Finding 2022-002 - Controls Over Payroll Expenditures (Material Weakness) Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: 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. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonFederal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. The Corporation should have controls in place to document that salaries and overtime paid with federal funds were allowable. Timecards supporting hours worked should be approved and pay rates reviewed. Condition and Context: A summary of allowable charges for the grant was prepared for submission. Differences were noted when comparing the summary to timecards. Within the sample of 45, we noted that 31 timecards did not have a documented review. From the sample, we noted that the pay advice form, which reflects pay rate changes, for 2 employees did not indicate signature by an approver and only indicated the requestor?s signature. The employees? new pay rate as indicated on the pay advice form was reflected in the payroll expenditure. Additionally, within the sample of 45, we noted 1 employee that did not have a pay advice form or contract to support the pay rate. We noted the following control items: ? 31 out of 45 timecards tested did not have documented review. ? 2 out of 45 employees tested did not have pay advice forms signed by both the requestor and reviewer. Only the requestor signed the form. ? 1 out of 45 employees tested did not have a pay advice form or other supporting documentation for the pay rate. Effect: Payroll expenditures could be inaccurately charged to the federal grant. Cause: The lack of documented timecard and pay rate approval were an oversight. Questioned Costs: None Recommendation: We recommend the Corporation maintain documented approval of all timecards and pay rate increases. Views of responsible officials and planned corrective actions: Management agrees with the finding and has prepared a corrective action plan.
Finding 2022-002 - Controls Over Payroll Expenditures (Material Weakness) Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: 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. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonFederal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. The Corporation should have controls in place to document that salaries and overtime paid with federal funds were allowable. Timecards supporting hours worked should be approved and pay rates reviewed. Condition and Context: A summary of allowable charges for the grant was prepared for submission. Differences were noted when comparing the summary to timecards. Within the sample of 45, we noted that 31 timecards did not have a documented review. From the sample, we noted that the pay advice form, which reflects pay rate changes, for 2 employees did not indicate signature by an approver and only indicated the requestor?s signature. The employees? new pay rate as indicated on the pay advice form was reflected in the payroll expenditure. Additionally, within the sample of 45, we noted 1 employee that did not have a pay advice form or contract to support the pay rate. We noted the following control items: ? 31 out of 45 timecards tested did not have documented review. ? 2 out of 45 employees tested did not have pay advice forms signed by both the requestor and reviewer. Only the requestor signed the form. ? 1 out of 45 employees tested did not have a pay advice form or other supporting documentation for the pay rate. Effect: Payroll expenditures could be inaccurately charged to the federal grant. Cause: The lack of documented timecard and pay rate approval were an oversight. Questioned Costs: None Recommendation: We recommend the Corporation maintain documented approval of all timecards and pay rate increases. Views of responsible officials and planned corrective actions: Management agrees with the finding and has prepared a corrective action plan.
Finding 2022-002 - Controls Over Payroll Expenditures (Material Weakness) Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: 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. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonFederal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. The Corporation should have controls in place to document that salaries and overtime paid with federal funds were allowable. Timecards supporting hours worked should be approved and pay rates reviewed. Condition and Context: A summary of allowable charges for the grant was prepared for submission. Differences were noted when comparing the summary to timecards. Within the sample of 45, we noted that 31 timecards did not have a documented review. From the sample, we noted that the pay advice form, which reflects pay rate changes, for 2 employees did not indicate signature by an approver and only indicated the requestor?s signature. The employees? new pay rate as indicated on the pay advice form was reflected in the payroll expenditure. Additionally, within the sample of 45, we noted 1 employee that did not have a pay advice form or contract to support the pay rate. We noted the following control items: ? 31 out of 45 timecards tested did not have documented review. ? 2 out of 45 employees tested did not have pay advice forms signed by both the requestor and reviewer. Only the requestor signed the form. ? 1 out of 45 employees tested did not have a pay advice form or other supporting documentation for the pay rate. Effect: Payroll expenditures could be inaccurately charged to the federal grant. Cause: The lack of documented timecard and pay rate approval were an oversight. Questioned Costs: None Recommendation: We recommend the Corporation maintain documented approval of all timecards and pay rate increases. Views of responsible officials and planned corrective actions: Management agrees with the finding and has prepared a corrective action plan.
Finding 2022-002 - Controls Over Payroll Expenditures (Material Weakness) Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: 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. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonFederal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. The Corporation should have controls in place to document that salaries and overtime paid with federal funds were allowable. Timecards supporting hours worked should be approved and pay rates reviewed. Condition and Context: A summary of allowable charges for the grant was prepared for submission. Differences were noted when comparing the summary to timecards. Within the sample of 45, we noted that 31 timecards did not have a documented review. From the sample, we noted that the pay advice form, which reflects pay rate changes, for 2 employees did not indicate signature by an approver and only indicated the requestor?s signature. The employees? new pay rate as indicated on the pay advice form was reflected in the payroll expenditure. Additionally, within the sample of 45, we noted 1 employee that did not have a pay advice form or contract to support the pay rate. We noted the following control items: ? 31 out of 45 timecards tested did not have documented review. ? 2 out of 45 employees tested did not have pay advice forms signed by both the requestor and reviewer. Only the requestor signed the form. ? 1 out of 45 employees tested did not have a pay advice form or other supporting documentation for the pay rate. Effect: Payroll expenditures could be inaccurately charged to the federal grant. Cause: The lack of documented timecard and pay rate approval were an oversight. Questioned Costs: None Recommendation: We recommend the Corporation maintain documented approval of all timecards and pay rate increases. Views of responsible officials and planned corrective actions: Management agrees with the finding and has prepared a corrective action plan.
Finding 2022-002 - Controls Over Payroll Expenditures (Material Weakness) Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: 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. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonFederal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. The Corporation should have controls in place to document that salaries and overtime paid with federal funds were allowable. Timecards supporting hours worked should be approved and pay rates reviewed. Condition and Context: A summary of allowable charges for the grant was prepared for submission. Differences were noted when comparing the summary to timecards. Within the sample of 45, we noted that 31 timecards did not have a documented review. From the sample, we noted that the pay advice form, which reflects pay rate changes, for 2 employees did not indicate signature by an approver and only indicated the requestor?s signature. The employees? new pay rate as indicated on the pay advice form was reflected in the payroll expenditure. Additionally, within the sample of 45, we noted 1 employee that did not have a pay advice form or contract to support the pay rate. We noted the following control items: ? 31 out of 45 timecards tested did not have documented review. ? 2 out of 45 employees tested did not have pay advice forms signed by both the requestor and reviewer. Only the requestor signed the form. ? 1 out of 45 employees tested did not have a pay advice form or other supporting documentation for the pay rate. Effect: Payroll expenditures could be inaccurately charged to the federal grant. Cause: The lack of documented timecard and pay rate approval were an oversight. Questioned Costs: None Recommendation: We recommend the Corporation maintain documented approval of all timecards and pay rate increases. Views of responsible officials and planned corrective actions: Management agrees with the finding and has prepared a corrective action plan.
Finding 2022-002 - Controls Over Payroll Expenditures (Material Weakness) Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: 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. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonFederal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. The Corporation should have controls in place to document that salaries and overtime paid with federal funds were allowable. Timecards supporting hours worked should be approved and pay rates reviewed. Condition and Context: A summary of allowable charges for the grant was prepared for submission. Differences were noted when comparing the summary to timecards. Within the sample of 45, we noted that 31 timecards did not have a documented review. From the sample, we noted that the pay advice form, which reflects pay rate changes, for 2 employees did not indicate signature by an approver and only indicated the requestor?s signature. The employees? new pay rate as indicated on the pay advice form was reflected in the payroll expenditure. Additionally, within the sample of 45, we noted 1 employee that did not have a pay advice form or contract to support the pay rate. We noted the following control items: ? 31 out of 45 timecards tested did not have documented review. ? 2 out of 45 employees tested did not have pay advice forms signed by both the requestor and reviewer. Only the requestor signed the form. ? 1 out of 45 employees tested did not have a pay advice form or other supporting documentation for the pay rate. Effect: Payroll expenditures could be inaccurately charged to the federal grant. Cause: The lack of documented timecard and pay rate approval were an oversight. Questioned Costs: None Recommendation: We recommend the Corporation maintain documented approval of all timecards and pay rate increases. Views of responsible officials and planned corrective actions: Management agrees with the finding and has prepared a corrective action plan.
