or approval for any selection. Cause and Effect: As described in 2022-001 and 2022-003, the Agency has not maintained appropriate internal controls over compliance. Lack of appropriate supervisory review and approval, along with managements review of record retention resulted in the noncompliance. Recommendation: See finding 2022-001, specifically the recommendation relating to appropriate oversight in the finance department. We recommend that the finance department continue to hire and train its employees on various programmatic requirements and resources, to ensure compliance with both existing and new federal compliance requirements. Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.
Criteria: 2 CFR 200.403 (g) requires adequate documentation to be retained to support allowable activities/costs. Condition and Context: We selected a sample of 20 different payroll entries related to time allocated to the Housing Choice Voucher program and requested supporting documentation for costs allocated to the grant. Our sample was not statistically valid. We reviewed payroll summary reports and paycheck detail to various programs, but noted that there were no timecards available for review or approval for any selection. It was noted that the payroll administrator was reviewing and approving the timecards, rather than a direct supervisor over the Section 8 program. Additionally, management indicated that timecards and payroll reports were not universally available due to system limitations and employee turnover. Cause and Effect: As described in 2022-001 and 2022-003, the Agency has not maintained appropriate internal controls over compliance. Lack of appropriate supervisory review and approval, along with managements review of record retention resulted in the noncompliance. Recommendation: We recommend the review and approval of timecards be completed by a direct supervisor, that payroll records be regularly reviewed against timecards, and all supporting documentation for program costs be retained internally. Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date
2 C.F.R. § 1000.10 gives regulatory effect to the Department of the Treasurer for 2 C.F.R. § 200.403(a), which requires that costs be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. 2 C.F.R. § 200.403(c) documents that costs must be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. The County paid stipends to various employees under the “premium pay” provisions of the State and Local Fiscal Recovery Funds (SLFRF) grant, Assistance Listing (AL) #21.027. This included reimbursements of $57,000 to the Coshocton County Job and Family Services (CCJFS). The CCJFS originally reported the premium pay stipends against various indirect cost pools which were allocated to various Federal and State grants. The reimbursement was not coded against the same cost pools which resulted in the County charging the SLFRF grant and various other Federal grants for the same cost. This error was brought to the attention of the County and the CCJFS subsequently posted adjustments in 2023 to correct this error. The County should more closely monitor the reporting of coding and reporting of expenditures against grant resources. Departments should work together to ensure that only one Federal grant is being charged when multiple grants could cover the costs. This will help improve internal controls to ensure that expenditures are accurately reported and are paid from one Federal revenue source, reducing the risk of questioned costs arising.
Sections 2 CFR 200.308, 200.309, and 200.403(h) state that 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. Recipients of State and Local Fiscal Recovery Funds (SLFRF) may only use funds to cover costs incurred during the period beginning on March 3, 2021 and ending on December 31, 2024 per section 602(g)(1) of the Social Security Act as added by section 9901 of the American Rescue Plan Act of 2021, Pub. L. No. 117-2 and Treasury’s Interim Final Rule at 31 C.F.R. § 35.5(a). The County used SLFRF funds to reimburse expenditures that were incurred prior to March 3, 2021. The County identified replacement expenditures within the period of availability which were allowable. The County should implement the appropriate procedures to ensure that only allowable expenditures incurred within the period of performance are used for reimbursement with Federal funds.
Assistance Listing Number: 93.958 Name of Federal Program: Block Grants for Community Mental Health Services Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities and Award Periods: Wisconsin Department of Health Services – October 1, 2021 through September 30, 2022, April 1, 2022 through September 30, 2022, October 1, 2022 through September 30, 2023, Milwaukee County Behavioral Health Division – January 1, 2022 through December 31, 2022, and Milwaukee County Department of Health Services – January 1, 2022 through December 31, 2022 Criteria or Specific Requirement: The Code of Federal Regulations Section 200 subpart E outlines the allowability of cost provisions. Specifically, 2 CFR 200.403(e) states that costs should be determined in accordance with generally accepted accounting principles. Condition: A prepayment for a 2023 training conference was recorded as an expense of the current period and reimbursed from a grant in the federal program. Cause: The recording of this transaction as an expense instead of a prepaid expense was because the transaction was not properly reviewed and approved. Effect or Potential Effect: An expense charged to the federal program could be disallowed. Context: This appears to be an isolated incident that was identified during other audit procedures. During our testing of for allowability of costs, we selected a sample of 40 expense transactions and 4 payrolls and did not identify any additional questioned costs. Repeat Finding: No Recommendation: Expenses should be reviewed and approved by an individual with sufficient knowledge of requirements for allowability before recording in the accounting records. Views of Responsible Officials: Management agrees with the finding and will have staff attend additional training.
Assistance Listing Number: 93.958 Name of Federal Program: Block Grants for Community Mental Health Services Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities and Award Periods: Wisconsin Department of Health Services – October 1, 2021 through September 30, 2022, April 1, 2022 through September 30, 2022, October 1, 2022 through September 30, 2023, Milwaukee County Behavioral Health Division – January 1, 2022 through December 31, 2022, and Milwaukee County Department of Health Services – January 1, 2022 through December 31, 2022 Criteria or Specific Requirement: The Code of Federal Regulations Section 200 subpart E outlines the allowability of cost provisions. Specifically, 2 CFR 200.403(e) states that costs should be determined in accordance with generally accepted accounting principles. Condition: A prepayment for a 2023 training conference was recorded as an expense of the current period and reimbursed from a grant in the federal program. Cause: The recording of this transaction as an expense instead of a prepaid expense was because the transaction was not properly reviewed and approved. Effect or Potential Effect: An expense charged to the federal program could be disallowed. Context: This appears to be an isolated incident that was identified during other audit procedures. During our testing of for allowability of costs, we selected a sample of 40 expense transactions and 4 payrolls and did not identify any additional questioned costs. Repeat Finding: No Recommendation: Expenses should be reviewed and approved by an individual with sufficient knowledge of requirements for allowability before recording in the accounting records. Views of Responsible Officials: Management agrees with the finding and will have staff attend additional training.
Assistance Listing Number: 93.958 Name of Federal Program: Block Grants for Community Mental Health Services Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities and Award Periods: Wisconsin Department of Health Services – October 1, 2021 through September 30, 2022, April 1, 2022 through September 30, 2022, October 1, 2022 through September 30, 2023, Milwaukee County Behavioral Health Division – January 1, 2022 through December 31, 2022, and Milwaukee County Department of Health Services – January 1, 2022 through December 31, 2022 Criteria or Specific Requirement: The Code of Federal Regulations Section 200 subpart E outlines the allowability of cost provisions. Specifically, 2 CFR 200.403(e) states that costs should be determined in accordance with generally accepted accounting principles. Condition: A prepayment for a 2023 training conference was recorded as an expense of the current period and reimbursed from a grant in the federal program. Cause: The recording of this transaction as an expense instead of a prepaid expense was because the transaction was not properly reviewed and approved. Effect or Potential Effect: An expense charged to the federal program could be disallowed. Context: This appears to be an isolated incident that was identified during other audit procedures. During our testing of for allowability of costs, we selected a sample of 40 expense transactions and 4 payrolls and did not identify any additional questioned costs. Repeat Finding: No Recommendation: Expenses should be reviewed and approved by an individual with sufficient knowledge of requirements for allowability before recording in the accounting records. Views of Responsible Officials: Management agrees with the finding and will have staff attend additional training.