Finding 2022-002 - Controls Over Payroll Expenditures (Material Weakness) Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: 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. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonFederal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. The Corporation should have controls in place to document that salaries and overtime paid with federal funds were allowable. Timecards supporting hours worked should be approved and pay rates reviewed. Condition and Context: A summary of allowable charges for the grant was prepared for submission. Differences were noted when comparing the summary to timecards. Within the sample of 45, we noted that 31 timecards did not have a documented review. From the sample, we noted that the pay advice form, which reflects pay rate changes, for 2 employees did not indicate signature by an approver and only indicated the requestor?s signature. The employees? new pay rate as indicated on the pay advice form was reflected in the payroll expenditure. Additionally, within the sample of 45, we noted 1 employee that did not have a pay advice form or contract to support the pay rate. We noted the following control items: ? 31 out of 45 timecards tested did not have documented review. ? 2 out of 45 employees tested did not have pay advice forms signed by both the requestor and reviewer. Only the requestor signed the form. ? 1 out of 45 employees tested did not have a pay advice form or other supporting documentation for the pay rate. Effect: Payroll expenditures could be inaccurately charged to the federal grant. Cause: The lack of documented timecard and pay rate approval were an oversight. Questioned Costs: None Recommendation: We recommend the Corporation maintain documented approval of all timecards and pay rate increases. Views of responsible officials and planned corrective actions: Management agrees with the finding and has prepared a corrective action plan.
Finding 2022-002 - Controls Over Payroll Expenditures (Material Weakness) Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: 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. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonFederal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. The Corporation should have controls in place to document that salaries and overtime paid with federal funds were allowable. Timecards supporting hours worked should be approved and pay rates reviewed. Condition and Context: A summary of allowable charges for the grant was prepared for submission. Differences were noted when comparing the summary to timecards. Within the sample of 45, we noted that 31 timecards did not have a documented review. From the sample, we noted that the pay advice form, which reflects pay rate changes, for 2 employees did not indicate signature by an approver and only indicated the requestor?s signature. The employees? new pay rate as indicated on the pay advice form was reflected in the payroll expenditure. Additionally, within the sample of 45, we noted 1 employee that did not have a pay advice form or contract to support the pay rate. We noted the following control items: ? 31 out of 45 timecards tested did not have documented review. ? 2 out of 45 employees tested did not have pay advice forms signed by both the requestor and reviewer. Only the requestor signed the form. ? 1 out of 45 employees tested did not have a pay advice form or other supporting documentation for the pay rate. Effect: Payroll expenditures could be inaccurately charged to the federal grant. Cause: The lack of documented timecard and pay rate approval were an oversight. Questioned Costs: None Recommendation: We recommend the Corporation maintain documented approval of all timecards and pay rate increases. Views of responsible officials and planned corrective actions: Management agrees with the finding and has prepared a corrective action plan.
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In addition, per 2 CFR Section 200.403, ?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 allocablethereto under these principles. (b)Conform to any limitations or exclusions set forth in these principles or in the Federal awardas to types or amount of cost items. (c)Be consistent with policies and procedures that apply uniformly to both federally-financedand other activities of the non-Federal entity. (d)Be accorded consistent treatment. A cost may not be assigned to a Federal award as a directcost if any other cost incurred for the same purpose in like circumstances has been allocatedto 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 otherfederally-financed program in either the current or a prior period. (g)Be adequately documented.? Condition ? In our examination of the program?s indirect cost charges, we noted that APS did not charge the appropriate indirect cost of $81,916 for the months of May through July 2022 to the program. Consequently, an adjustment was recorded to correct the SEFA. Cause ? Management did not adhere to their internal policies and procedures to ensure that all federal transactions are charged to the programs and that the SEFA is complete and accurate. Effect or potential effect ? The SEFA may not be fairly presented, in all material respects, in relation to the basic financial statements taken as a whole. In addition, the lack of adherence to the established internal controls policies and procedures can lead to noncompliance with federal statutes, regulations, and provisions of grant agreements. Questioned Costs ? None. Context ? This is a condition identified per review of APS? compliance with specified requirements using a statistically valid sample. Recommendation ? We recommend that APS strengthen their policies and procedures to ensure the completeness and accuracy of the SEFA. Views of Responsible Officials - APS concurs with this finding. APS?s corrective action is described in the Management?s Corrective Action Plan included below.
Criteria: Under the Uniform Guidance, specifically 2 CFR 200.403(g), charges to Federal awards must be documented and supported by a system of internal controls, including documentation of approval of expenses. Condition: Documentation for certain expenses was unavailable or incomplete. Cause: Management currently lacks sufficient resources to locate all supporting documentation. The work from home environment has impacted existing processes and retention of information, along with turnover in the accounting department. Effect: Management was unable to fully substantiate $71,054 of $168,234 of nonpayroll items selected for testing. These are determined to be questioned costs. Context: We tested 40 haphazardly selected expense items. Of these, management was unable to locate complete documentation for four expenses, including two payments made and two journal entries to accrue expenses. Recommendation: Management should revise its transaction documentation system to allow for centralized and accessible storage of support for programmatic costs by all appropriate personnel who interact with external auditors, including local funding sources. For accrued items, management should retain journal entry documentation including invoices included within accrued amounts. Views of responsible officials: We agree with the finding. We are in the process of developing a formal contract management system and process that includes additional review and oversight. We are also in the process of hiring a grants and contracts compliance manager.
2022-002 - Emergency Solutions Grant - Assistance Listing No. 14.231 Significant Deficiency in Internal Control Over Compliance and Noncompliance – A. Activities Allowed or Unallowed and B. Allowable Costs/Cost Principles Criteria: 2 CFR 200.403(g) indicates costs must be adequately documented in order to be considered allowable. Condition and Context: During 2022, FSA maintained payroll records which included detailed timecards or time studies for employees who spent hours worked on the Emergency Solutions Grant (ESG). We selected 8 employees for testing during the audit and noted that 2 employees did not maintain detailed timecards or a time study and 3 employees worked less hours on ESG than what were claimed for reimbursement under the grant. Our sample was not considered to be a statistically valid sample. Cause and Effect: We noted a lack of internal controls surrounding the tracking of hours worked for ESG during 2022 which resulted in noncompliance. We tested 8 employees for a total of $14,431 of claimed payroll cost and calculated known questioned costs of $2,196 which resulted in likely questioned costs of $8,703 using an error rate of 15% over total payroll claimed for 2022 of $57,188. Total likely questioned costs were 2% of overall ESG expenditures for 2022. Recommendation: We recommend FSA implement procedures for all employees who have payroll claimed under federal programs to maintain detailed timecards or time studies to support hours worked under each federal program. Views of Responsible Officials and Planned Corrective Actions: Family Service Association of Howard County, Inc.’s (FSA) accounting department experienced significant turnover during 2022 which included the Director of Accounting leaving mid-year. Since the new Director of Accounting took on her role we have been actively working on ways to enhance our processes. Family Service Association of Howard County, Inc. (FSA) will implement procedures and maintain timecards and time studies for employees who have payroll claimed under the federal programs to be in compliance of federal grants beginning April 2024.