Assistance Listing Number: 93.958 Name of Federal Program: Block Grants for Community Mental Health Services Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities and Award Periods: Wisconsin Department of Health Services – October 1, 2021 through September 30, 2022, April 1, 2022 through September 30, 2022, October 1, 2022 through September 30, 2023, Milwaukee County Behavioral Health Division – January 1, 2022 through December 31, 2022, and Milwaukee County Department of Health Services – January 1, 2022 through December 31, 2022 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)). Condition: During our testing of reimbursement requests, we identified an invoice that included expenses outside the period of performance for a grant in the federal program. Cause: Sufficient internal controls for reimbursement requests have not been implemented to ensure costs included for reimbursement are within the period of performance. Effect or Potential Effect: An expense charged to the federal program could be disallowed. Questioned Costs: $48,728. Context: This appeared to be an isolated incident from one grant invoice that was tested during audit procedures performed on financial statement account balances. For testing period of performance requirements, we selected a sample of 20 expense transactions and did not identify any expenses charged to grants outside the period of performance. Repeat Finding: No Recommendation: Additional internal controls for reimbursement requests should be implemented, including having another individual outside the process review and approve reimbursement requests prior to submission or require detailed accounting expense transactions be included with reimbursement requests to ensure expenses have been incurred within the period of performance. Views of Responsible Officials: Management agrees with the finding and the Organization and outsourced accounting rep will meet monthly to review cost reports and correlating invoices together before approving and submitting to the funder to ensure expenses submitted are within the grant performance period.
Assistance Listing Number: 93.958 Name of Federal Program: Block Grants for Community Mental Health Services Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities and Award Periods: Wisconsin Department of Health Services – October 1, 2021 through September 30, 2022, April 1, 2022 through September 30, 2022, October 1, 2022 through September 30, 2023, Milwaukee County Behavioral Health Division – January 1, 2022 through December 31, 2022, and Milwaukee County Department of Health Services – January 1, 2022 through December 31, 2022 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)). Condition: During our testing of reimbursement requests, we identified an invoice that included expenses outside the period of performance for a grant in the federal program. Cause: Sufficient internal controls for reimbursement requests have not been implemented to ensure costs included for reimbursement are within the period of performance. Effect or Potential Effect: An expense charged to the federal program could be disallowed. Questioned Costs: $48,728. Context: This appeared to be an isolated incident from one grant invoice that was tested during audit procedures performed on financial statement account balances. For testing period of performance requirements, we selected a sample of 20 expense transactions and did not identify any expenses charged to grants outside the period of performance. Repeat Finding: No Recommendation: Additional internal controls for reimbursement requests should be implemented, including having another individual outside the process review and approve reimbursement requests prior to submission or require detailed accounting expense transactions be included with reimbursement requests to ensure expenses have been incurred within the period of performance. Views of Responsible Officials: Management agrees with the finding and the Organization and outsourced accounting rep will meet monthly to review cost reports and correlating invoices together before approving and submitting to the funder to ensure expenses submitted are within the grant performance period.
Assistance Listing Number: 93.958 Name of Federal Program: Block Grants for Community Mental Health Services Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities and Award Periods: Wisconsin Department of Health Services – October 1, 2021 through September 30, 2022, April 1, 2022 through September 30, 2022, October 1, 2022 through September 30, 2023, Milwaukee County Behavioral Health Division – January 1, 2022 through December 31, 2022, and Milwaukee County Department of Health Services – January 1, 2022 through December 31, 2022 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)). Condition: During our testing of reimbursement requests, we identified an invoice that included expenses outside the period of performance for a grant in the federal program. Cause: Sufficient internal controls for reimbursement requests have not been implemented to ensure costs included for reimbursement are within the period of performance. Effect or Potential Effect: An expense charged to the federal program could be disallowed. Questioned Costs: $48,728. Context: This appeared to be an isolated incident from one grant invoice that was tested during audit procedures performed on financial statement account balances. For testing period of performance requirements, we selected a sample of 20 expense transactions and did not identify any expenses charged to grants outside the period of performance. Repeat Finding: No Recommendation: Additional internal controls for reimbursement requests should be implemented, including having another individual outside the process review and approve reimbursement requests prior to submission or require detailed accounting expense transactions be included with reimbursement requests to ensure expenses have been incurred within the period of performance. Views of Responsible Officials: Management agrees with the finding and the Organization and outsourced accounting rep will meet monthly to review cost reports and correlating invoices together before approving and submitting to the funder to ensure expenses submitted are within the grant performance period.