2022-002 - Emergency Solutions Grant - Assistance Listing No. 14.231 Significant Deficiency in Internal Control Over Compliance and Noncompliance – A. Activities Allowed or Unallowed and B. Allowable Costs/Cost Principles Criteria: 2 CFR 200.403(g) indicates costs must be adequately documented in order to be considered allowable. Condition and Context: During 2022, FSA maintained payroll records which included detailed timecards or time studies for employees who spent hours worked on the Emergency Solutions Grant (ESG). We selected 8 employees for testing during the audit and noted that 2 employees did not maintain detailed timecards or a time study and 3 employees worked less hours on ESG than what were claimed for reimbursement under the grant. Our sample was not considered to be a statistically valid sample. Cause and Effect: We noted a lack of internal controls surrounding the tracking of hours worked for ESG during 2022 which resulted in noncompliance. We tested 8 employees for a total of $14,431 of claimed payroll cost and calculated known questioned costs of $2,196 which resulted in likely questioned costs of $8,703 using an error rate of 15% over total payroll claimed for 2022 of $57,188. Total likely questioned costs were 2% of overall ESG expenditures for 2022. Recommendation: We recommend FSA implement procedures for all employees who have payroll claimed under federal programs to maintain detailed timecards or time studies to support hours worked under each federal program. Views of Responsible Officials and Planned Corrective Actions: Family Service Association of Howard County, Inc.’s (FSA) accounting department experienced significant turnover during 2022 which included the Director of Accounting leaving mid-year. Since the new Director of Accounting took on her role we have been actively working on ways to enhance our processes. Family Service Association of Howard County, Inc. (FSA) will implement procedures and maintain timecards and time studies for employees who have payroll claimed under the federal programs to be in compliance of federal grants beginning April 2024.
(2022-004) Allowable Costs and Procurement Federal Agency: U.S. Department of Treasury CFDA No.: 21.027 Federal Program: Coronavirus State and Local Fiscal Recovery Funds Federal Award Year: 2022 Control Category: Allowable Costs and Procurement, Suspension and Debarment Questioned Costs: $804.05 Condition The Center did not retain evidence of competitive bidding or evidence of verifying suspension and debarment for the two contracts selected for testing. Additionally, the Center did not retain invoice support and documentation of approval for two disbursements selected for testing. Criteria 2 CFR 200.403 Factors Affecting Allowability of Costs, states, in part that costs “be adequately documented”. 2 CFR 200.320 Methods of Procurement includes several required procurement procedures including competitive bidding and verification that vendors re not suspended or debarred from working with the federal government. Cause The Center did not retain evidence of bidding, suspension and debarment, or invoice documentation for certain purchases. Effect We are unable to determine if the costs are allowable in accordance with the Uniform Guidance. Management Response The Center will retain evidence of competitive bidding, unless an emergency or other situation precluding the delay of competitive bidding has arisen (in which case, the Center will retain the evidence and rationale justifying the sole source contract). The Center will retain verification of suspension and debarment for all potential contract service providers. The Center notes that one of the contracts selected for testing arose during an emergency situation (flooding). CFO will ensure that all invoices and supporting documentation are retained. ED and/or Director of Legal Services(depending on amount of expenditure, both may be required) will approve electronic payments inBill.com. Approval of expenses paid with paper checks will be indicated by signature of checks after reviewing accompanying support.
(2022-004) Allowable Costs and Procurement Federal Agency: U.S. Department of Treasury CFDA No.: 21.027 Federal Program: Coronavirus State and Local Fiscal Recovery Funds Federal Award Year: 2022 Control Category: Allowable Costs and Procurement, Suspension and Debarment Questioned Costs: $804.05 Condition The Center did not retain evidence of competitive bidding or evidence of verifying suspension and debarment for the two contracts selected for testing. Additionally, the Center did not retain invoice support and documentation of approval for two disbursements selected for testing. Criteria 2 CFR 200.403 Factors Affecting Allowability of Costs, states, in part that costs “be adequately documented”. 2 CFR 200.320 Methods of Procurement includes several required procurement procedures including competitive bidding and verification that vendors re not suspended or debarred from working with the federal government. Cause The Center did not retain evidence of bidding, suspension and debarment, or invoice documentation for certain purchases. Effect We are unable to determine if the costs are allowable in accordance with the Uniform Guidance. Management Response The Center will retain evidence of competitive bidding, unless an emergency or other situation precluding the delay of competitive bidding has arisen (in which case, the Center will retain the evidence and rationale justifying the sole source contract). The Center will retain verification of suspension and debarment for all potential contract service providers. The Center notes that one of the contracts selected for testing arose during an emergency situation (flooding). CFO will ensure that all invoices and supporting documentation are retained. ED and/or Director of Legal Services(depending on amount of expenditure, both may be required) will approve electronic payments inBill.com. Approval of expenses paid with paper checks will be indicated by signature of checks after reviewing accompanying support.
2022-006: Period of Performance – Material Weakness – Originated in 2019 Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: H49MC00119-22-00 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2020-2024 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR sections 200.308 200.309 and 200.403(h)), the Organization 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. Condition: The Organization lacked supporting documentation for certain non-payroll expenses and lacked evidence of review for certain non-payroll expenses. Due to lack of supporting documentation and evidence of approval for payment, certain transactions could not be verified. Of the sixty (60) transactions examined, eight (8) lacked supporting documentation and twenty five (25) lacked evidence of review, and approval for payment. Effect: Management possibly did not expend funds in accordance with the approved detailed line-item budget and grant agreement and possibly expended funds in the incorrect period of performance. Cause: Expenses including approved invoices and/or supporting documentation were not properly maintained in part due to several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned Costs: Known questioned costs of $980 and likely questioned costs of $5,791 for Healthy Start. Recommendation: We recommend that internal controls be strengthened and processes implemented to ensure all expenses include supporting documentation/invoice indicating period of performance.
2022-006: Period of Performance – Material Weakness – Originated in 2019 Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: H49MC00119-22-00 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2020-2024 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR sections 200.308 200.309 and 200.403(h)), the Organization 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. Condition: The Organization lacked supporting documentation for certain non-payroll expenses and lacked evidence of review for certain non-payroll expenses. Due to lack of supporting documentation and evidence of approval for payment, certain transactions could not be verified. Of the sixty (60) transactions examined, eight (8) lacked supporting documentation and twenty five (25) lacked evidence of review, and approval for payment. Effect: Management possibly did not expend funds in accordance with the approved detailed line-item budget and grant agreement and possibly expended funds in the incorrect period of performance. Cause: Expenses including approved invoices and/or supporting documentation were not properly maintained in part due to several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned Costs: Known questioned costs of $980 and likely questioned costs of $5,791 for Healthy Start. Recommendation: We recommend that internal controls be strengthened and processes implemented to ensure all expenses include supporting documentation/invoice indicating period of performance.