Finding #: 2022-003 Period of Performance – Noncompliance (not material to compliance requirement) Identification of Federal Program and Award Program title: U.S. Department of Health and Human Services (DHHS): Public Health Services Act, Title III, Section 330 (Health Center Cluster) CFDA #: 93.224/93.527 Award #: H8DCS36483 Program Year: 2022 Criteria Pursuant to 2 CFR sections 200.308, 200.309, and 200.403(h), a non-Federal entity may charge to the Federal award 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. Pursuant to 2 CFR section 200.305(b)(5), to the extent available, the non-Federal entity must disburse funds available from program income and interest earned on such funds before requesting additional cash payments. Condition During our testing of period of performance, we noted instances of noncompliance relating to the health center’s recognition of expenditures beyond the award’s period of performance. After inspection of invoices and canceled checks supporting disbursements tested, the auditor identified 3 out of 40 expenditures where costs were incurred after the period of performance end date. Upon further investigation, the auditor determined that $153,005 of the $433,455 amount reported as 2022 federal expenditures under award H8DCS36483 was incurred beyond the period of performance end date. Cause Health center personnel were not following financial expense allocation of revenue policies and procedures, which state that federal funds will be utilized according to regulations and what is established on the budget information form submitted with the grant application. Effect Possibility of interest payments due, and of draw down restriction being placed on Payment Management System (PMS) account or denial of future funding. Questioned Costs $153,005 Perspective Information We tested a statistically valid sample of 40 out of 250+ federal expenditures and determined that the audit finding represented a systemic problem. Repeat Finding This finding is not a repeated finding. Recommendation We recommend that management review financial expense allocation of revenue policies and closely monitor grant procedures in place to ensure CAMcare is in compliance with budget information stipulated in grant agreements. Views of Responsible Officials Management recognizes the noncompliance; on November 29, 2023, CAMcare’s CEO, Jillian Hudspeth, and CFO, Christopher Bernardi, agreed with this finding, and explained that the issue occurred during a time period when none of the current authorizing officials were employed by CAMcare.
2 CFR § 300.1 states the Department of Health and Human Services adopts the Office of Management and Budget (OMB) Guidance in 2 CFR part 200, and has codified the text, with HHS-specific amendments in 45 CFR part 75. Thus, this part gives regulatory effect to the OMB guidance and supplements the guidance as needed for the Department. 2 CFR § 200.403 which states, in part, that except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented. The PRF and ARP Rural Distribution are administered by the Health Resources and Services Administration (HRSA) and support eligible health care providers in the battle against the COVID-19 pandemic. PRF provides relief funds to eligible providers of health care services and support for health care-related expenses or lost revenues attributable to coronavirus. ARP Rural Distribution addresses the disproportionate impact that COVID-19 has had on rural communities and rural health care providers. PRF and ARP Rural Distribution recipients must only use payments for eligible expenses. The recipient certifies that the payment will only be used to prevent, prepare for, and respond to coronavirus and COVID-19, and that the payment shall reimburse the recipient only for health care related expenses or lost revenues that are attributable to coronavirus and COVID-19. 2022 OBM Compliance Supplement, Part 4, 93.498. Reporting Entities are required to maintain adequate documentation to substantiate that the PRF funds were used for health care-related expenses or lost revenues that are attributable to coronavirus and COVID-19. See PRB Reporting and Auditing FAQ, Health Resources & Services Administration, https://www.hrsa.gov/provider-relief/faq/reporting?categories=210&keywords=. For 2022, five out of the twenty-five employees (20%) tested did not have adequate documentation to support the hours worked and paid to the employees for COV+10 and/or COV+7 pay. Logan County Logan Acres Care Center Department was unable to locate all of the pickup bonus forms for five of the employees. These forms indicate the day, number of hours, and type of bonus the employee was approved for and received. Therefore, $998 of the $6,882 of employee wages tested did not have supporting documentation, resulting in a projected error of $39,233 and a questioned cost. Failure to maintain and provide adequate detailed financial records to support payments made could result in unallowable federal grant expenditures, reimbursements to the grantor, and/or additional questioned costs issued in future audits. Logan County Logan Acres Care Center Department should implement policies and procedures to identify, gather, and verify that adequate supporting documentation is received, reviewed, and maintained prior to issuing payments of grant funds.
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.241 Program: Housing Opportunities for Persons with AIDS, COVID-19 Housing Opportunities for Persons with AIDS Award/Pass-Through Entity Identifying Numbers: 558951 Criteria: The Uniform Guidance in 2 CFR §200.403 states that for costs to be allowable under Federal awards, they must be adequately documented and there must be sufficient documentation. “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. See also §200.306(b). (g) Be adequately documented. See also §200.300 through §200.309. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to §200.308(e)(3).” Condition: The Village allocated expenditures to programs during 2022 based on a direct allocation methodology. This allocation is done manually, and the support was inconsistently maintained. During our testing of costs (excluding payroll and fringe benefits, see finding 2022-004), we noted in accordance with §200.403(g) that 12 of the 60 samples selected for testing within Housing Opportunities for Persons with AIDS, did not have sufficient support for the allocation of the costs, or the costs themselves. Cause: The Village did not have policies and procedures in place to ensure that sufficient documentation was maintained to support the allocation of costs. Effect or Potential Effect: Without adequate controls in place to ensure costs are allowable and reimbursable, including controls over review of allocation methodologies, the Village could incorrectly charge expenditures to the federal programs. Questioned Costs: Known Questioned Costs Housing Opportunities for Persons with AIDS: $6,830 Likely Questioned Costs Housing Opportunities for Persons with AIDS: $234,595 Context: This is a condition identified per review of the Village’s compliance with specified requirements not using a statistically valid sample. Nonpayroll costs for the Housing Opportunities for Persons with AIDS in 2022 were $1,173,061. Questioned costs consist of amounts lacking underlying support or amounts in excess of supported allocations. Identification as a Repeat Finding: This is a repeat of prior year finding 2021-008. Recommendation: We recommend that sufficient documentation be maintained to support any allocations of costs as required by §200.403. Views of Responsible Officials: Management agrees with this finding. Management is developing a cost allocation worksheet and implementing new procedures to ensure accurate expenditure reporting.
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.241 Program: Housing Opportunities for Persons with AIDS, COVID-19 Housing Opportunities for Persons with AIDS Award/Pass-Through Entity Identifying Numbers: 558951 Criteria: The Uniform Guidance in 2 CFR §200.403 states that for costs to be allowable under Federal awards, they must be adequately documented and there must be sufficient documentation. “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. See also §200.306(b). (g) Be adequately documented. See also §200.300 through §200.309. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to §200.308(e)(3).” Condition: The Village allocated expenditures to programs during 2022 based on a direct allocation methodology. This allocation is done manually, and the support was inconsistently maintained. During our testing of costs (excluding payroll and fringe benefits, see finding 2022-004), we noted in accordance with §200.403(g) that 12 of the 60 samples selected for testing within Housing Opportunities for Persons with AIDS, did not have sufficient support for the allocation of the costs, or the costs themselves. Cause: The Village did not have policies and procedures in place to ensure that sufficient documentation was maintained to support the allocation of costs. Effect or Potential Effect: Without adequate controls in place to ensure costs are allowable and reimbursable, including controls over review of allocation methodologies, the Village could incorrectly charge expenditures to the federal programs. Questioned Costs: Known Questioned Costs Housing Opportunities for Persons with AIDS: $6,830 Likely Questioned Costs Housing Opportunities for Persons with AIDS: $234,595 Context: This is a condition identified per review of the Village’s compliance with specified requirements not using a statistically valid sample. Nonpayroll costs for the Housing Opportunities for Persons with AIDS in 2022 were $1,173,061. Questioned costs consist of amounts lacking underlying support or amounts in excess of supported allocations. Identification as a Repeat Finding: This is a repeat of prior year finding 2021-008. Recommendation: We recommend that sufficient documentation be maintained to support any allocations of costs as required by §200.403. Views of Responsible Officials: Management agrees with this finding. Management is developing a cost allocation worksheet and implementing new procedures to ensure accurate expenditure reporting.