Federal Agency: Department of Justice Federal Assistance Listing Numbers: 16.756, 16.726 Programs: Court Appointed Special Advocates, Juvenile Mentoring Program Award/Pass-Through Entity Identifying Numbers: 2018-CH-BX-K001, 15PJDP-21-GK-02762-CASA, 2019-MU-FX-0004, 2020-JU-FX-0028 Criteria: The Uniform Guidance in 2 CFR §200.403 states that for costs to be allowable under federal awards, they must be adequately documented and there must be sufficient documentation. “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under federal awards: a) Be necessary and reasonable for the performance of the federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. See also §200.306(b). g) Be adequately documented. See also §200.300 through §200.309. h) Cost must be incurred during the approved budget period. The federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to §200.308(e)(3).” Condition: National CASA/GAL allocated expenditures to programs during 2022 based on a direct allocation methodology. This allocation is done manually, and the support was inconsistently maintained. During our testing of costs (excluding salaries, see finding 2022-003), we noted in accordance with §200.403(g) that: For Court Appointed Special Advocates: • One of 60 transactions was partially charged in the incorrect fiscal period. • One of 60 transactions underlying supporting documentation was not retained. • 19 of 60 transactions had inconsistent allocation methods (based on an estimated metric such as estimated time on program or square feet space utilized) applied to costs. • 21 of 60 transactions lacked documentation of review and approval of the allocation of costs made through journal entries. For the Juvenile Mentoring Program: • One of 60 transactions lacked documentation of all required reviews and approvals. • One of 60 transactions the incorrect allocation rate was utilized. • One of 60 transactions underlying supporting documentation was not retained. • 27 of 60 transactions lacked documentation of review and approval of the allocation of costs made through journal entries. Cause: National CASA/GAL did not have procedures in place to document, and maintain the documentation of, the review and approval of the allocation methodology and the allocation of costs (journal entries). Effect or Potential Effect: Without adequate controls in place to ensure costs are allowable and reimbursable, including controls over review of allocation methodologies, National CASA/GAL could incorrectly charge expenditures to the federal programs. Questioned Costs Court Appointed Special Advocates: Below reporting threshold. Questioned Costs Juvenile Mentoring Program: Below reporting threshold. Context: This is a condition identified per review of National CASA/GAL’s compliance with specified requirements not using a statistically valid sample. Nonpayroll costs for the Court Appointed Special Advocates in 2022 were $6,500,295. The sample tested consisted of 60 transactions totaling $165,919. Nonpayroll costs for the Juvenile Mentoring Program in 2022 were $2,401,373. The sample tested consisted of 60 transactions totaling $151,177. Questioned costs consist of amounts lacking underlying support or amounts in excess of supported allocations. For Court Appointed Special Advocates, four transactions resulted in questioned costs of $3,139. For the Juvenile Mentoring Program, two transactions resulted in questioned costs of $456. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that policies and procedures be updated to ensure underlying support, as well as support for allocations is appropriately maintained as required by §200.403. Views of Responsible Officials: Management concurs with the finding that procedures should specify that documentation of review and approval of both the costs charged and the allocation method of costs charged to federal grants be maintained. Management put policies in place to capture the documentation and maintenance of documentation indicating supervisor review and approval.
Federal Agency: Department of Justice Federal Assistance Listing Numbers: 16.756, 16.726 Programs: Court Appointed Special Advocates, Juvenile Mentoring Program Award/Pass-Through Entity Identifying Numbers: 2018-CH-BX-K001, 15PJDP-21-GK-02762-CASA, 2019-MU-FX-0004, 2020-JU-FX-0028 Criteria: The Uniform Guidance in 2 CFR §200.403 states that for costs to be allowable under federal awards, they must be adequately documented and there must be sufficient documentation. “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under federal awards: a) Be necessary and reasonable for the performance of the federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. See also §200.306(b). g) Be adequately documented. See also §200.300 through §200.309. h) Cost must be incurred during the approved budget period. The federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to §200.308(e)(3).” Condition: National CASA/GAL allocated expenditures to programs during 2022 based on a direct allocation methodology. This allocation is done manually, and the support was inconsistently maintained. During our testing of costs (excluding salaries, see finding 2022-003), we noted in accordance with §200.403(g) that: For Court Appointed Special Advocates: • One of 60 transactions was partially charged in the incorrect fiscal period. • One of 60 transactions underlying supporting documentation was not retained. • 19 of 60 transactions had inconsistent allocation methods (based on an estimated metric such as estimated time on program or square feet space utilized) applied to costs. • 21 of 60 transactions lacked documentation of review and approval of the allocation of costs made through journal entries. For the Juvenile Mentoring Program: • One of 60 transactions lacked documentation of all required reviews and approvals. • One of 60 transactions the incorrect allocation rate was utilized. • One of 60 transactions underlying supporting documentation was not retained. • 27 of 60 transactions lacked documentation of review and approval of the allocation of costs made through journal entries. Cause: National CASA/GAL did not have procedures in place to document, and maintain the documentation of, the review and approval of the allocation methodology and the allocation of costs (journal entries). Effect or Potential Effect: Without adequate controls in place to ensure costs are allowable and reimbursable, including controls over review of allocation methodologies, National CASA/GAL could incorrectly charge expenditures to the federal programs. Questioned Costs Court Appointed Special Advocates: Below reporting threshold. Questioned Costs Juvenile Mentoring Program: Below reporting threshold. Context: This is a condition identified per review of National CASA/GAL’s compliance with specified requirements not using a statistically valid sample. Nonpayroll costs for the Court Appointed Special Advocates in 2022 were $6,500,295. The sample tested consisted of 60 transactions totaling $165,919. Nonpayroll costs for the Juvenile Mentoring Program in 2022 were $2,401,373. The sample tested consisted of 60 transactions totaling $151,177. Questioned costs consist of amounts lacking underlying support or amounts in excess of supported allocations. For Court Appointed Special Advocates, four transactions resulted in questioned costs of $3,139. For the Juvenile Mentoring Program, two transactions resulted in questioned costs of $456. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that policies and procedures be updated to ensure underlying support, as well as support for allocations is appropriately maintained as required by §200.403. Views of Responsible Officials: Management concurs with the finding that procedures should specify that documentation of review and approval of both the costs charged and the allocation method of costs charged to federal grants be maintained. Management put policies in place to capture the documentation and maintenance of documentation indicating supervisor review and approval.
Federal Agency: Department of Justice Federal Assistance Listing Numbers: 16.756, 16.726 Programs: Court Appointed Special Advocates, Juvenile Mentoring Program Award/Pass-Through Entity Identifying Numbers: 2018-CH-BX-K001, 15PJDP-21-GK-02762-CASA, 2019-MU-FX-0004, 2020-JU-FX-0028 Criteria: The Uniform Guidance in 2 CFR §200.403 states that for costs to be allowable under federal awards, they must be adequately documented and there must be sufficient documentation. “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under federal awards: a) Be necessary and reasonable for the performance of the federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. See also §200.306(b). g) Be adequately documented. See also §200.300 through §200.309. h) Cost must be incurred during the approved budget period. The federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to §200.308(e)(3).” Condition: National CASA/GAL allocated expenditures to programs during 2022 based on a direct allocation methodology. This allocation is done manually, and the support was inconsistently maintained. During our testing of costs (excluding salaries, see finding 2022-003), we noted in accordance with §200.403(g) that: For Court Appointed Special Advocates: • One of 60 transactions was partially charged in the incorrect fiscal period. • One of 60 transactions underlying supporting documentation was not retained. • 19 of 60 transactions had inconsistent allocation methods (based on an estimated metric such as estimated time on program or square feet space utilized) applied to costs. • 21 of 60 transactions lacked documentation of review and approval of the allocation of costs made through journal entries. For the Juvenile Mentoring Program: • One of 60 transactions lacked documentation of all required reviews and approvals. • One of 60 transactions the incorrect allocation rate was utilized. • One of 60 transactions underlying supporting documentation was not retained. • 27 of 60 transactions lacked documentation of review and approval of the allocation of costs made through journal entries. Cause: National CASA/GAL did not have procedures in place to document, and maintain the documentation of, the review and approval of the allocation methodology and the allocation of costs (journal entries). Effect or Potential Effect: Without adequate controls in place to ensure costs are allowable and reimbursable, including controls over review of allocation methodologies, National CASA/GAL could incorrectly charge expenditures to the federal programs. Questioned Costs Court Appointed Special Advocates: Below reporting threshold. Questioned Costs Juvenile Mentoring Program: Below reporting threshold. Context: This is a condition identified per review of National CASA/GAL’s compliance with specified requirements not using a statistically valid sample. Nonpayroll costs for the Court Appointed Special Advocates in 2022 were $6,500,295. The sample tested consisted of 60 transactions totaling $165,919. Nonpayroll costs for the Juvenile Mentoring Program in 2022 were $2,401,373. The sample tested consisted of 60 transactions totaling $151,177. Questioned costs consist of amounts lacking underlying support or amounts in excess of supported allocations. For Court Appointed Special Advocates, four transactions resulted in questioned costs of $3,139. For the Juvenile Mentoring Program, two transactions resulted in questioned costs of $456. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that policies and procedures be updated to ensure underlying support, as well as support for allocations is appropriately maintained as required by §200.403. Views of Responsible Officials: Management concurs with the finding that procedures should specify that documentation of review and approval of both the costs charged and the allocation method of costs charged to federal grants be maintained. Management put policies in place to capture the documentation and maintenance of documentation indicating supervisor review and approval.
Federal Agency: Department of Justice Federal Assistance Listing Numbers: 16.756, 16.726 Programs: Court Appointed Special Advocates, Juvenile Mentoring Program Award/Pass-Through Entity Identifying Numbers: 2018-CH-BX-K001, 15PJDP-21-GK-02762-CASA, 2019-MU-FX-0004, 2020-JU-FX-0028 Criteria: The Uniform Guidance in 2 CFR §200.403 states that for costs to be allowable under federal awards, they must be adequately documented and there must be sufficient documentation. “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under federal awards: a) Be necessary and reasonable for the performance of the federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. See also §200.306(b). g) Be adequately documented. See also §200.300 through §200.309. h) Cost must be incurred during the approved budget period. The federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to §200.308(e)(3).” Condition: National CASA/GAL allocated expenditures to programs during 2022 based on a direct allocation methodology. This allocation is done manually, and the support was inconsistently maintained. During our testing of costs (excluding salaries, see finding 2022-003), we noted in accordance with §200.403(g) that: For Court Appointed Special Advocates: • One of 60 transactions was partially charged in the incorrect fiscal period. • One of 60 transactions underlying supporting documentation was not retained. • 19 of 60 transactions had inconsistent allocation methods (based on an estimated metric such as estimated time on program or square feet space utilized) applied to costs. • 21 of 60 transactions lacked documentation of review and approval of the allocation of costs made through journal entries. For the Juvenile Mentoring Program: • One of 60 transactions lacked documentation of all required reviews and approvals. • One of 60 transactions the incorrect allocation rate was utilized. • One of 60 transactions underlying supporting documentation was not retained. • 27 of 60 transactions lacked documentation of review and approval of the allocation of costs made through journal entries. Cause: National CASA/GAL did not have procedures in place to document, and maintain the documentation of, the review and approval of the allocation methodology and the allocation of costs (journal entries). Effect or Potential Effect: Without adequate controls in place to ensure costs are allowable and reimbursable, including controls over review of allocation methodologies, National CASA/GAL could incorrectly charge expenditures to the federal programs. Questioned Costs Court Appointed Special Advocates: Below reporting threshold. Questioned Costs Juvenile Mentoring Program: Below reporting threshold. Context: This is a condition identified per review of National CASA/GAL’s compliance with specified requirements not using a statistically valid sample. Nonpayroll costs for the Court Appointed Special Advocates in 2022 were $6,500,295. The sample tested consisted of 60 transactions totaling $165,919. Nonpayroll costs for the Juvenile Mentoring Program in 2022 were $2,401,373. The sample tested consisted of 60 transactions totaling $151,177. Questioned costs consist of amounts lacking underlying support or amounts in excess of supported allocations. For Court Appointed Special Advocates, four transactions resulted in questioned costs of $3,139. For the Juvenile Mentoring Program, two transactions resulted in questioned costs of $456. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that policies and procedures be updated to ensure underlying support, as well as support for allocations is appropriately maintained as required by §200.403. Views of Responsible Officials: Management concurs with the finding that procedures should specify that documentation of review and approval of both the costs charged and the allocation method of costs charged to federal grants be maintained. Management put policies in place to capture the documentation and maintenance of documentation indicating supervisor review and approval.
Fraudulent Checks Finding Number: 2022-006 Assistance Listing Number and Title: AL # 14.871 - Section 8 Housing Choice Vouchers/Housing Voucher Cluster Federal Award Identification Number / Year: 2022 Federal Agency: U.S. Department of Housing and Urban Development Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Pass-Through Entity: N/A Repeat Finding from Prior Audit? No Noncompliance, Material Weakness, and Questioned Cost 2 CFR § 2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR Part 200 Subpart E § 200.403 which provides that, except where otherwise authorized by statute, costs must meet certain general criteria in order to be allowable under Federal awards including being necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles and being adequately documented. State ex rel. McClure v. Hagerman, 155 Ohio St. 320 (1951), provides that expenditures made by a governmental unit should serve a public purpose. Typically, the determination of what constitutes a “proper public purpose” rests with the judgment of the governmental entity, unless such determination is arbitrary or unreasonable. Even if a purchase is reasonable, Ohio Attorney General Opinion 82006 indicates that it must be memorialized by a duly enacted ordinance or resolution and may have a prospective effect only. Auditor of State Bulletin 2003-005 Expenditure of Public Funds/Proper Public Purpose states, in part, the Auditor of State’s Office will only question expenditures where the legislative determination of a public purpose is manifestly arbitrary and incorrect. Due to lack of proper internal controls and fraud by the previous Executive Director, expenditures totaling $324,624 were posted to the Housing Voucher Cluster in 2022. These expenditures were not related to the Housing Voucher Cluster as they pertained to fraud. There was no valid support for the expenditures. As such, the entire $324,624 is considered a questioned cost. These costs were also not for proper public purposes. The Board and Authority management should implement proper internal controls to ensure proper segregation of duties to help prevent and deter fraud.
Fraudulent Checks Finding Number: 2022-006 Assistance Listing Number and Title: AL # 14.871 - Section 8 Housing Choice Vouchers/Housing Voucher Cluster Federal Award Identification Number / Year: 2022 Federal Agency: U.S. Department of Housing and Urban Development Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Pass-Through Entity: N/A Repeat Finding from Prior Audit? No Noncompliance, Material Weakness, and Questioned Cost 2 CFR § 2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR Part 200 Subpart E § 200.403 which provides that, except where otherwise authorized by statute, costs must meet certain general criteria in order to be allowable under Federal awards including being necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles and being adequately documented. State ex rel. McClure v. Hagerman, 155 Ohio St. 320 (1951), provides that expenditures made by a governmental unit should serve a public purpose. Typically, the determination of what constitutes a “proper public purpose” rests with the judgment of the governmental entity, unless such determination is arbitrary or unreasonable. Even if a purchase is reasonable, Ohio Attorney General Opinion 82006 indicates that it must be memorialized by a duly enacted ordinance or resolution and may have a prospective effect only. Auditor of State Bulletin 2003-005 Expenditure of Public Funds/Proper Public Purpose states, in part, the Auditor of State’s Office will only question expenditures where the legislative determination of a public purpose is manifestly arbitrary and incorrect. Due to lack of proper internal controls and fraud by the previous Executive Director, expenditures totaling $324,624 were posted to the Housing Voucher Cluster in 2022. These expenditures were not related to the Housing Voucher Cluster as they pertained to fraud. There was no valid support for the expenditures. As such, the entire $324,624 is considered a questioned cost. These costs were also not for proper public purposes. The Board and Authority management should implement proper internal controls to ensure proper segregation of duties to help prevent and deter fraud.