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.218, 14.231 Program: CDBG-Entitlement Grants Cluster, Emergency Solutions Grants Program, COVID-19 Emergency Solutions Grants Program Award/Pass-Through Entity Identifying Numbers: HHI-21-03, HHI-22-21, NCIP-FY20-010, HHI-21-35, HHI-20-21, 563770 Criteria: The Uniform Guidance in 2 CFR §200.403 states that for costs to be allowable under Federal awards, they must be adequately documented and there must be sufficient documentation. “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. See also §200.306(b). (g) Be adequately documented. See also §200.300 through §200.309. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to §200.308(e)(3).” Condition: During our testing of costs (excluding payroll and fringe benefits, see finding 2022-004), we noted in accordance with §200.403(g) that 10 of the 60 samples selected for testing within CDBG- Entitlement Grants Cluster, did not have sufficient support for their rationale regarding the allocation of the costs. For the Emergency Solutions Grants Program, 29 of the 60 samples selected for testing did not have sufficient support for their rationale regarding the allocation of the costs. Cause: The Village allocates many costs between individual grants and grant programs, without maintaining adequate support for the rationale behind the allocation of costs. Effect or Potential Effect: Without adequate support for the rationale behind cost allocations, the Village cannot adequately document that costs are fairly charged between individual grants and grant programs. The Village could charge expenses to federal programs that are not based on the programs usage. Questioned Costs: Known Questioned Costs CDBG-Entitlement Grants Cluster: None above the $25,000 reporting threshold. Likely Questioned Costs CDBG-Entitlement Grants Cluster: None above the $25,000 reporting threshold. Known Questioned Costs Emergency Solutions Grants Program: $6,232 Likely Questioned Costs Emergency Solutions Grants Program: $38,701 Context: This is a condition identified per review of the Village’s compliance with specified requirements not using a statistically valid sample. Nonpayroll costs for the CDBG-Entitlement Grants Cluster in 2022 were $444,085 with known questioned costs of $7,732 and likely questioned costs of $20,400. Nonpayroll costs for the Emergency Solutions Grants Program in 2022 were $1,854,771. Questioned costs consist of amounts lacking underlying support or amounts in excess of supported allocations. Identification as a Repeat Finding: This is a repeat of prior year finding 2021-008. Recommendation: We recommend that the Village carefully document the rationale or justification for cost allocations. Views of Responsible Officials: Management agrees with this finding. Management is developing a cost allocation worksheet, which will include documentation for the rationale or justification for cost allocations.
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.218, 14.231 Program: CDBG-Entitlement Grants Cluster, Emergency Solutions Grants Program, COVID-19 Emergency Solutions Grants Program Award/Pass-Through Entity Identifying Numbers: HHI-21-03, HHI-22-21, NCIP-FY20-010, HHI-21-35, HHI-20-21, 563770 Criteria: The Uniform Guidance in 2 CFR §200.403 states that for costs to be allowable under Federal awards, they must be adequately documented and there must be sufficient documentation. “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. See also §200.306(b). (g) Be adequately documented. See also §200.300 through §200.309. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to §200.308(e)(3).” Condition: During our testing of costs (excluding payroll and fringe benefits, see finding 2022-004), we noted in accordance with §200.403(g) that 10 of the 60 samples selected for testing within CDBG- Entitlement Grants Cluster, did not have sufficient support for their rationale regarding the allocation of the costs. For the Emergency Solutions Grants Program, 29 of the 60 samples selected for testing did not have sufficient support for their rationale regarding the allocation of the costs. Cause: The Village allocates many costs between individual grants and grant programs, without maintaining adequate support for the rationale behind the allocation of costs. Effect or Potential Effect: Without adequate support for the rationale behind cost allocations, the Village cannot adequately document that costs are fairly charged between individual grants and grant programs. The Village could charge expenses to federal programs that are not based on the programs usage. Questioned Costs: Known Questioned Costs CDBG-Entitlement Grants Cluster: None above the $25,000 reporting threshold. Likely Questioned Costs CDBG-Entitlement Grants Cluster: None above the $25,000 reporting threshold. Known Questioned Costs Emergency Solutions Grants Program: $6,232 Likely Questioned Costs Emergency Solutions Grants Program: $38,701 Context: This is a condition identified per review of the Village’s compliance with specified requirements not using a statistically valid sample. Nonpayroll costs for the CDBG-Entitlement Grants Cluster in 2022 were $444,085 with known questioned costs of $7,732 and likely questioned costs of $20,400. Nonpayroll costs for the Emergency Solutions Grants Program in 2022 were $1,854,771. Questioned costs consist of amounts lacking underlying support or amounts in excess of supported allocations. Identification as a Repeat Finding: This is a repeat of prior year finding 2021-008. Recommendation: We recommend that the Village carefully document the rationale or justification for cost allocations. Views of Responsible Officials: Management agrees with this finding. Management is developing a cost allocation worksheet, which will include documentation for the rationale or justification for cost allocations.