Criteria or specific requirement: 2 CFR 200.403(b) states that costs must "Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items". Per the Federal award (contract 2018-51300-28430, PTEIN C0535A-A), there was no specific allowability for “Fees”, and the budget indicated $0 allocated to “Fees”. 2 CFR 200.303(a) requires nonfederal entities receiving Federal awards to "Establish and maintain internal controls over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." 2 CFR 200.430(i)(1) states that "Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed." Condition: (10.307) During testing of general disbursements, it was noted that the Organization did not retain documentary evidence of review and approval of disbursements for 4 out of 17 samples tested. In addition, for 1 sample, the Organization charged unallowable costs (bank fees) to the major program. During testing of payroll, it was noted that inadequate time and effort documentation was retained for 2 out of 26 samples tested, resulting in wages being charged erroneously between programs. (10.311) During testing of general disbursements, it was noted that the Organization did not retain documentary evidence of review and approval of disbursements for 5 out of 14 samples tested. During testing of payroll, it was noted that inadequate time and effort documentation was retained for 2 out of 21 samples tested, resulting in wages being charged erroneously between programs. During testing of indirect costs, it was noted that direct costs used to calculate the applied indirect cost rate were not supported by underlying documentation of costs incurred. Questioned costs: None Context: (10.307) For testing of general disbursements, a sample of 17 was made from a population of 113 disbursement transactions. Of the 17 sampled, 4 did not include documentary evidence of review and approval of the disbursement. In addition, 1 sample was found to be out of compliance with the provisions for 2 CFR 200.403(b). For testing of payroll, a sample of 26 was made from a population of 168 unique employee paychecks. Of the 26 sampled, 2 had inadequate documentation of time and effort spent on the major program, resulting in an overbilling in one sample and an underbilling in the second sample. (10.311) For testing of general disbursements, a sample of 14 was made from a population of 90 disbursement transactions. Of the 14 sampled, 5 did not include documentary evidence of review and approval of the disbursement. For testing of payroll, a sample of 21 was made from a population of 139 unique employee paychecks. Of the 21 sampled, 2 had inadequate documentation of time and effort spent on the major program, resulting in an overbilling in one sample and an underbilling in the second sample. For testing of indirect costs, a sample of 6 was made from a population of 21 monthly reimbursement invoices. Of the 6 sampled, 3 did not include sufficient documentation to support the direct costs used to apply the indirect cost rate. Cause: The Organization does not have adequate controls around the documentation of the supervisor review and approval process. Supervisory review and approvals are currently being communicated verbally. In addition, inadequate documentation is retained to document the time and effort of employee time spent on grants and the total direct costs that should be considered when applying the indirect cost rate. Effect: Without adequate records retained, the Organization is at risk of noncompliance with Federal programs and grant regulations, which could result in penalties or repayment obligations. Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, the Organization could incorrectly charge expenditures to the Federal program, report fraudulent expenditures, or not request appropriate reimbursement that the Organization is entitled to under the terms of the grant. Repeat Finding: No Recommendation: CLA recommends for the Organization to evaluate its current policies and procedures to implement an additional layer of review, and to formally document such review and approval procedures for all transactions affecting federal funds (i.e. approval of general expenditures, approval of timesheets, approval of indirect cost allocations). In addition, the Organization should emphasize the importance of detailed reviewed timesheets, including a second level review by the Finance Manager to ensure the accuracy and documentation of time and effort billed to each Federal program. Views of responsible officials: Management agrees with the finding.
Criteria or specific requirement: 2 CFR 200.403(b) states that costs must "Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items". Per the Federal award (contract 2018-51300-28430, PTEIN C0535A-A), there was no specific allowability for “Fees”, and the budget indicated $0 allocated to “Fees”. 2 CFR 200.303(a) requires nonfederal entities receiving Federal awards to "Establish and maintain internal controls over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." 2 CFR 200.430(i)(1) states that "Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed." Condition: (10.307) During testing of general disbursements, it was noted that the Organization did not retain documentary evidence of review and approval of disbursements for 4 out of 17 samples tested. In addition, for 1 sample, the Organization charged unallowable costs (bank fees) to the major program. During testing of payroll, it was noted that inadequate time and effort documentation was retained for 2 out of 26 samples tested, resulting in wages being charged erroneously between programs. (10.311) During testing of general disbursements, it was noted that the Organization did not retain documentary evidence of review and approval of disbursements for 5 out of 14 samples tested. During testing of payroll, it was noted that inadequate time and effort documentation was retained for 2 out of 21 samples tested, resulting in wages being charged erroneously between programs. During testing of indirect costs, it was noted that direct costs used to calculate the applied indirect cost rate were not supported by underlying documentation of costs incurred. Questioned costs: None Context: (10.307) For testing of general disbursements, a sample of 17 was made from a population of 113 disbursement transactions. Of the 17 sampled, 4 did not include documentary evidence of review and approval of the disbursement. In addition, 1 sample was found to be out of compliance with the provisions for 2 CFR 200.403(b). For testing of payroll, a sample of 26 was made from a population of 168 unique employee paychecks. Of the 26 sampled, 2 had inadequate documentation of time and effort spent on the major program, resulting in an overbilling in one sample and an underbilling in the second sample. (10.311) For testing of general disbursements, a sample of 14 was made from a population of 90 disbursement transactions. Of the 14 sampled, 5 did not include documentary evidence of review and approval of the disbursement. For testing of payroll, a sample of 21 was made from a population of 139 unique employee paychecks. Of the 21 sampled, 2 had inadequate documentation of time and effort spent on the major program, resulting in an overbilling in one sample and an underbilling in the second sample. For testing of indirect costs, a sample of 6 was made from a population of 21 monthly reimbursement invoices. Of the 6 sampled, 3 did not include sufficient documentation to support the direct costs used to apply the indirect cost rate. Cause: The Organization does not have adequate controls around the documentation of the supervisor review and approval process. Supervisory review and approvals are currently being communicated verbally. In addition, inadequate documentation is retained to document the time and effort of employee time spent on grants and the total direct costs that should be considered when applying the indirect cost rate. Effect: Without adequate records retained, the Organization is at risk of noncompliance with Federal programs and grant regulations, which could result in penalties or repayment obligations. Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, the Organization could incorrectly charge expenditures to the Federal program, report fraudulent expenditures, or not request appropriate reimbursement that the Organization is entitled to under the terms of the grant. Repeat Finding: No Recommendation: CLA recommends for the Organization to evaluate its current policies and procedures to implement an additional layer of review, and to formally document such review and approval procedures for all transactions affecting federal funds (i.e. approval of general expenditures, approval of timesheets, approval of indirect cost allocations). In addition, the Organization should emphasize the importance of detailed reviewed timesheets, including a second level review by the Finance Manager to ensure the accuracy and documentation of time and effort billed to each Federal program. Views of responsible officials: Management agrees with the finding.
Criteria or specific requirement: 2 CFR 200.403(b) states that costs must "Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items". Per the Federal award (contract 2018-51300-28430, PTEIN C0535A-A), there was no specific allowability for “Fees”, and the budget indicated $0 allocated to “Fees”. 2 CFR 200.303(a) requires nonfederal entities receiving Federal awards to "Establish and maintain internal controls over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." 2 CFR 200.430(i)(1) states that "Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed." Condition: (10.307) During testing of general disbursements, it was noted that the Organization did not retain documentary evidence of review and approval of disbursements for 4 out of 17 samples tested. In addition, for 1 sample, the Organization charged unallowable costs (bank fees) to the major program. During testing of payroll, it was noted that inadequate time and effort documentation was retained for 2 out of 26 samples tested, resulting in wages being charged erroneously between programs. (10.311) During testing of general disbursements, it was noted that the Organization did not retain documentary evidence of review and approval of disbursements for 5 out of 14 samples tested. During testing of payroll, it was noted that inadequate time and effort documentation was retained for 2 out of 21 samples tested, resulting in wages being charged erroneously between programs. During testing of indirect costs, it was noted that direct costs used to calculate the applied indirect cost rate were not supported by underlying documentation of costs incurred. Questioned costs: None Context: (10.307) For testing of general disbursements, a sample of 17 was made from a population of 113 disbursement transactions. Of the 17 sampled, 4 did not include documentary evidence of review and approval of the disbursement. In addition, 1 sample was found to be out of compliance with the provisions for 2 CFR 200.403(b). For testing of payroll, a sample of 26 was made from a population of 168 unique employee paychecks. Of the 26 sampled, 2 had inadequate documentation of time and effort spent on the major program, resulting in an overbilling in one sample and an underbilling in the second sample. (10.311) For testing of general disbursements, a sample of 14 was made from a population of 90 disbursement transactions. Of the 14 sampled, 5 did not include documentary evidence of review and approval of the disbursement. For testing of payroll, a sample of 21 was made from a population of 139 unique employee paychecks. Of the 21 sampled, 2 had inadequate documentation of time and effort spent on the major program, resulting in an overbilling in one sample and an underbilling in the second sample. For testing of indirect costs, a sample of 6 was made from a population of 21 monthly reimbursement invoices. Of the 6 sampled, 3 did not include sufficient documentation to support the direct costs used to apply the indirect cost rate. Cause: The Organization does not have adequate controls around the documentation of the supervisor review and approval process. Supervisory review and approvals are currently being communicated verbally. In addition, inadequate documentation is retained to document the time and effort of employee time spent on grants and the total direct costs that should be considered when applying the indirect cost rate. Effect: Without adequate records retained, the Organization is at risk of noncompliance with Federal programs and grant regulations, which could result in penalties or repayment obligations. Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, the Organization could incorrectly charge expenditures to the Federal program, report fraudulent expenditures, or not request appropriate reimbursement that the Organization is entitled to under the terms of the grant. Repeat Finding: No Recommendation: CLA recommends for the Organization to evaluate its current policies and procedures to implement an additional layer of review, and to formally document such review and approval procedures for all transactions affecting federal funds (i.e. approval of general expenditures, approval of timesheets, approval of indirect cost allocations). In addition, the Organization should emphasize the importance of detailed reviewed timesheets, including a second level review by the Finance Manager to ensure the accuracy and documentation of time and effort billed to each Federal program. Views of responsible officials: Management agrees with the finding.
Criteria or specific requirement: 2 CFR 200.403(b) states that costs must "Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items". Per the Federal award (contract 2018-51300-28430, PTEIN C0535A-A), there was no specific allowability for “Fees”, and the budget indicated $0 allocated to “Fees”. 2 CFR 200.303(a) requires nonfederal entities receiving Federal awards to "Establish and maintain internal controls over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." 2 CFR 200.430(i)(1) states that "Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed." Condition: (10.307) During testing of general disbursements, it was noted that the Organization did not retain documentary evidence of review and approval of disbursements for 4 out of 17 samples tested. In addition, for 1 sample, the Organization charged unallowable costs (bank fees) to the major program. During testing of payroll, it was noted that inadequate time and effort documentation was retained for 2 out of 26 samples tested, resulting in wages being charged erroneously between programs. (10.311) During testing of general disbursements, it was noted that the Organization did not retain documentary evidence of review and approval of disbursements for 5 out of 14 samples tested. During testing of payroll, it was noted that inadequate time and effort documentation was retained for 2 out of 21 samples tested, resulting in wages being charged erroneously between programs. During testing of indirect costs, it was noted that direct costs used to calculate the applied indirect cost rate were not supported by underlying documentation of costs incurred. Questioned costs: None Context: (10.307) For testing of general disbursements, a sample of 17 was made from a population of 113 disbursement transactions. Of the 17 sampled, 4 did not include documentary evidence of review and approval of the disbursement. In addition, 1 sample was found to be out of compliance with the provisions for 2 CFR 200.403(b). For testing of payroll, a sample of 26 was made from a population of 168 unique employee paychecks. Of the 26 sampled, 2 had inadequate documentation of time and effort spent on the major program, resulting in an overbilling in one sample and an underbilling in the second sample. (10.311) For testing of general disbursements, a sample of 14 was made from a population of 90 disbursement transactions. Of the 14 sampled, 5 did not include documentary evidence of review and approval of the disbursement. For testing of payroll, a sample of 21 was made from a population of 139 unique employee paychecks. Of the 21 sampled, 2 had inadequate documentation of time and effort spent on the major program, resulting in an overbilling in one sample and an underbilling in the second sample. For testing of indirect costs, a sample of 6 was made from a population of 21 monthly reimbursement invoices. Of the 6 sampled, 3 did not include sufficient documentation to support the direct costs used to apply the indirect cost rate. Cause: The Organization does not have adequate controls around the documentation of the supervisor review and approval process. Supervisory review and approvals are currently being communicated verbally. In addition, inadequate documentation is retained to document the time and effort of employee time spent on grants and the total direct costs that should be considered when applying the indirect cost rate. Effect: Without adequate records retained, the Organization is at risk of noncompliance with Federal programs and grant regulations, which could result in penalties or repayment obligations. Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, the Organization could incorrectly charge expenditures to the Federal program, report fraudulent expenditures, or not request appropriate reimbursement that the Organization is entitled to under the terms of the grant. Repeat Finding: No Recommendation: CLA recommends for the Organization to evaluate its current policies and procedures to implement an additional layer of review, and to formally document such review and approval procedures for all transactions affecting federal funds (i.e. approval of general expenditures, approval of timesheets, approval of indirect cost allocations). In addition, the Organization should emphasize the importance of detailed reviewed timesheets, including a second level review by the Finance Manager to ensure the accuracy and documentation of time and effort billed to each Federal program. Views of responsible officials: Management agrees with the finding.
FINDING 2022-002 Subject: Child Support Enforcement - Allowable Costs/Cost Principles Federal Agency: Department of Health and Human Services Federal Program: Child Support Enforcement Assistance Listings Number: 93.563 Federal Award Number and Year (or Other Identifying Number): FY2022 Pass-Through Entity: Indiana Department of Child Services Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Noncompliance Condition and Context Indirect costs are expenses that are incurred by other County offices, which indirectly benefit the County Title IV-D offices. Indirect expenses are allocated to the County Title IV-D offices through an indirect Cost Allocation Plan (CAP) which is submitted to the Department of Child Services' Child Support Bureau. Indirect costs charged are based on two-year prior expenditures; therefore, indirect costs charged in 2022 were based on expenditures from 2020. A sample of 25 expenditures, totaling $27,077, from the department cost pools from the CAP were selected for testing. For 1 of the 25 expenditures examined, the County was unable to provide the contract; therefore, we were unable to verify if the correct rate for the contract payment was charged. For an additional 2 contracts requested, the contract could not be provided at the initial time of request. The contracts were provided nine months later at which time we verified the contract payment charged. In addition, the County did not have written procedures for determining the allowability of costs in accordance with Subpart E of 2 CFR 200. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (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 . . . (g) Be adequately documented. . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (7) Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award." Cause A proper system of internal controls over child support enforcement expenditures was not designed by management of the County. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, expenses within the cost application plan could not be verified as accurate. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls and develop policies and procedures to ensure that costs included within the cost allocation plan have adequate supporting documentation to support the amount paid. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. Auditor's Response Sufficient, appropriate audit evidence in regard to supplement not supplant was determined to not have been obtained at the initial time of audit. As such, additional audit procedures were performed after the report date of September 29, 2023. The missing contracts were a part of the original report which was discussed and communicated to management on September 29, 2023. Contracts were not provided in September, nor was there a disagreement with this portion of the finding in the original corrective action plan provided by management. Documentation provided in June 2024 was unsolicited but was reviewed, and the issue noted in the finding was updated accordingly. While we agree two of the three contracts could be reviewed and verified once provided in June 2024, the third contract is still in question as noted in the finding.