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.218, 14.231 Program: CDBG-Entitlement Grants Cluster, Emergency Solutions Grants Program, COVID-19 Emergency Solutions Grants Program Award/Pass-Through Entity Identifying Numbers: HHI-21-03, HHI-22-21, NCIP-FY20-010, HHI-21-35, HHI-20-21, 563770 Criteria: The Uniform Guidance in 2 CFR §200.403 states that for costs to be allowable under Federal awards, they must be adequately documented and there must be sufficient documentation. “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. See also §200.306(b). (g) Be adequately documented. See also §200.300 through §200.309. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to §200.308(e)(3).” Condition: During our testing of costs (excluding payroll and fringe benefits, see finding 2022-004), we noted in accordance with §200.403(g) that 10 of the 60 samples selected for testing within CDBG- Entitlement Grants Cluster, did not have sufficient support for their rationale regarding the allocation of the costs. For the Emergency Solutions Grants Program, 29 of the 60 samples selected for testing did not have sufficient support for their rationale regarding the allocation of the costs. Cause: The Village allocates many costs between individual grants and grant programs, without maintaining adequate support for the rationale behind the allocation of costs. Effect or Potential Effect: Without adequate support for the rationale behind cost allocations, the Village cannot adequately document that costs are fairly charged between individual grants and grant programs. The Village could charge expenses to federal programs that are not based on the programs usage. Questioned Costs: Known Questioned Costs CDBG-Entitlement Grants Cluster: None above the $25,000 reporting threshold. Likely Questioned Costs CDBG-Entitlement Grants Cluster: None above the $25,000 reporting threshold. Known Questioned Costs Emergency Solutions Grants Program: $6,232 Likely Questioned Costs Emergency Solutions Grants Program: $38,701 Context: This is a condition identified per review of the Village’s compliance with specified requirements not using a statistically valid sample. Nonpayroll costs for the CDBG-Entitlement Grants Cluster in 2022 were $444,085 with known questioned costs of $7,732 and likely questioned costs of $20,400. Nonpayroll costs for the Emergency Solutions Grants Program in 2022 were $1,854,771. Questioned costs consist of amounts lacking underlying support or amounts in excess of supported allocations. Identification as a Repeat Finding: This is a repeat of prior year finding 2021-008. Recommendation: We recommend that the Village carefully document the rationale or justification for cost allocations. Views of Responsible Officials: Management agrees with this finding. Management is developing a cost allocation worksheet, which will include documentation for the rationale or justification for cost allocations.
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.218, 14.231 Program: CDBG-Entitlement Grants Cluster, Emergency Solutions Grants Program, COVID-19 Emergency Solutions Grants Program Award/Pass-Through Entity Identifying Numbers: HHI-21-03, HHI-22-21, NCIP-FY20-010, HHI-21-35, HHI-20-21, 563770 Criteria: The Uniform Guidance in 2 CFR §200.403 states that for costs to be allowable under Federal awards, they must be adequately documented and there must be sufficient documentation. “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. See also §200.306(b). (g) Be adequately documented. See also §200.300 through §200.309. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to §200.308(e)(3).” Condition: During our testing of costs (excluding payroll and fringe benefits, see finding 2022-004), we noted in accordance with §200.403(g) that 10 of the 60 samples selected for testing within CDBG- Entitlement Grants Cluster, did not have sufficient support for their rationale regarding the allocation of the costs. For the Emergency Solutions Grants Program, 29 of the 60 samples selected for testing did not have sufficient support for their rationale regarding the allocation of the costs. Cause: The Village allocates many costs between individual grants and grant programs, without maintaining adequate support for the rationale behind the allocation of costs. Effect or Potential Effect: Without adequate support for the rationale behind cost allocations, the Village cannot adequately document that costs are fairly charged between individual grants and grant programs. The Village could charge expenses to federal programs that are not based on the programs usage. Questioned Costs: Known Questioned Costs CDBG-Entitlement Grants Cluster: None above the $25,000 reporting threshold. Likely Questioned Costs CDBG-Entitlement Grants Cluster: None above the $25,000 reporting threshold. Known Questioned Costs Emergency Solutions Grants Program: $6,232 Likely Questioned Costs Emergency Solutions Grants Program: $38,701 Context: This is a condition identified per review of the Village’s compliance with specified requirements not using a statistically valid sample. Nonpayroll costs for the CDBG-Entitlement Grants Cluster in 2022 were $444,085 with known questioned costs of $7,732 and likely questioned costs of $20,400. Nonpayroll costs for the Emergency Solutions Grants Program in 2022 were $1,854,771. Questioned costs consist of amounts lacking underlying support or amounts in excess of supported allocations. Identification as a Repeat Finding: This is a repeat of prior year finding 2021-008. Recommendation: We recommend that the Village carefully document the rationale or justification for cost allocations. Views of Responsible Officials: Management agrees with this finding. Management is developing a cost allocation worksheet, which will include documentation for the rationale or justification for cost allocations.
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.218, 14.231 Program: CDBG-Entitlement Grants Cluster, Emergency Solutions Grants Program, COVID-19 Emergency Solutions Grants Program Award/Pass-Through Entity Identifying Numbers: HHI-21-03, HHI-22-21, NCIP-FY20-010, HHI-21-35, HHI-20-21, 563770 Criteria: The Uniform Guidance in 2 CFR §200.403 states that for costs to be allowable under Federal awards, they must be adequately documented and there must be sufficient documentation. “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. See also §200.306(b). (g) Be adequately documented. See also §200.300 through §200.309. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to §200.308(e)(3).” Condition: During our testing of costs (excluding payroll and fringe benefits, see finding 2022-004), we noted in accordance with §200.403(g) that 10 of the 60 samples selected for testing within CDBG- Entitlement Grants Cluster, did not have sufficient support for their rationale regarding the allocation of the costs. For the Emergency Solutions Grants Program, 29 of the 60 samples selected for testing did not have sufficient support for their rationale regarding the allocation of the costs. Cause: The Village allocates many costs between individual grants and grant programs, without maintaining adequate support for the rationale behind the allocation of costs. Effect or Potential Effect: Without adequate support for the rationale behind cost allocations, the Village cannot adequately document that costs are fairly charged between individual grants and grant programs. The Village could charge expenses to federal programs that are not based on the programs usage. Questioned Costs: Known Questioned Costs CDBG-Entitlement Grants Cluster: None above the $25,000 reporting threshold. Likely Questioned Costs CDBG-Entitlement Grants Cluster: None above the $25,000 reporting threshold. Known Questioned Costs Emergency Solutions Grants Program: $6,232 Likely Questioned Costs Emergency Solutions Grants Program: $38,701 Context: This is a condition identified per review of the Village’s compliance with specified requirements not using a statistically valid sample. Nonpayroll costs for the CDBG-Entitlement Grants Cluster in 2022 were $444,085 with known questioned costs of $7,732 and likely questioned costs of $20,400. Nonpayroll costs for the Emergency Solutions Grants Program in 2022 were $1,854,771. Questioned costs consist of amounts lacking underlying support or amounts in excess of supported allocations. Identification as a Repeat Finding: This is a repeat of prior year finding 2021-008. Recommendation: We recommend that the Village carefully document the rationale or justification for cost allocations. Views of Responsible Officials: Management agrees with this finding. Management is developing a cost allocation worksheet, which will include documentation for the rationale or justification for cost allocations.