FINDING 2022-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Allowable Costs/Cost Principles Federal Agency: Department of Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2022 Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context Allowable costs are based on the premise that a recipient is responsible for the effective administration of the federal award, application of sound management practices, and administration of federal funds in a manner consistent with the program objectives and terms and conditions of the awards. State and Local Fiscal Recovery Funds (SLFRF) recipients must implement internal controls and effective monitoring to ensure compliance with the cost principles. Costs were charged to the SLFRF award in two ways. Either directly, as an expense to the fund at the time of initial posting, or indirectly via a journal entry after the initial time of posting. Costs charged directly at the time of initial posting were reviewed and approved by an individual that had knowledge of the activity. Costs charged to the SLFRF award indirectly via a journal entry were completed by one employee with no review process in place to ensure the journal entry posted was allowable, accurate, and timely. Due to the lack of effective internal controls over direct payroll postings, 2 deviations out of 13 payroll transactions tested were not supported due to the City incorrectly calculating the firefighter overtime wages. The deviations noted were for the pay periods ending March 27, 2022, and July 3, 2022. This time frame was covered in an audit conducted by the Department of Labor (DOL). The audit conducted by the DOL was over the City's payroll pertaining to firefighter and paramedic overtime wages. The audit covered the period of March 8, 2020 to October 29, 2022, and concluded that the City underpaid 172 firefighters/paramedics due to incorrectly calculating the overtime wages for the audit period covered. Based on the audit conducted by the DOL, we tested two employees' payrolls from November 4, 2022 through December 30, 2022, which consisted of 10 additional transactions, to determine if the City had corrected the calculations after the audit period that was covered by the DOL audit. This testing identified that the City had not corrected the calculation issue for the overtime wages for these two employees which resulted in 9 additional deviations of noncompliance. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 24 CITY OF GARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (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. . . . (g) Be adequately documented. . . ." Cause A proper system of internal controls over payroll transactions was not effective to ensure that the City correctly calculated firefighter wages that were paid from the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds grant. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, costs paid from the SLFRF funds for overtime pay to firefighters and paramedics was not adequately documented. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City design and implement a proper system of internal controls, including policies and procedures to ensure that the City's payroll is calculated properly based on the Fair Labor Standards Act (FLSA) requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2022-002 – INTERNAL CONTROLS OVER COMPLIANCE – ALLOWABLE COSTS/COST PRINCIPLES Material Weakness U.S. Department of Housing and Urban Development CFDA #: 14.871/14.879 – Housing Voucher Cluster CRITERIA Factors affecting allowability of costs: Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal Awards: (a) Be necessary and reasonable for the performance of the Federal Award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non- Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal Award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this Part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. (g) Be adequately documented. (2 CFR Chapter 1 Part 200 § 200.403) CONDITION As disclosed in Finding 2022-001, the Authority lacked controls over the expenditure and recording of materials and supplies. As such, it is unknown whether or not these expenditures were appropriately charged to the Housing Voucher Program. CAUSE As disclosed in Finding 2022-001, the Authority did not establish an effective control environment or effective control activities over financial reporting or compliance. EFFECT Expenses may have been inappropriately charged to the Housing Voucher Cluster. QUESTIONED COSTS None identified. CONTEXT We reviewed the Authority’s internal controls over compliance with federal awards. REPEAT FINDING Repeat of finding 2021-002 RECOMMENDATION We recommend the Authority’s management take an active role in reviewing their policies and monitoring the Authority’s compliance with those policies. AUDITEE’S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.
2022-002 – INTERNAL CONTROLS OVER COMPLIANCE – ALLOWABLE COSTS/COST PRINCIPLES Material Weakness U.S. Department of Housing and Urban Development CFDA #: 14.871/14.879 – Housing Voucher Cluster CRITERIA Factors affecting allowability of costs: Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal Awards: (a) Be necessary and reasonable for the performance of the Federal Award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non- Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal Award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this Part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. (g) Be adequately documented. (2 CFR Chapter 1 Part 200 § 200.403) CONDITION As disclosed in Finding 2022-001, the Authority lacked controls over the expenditure and recording of materials and supplies. As such, it is unknown whether or not these expenditures were appropriately charged to the Housing Voucher Program. CAUSE As disclosed in Finding 2022-001, the Authority did not establish an effective control environment or effective control activities over financial reporting or compliance. EFFECT Expenses may have been inappropriately charged to the Housing Voucher Cluster. QUESTIONED COSTS None identified. CONTEXT We reviewed the Authority’s internal controls over compliance with federal awards. REPEAT FINDING Repeat of finding 2021-002 RECOMMENDATION We recommend the Authority’s management take an active role in reviewing their policies and monitoring the Authority’s compliance with those policies. AUDITEE’S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.
CONDITION: During the calendar year 2022, the City did not record the necessary adjustments to the various ‘Fund’ general ledgers of the City to properly reconcile the balance sheet accounts, such as cash, receivables, payables, and payroll-related liabilities to the underlying supporting documentation available at the City (which includes reconciliations of cash prepared independently by City personnel but do not agree to amounts reported in the various general ledgers). This included ‘Funds” containing significant federal funding such as the City’s Community Development Block Grant (CDBG) Program and American Rescue Plan Act (ARPA) funding known as the Coronavirus State and Local Fiscal Recovery Fund. As a result, the financial position and results of operations as shown throughout the calendar year were inaccurately stated. However, it should be noted that the Community Development Department of the City and other City personnel maintain separate financial reporting for these federal funds, independent of the aforementioned ‘Fund’ general ledgers sufficient to ascertain the revenues and expenditures of the federal programs. This is a repeat finding (2021-001) from the prior year. CRITERIA: Prudent internal control procedures in the areas of general ledger management and financial reporting include the reconciliation of all general ledger account balances to underlying supporting documentation monthly with independent oversight and approval as part of the process. In specific as it relates to federal programs, Section 2 CFR 200.403(g) of the Uniform Guidance requires that federal costs must be adequately documented which would include the applicable general ledgers of the City. EFFECT: The lack of procedures in place for reconciling balance sheet accounts throughout the calendar year, with independent oversight, 1) reduces the City’s internal control over the financial reporting processes, 2) exposes the City to inaccurate financial reporting to management for decision-making purposes, and 3) increases the potential for irregularities that may result (unintentional or otherwise) that are not detected in a timely manner. Had these reconciliations been performed, issues such as non-postings, and inaccurate postings to the City’s various general ledgers could have been detected and corrected in a timely manner to enhance internal controls and financial reporting in this important area of financial management. As a result, the City is not incompliance with Section 2 CFR 200.403(g) of the Uniform Guidance which requires federal costs to be adequately documented in the applicable general ledgers of the City. CAUSE: City business office personnel perform a variety of duties such as accounting for deposits, invoice processing, reconciliation of cash (but not to the various general ledger accounts of the City), preparation of payroll, and posting of financial transactions to the City’s general ledgers. However, no one individual is responsible for managing and reconciling all of the aforementioned procedures to the various ‘Fund’ general ledgers at the City. RECOMMENDATION: I am recommending that the management of the City establish written procedures for all accounting functions, but most notably for recording the necessary adjustments to the City’s general ledgers throughout the calendar year (monthly) to ensure that all balance sheet account balances are supported by the underlying documentation available at the City. It is anticipated that additional training will be required for in-house personnel to perform this function, or the City may want to consider contracting these services to a third-party professional with the expertise to perform these functions for the City on a monthly or quarterly basis throughout the year. These procedures should significantly enhance the internal control over the financial accounting and reporting process relative to the City’s general ledgers for each Fund. VIEWS OF RESPONSIBLE OFFICIALS: The City concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During the calendar year 2022, the City did not record the necessary adjustments to the various ‘Fund’ general ledgers of the City to properly reconcile the balance sheet accounts, such as cash, receivables, payables, and payroll-related liabilities to the underlying supporting documentation available at the City (which includes reconciliations of cash prepared independently by City personnel but do not agree to amounts reported in the various general ledgers). This included ‘Funds” containing significant federal funding such as the City’s Community Development Block Grant (CDBG) Program and American Rescue Plan Act (ARPA) funding known as the Coronavirus State and Local Fiscal Recovery Fund. As a result, the financial position and results of operations as shown throughout the calendar year were inaccurately stated. However, it should be noted that the Community Development Department of the City and other City personnel maintain separate financial reporting for these federal funds, independent of the aforementioned ‘Fund’ general ledgers sufficient to ascertain the revenues and expenditures of the federal programs. This is a repeat finding (2021-001) from the prior year. CRITERIA: Prudent internal control procedures in the areas of general ledger management and financial reporting include the reconciliation of all general ledger account balances to underlying supporting documentation monthly with independent oversight and approval as part of the process. In specific as it relates to federal programs, Section 2 CFR 200.403(g) of the Uniform Guidance requires that federal costs must be adequately documented which would include the applicable general ledgers of the City. EFFECT: The lack of procedures in place for reconciling balance sheet accounts throughout the calendar year, with independent oversight, 1) reduces the City’s internal control over the financial reporting processes, 2) exposes the City to inaccurate financial reporting to management for decision-making purposes, and 3) increases the potential for irregularities that may result (unintentional or otherwise) that are not detected in a timely manner. Had these reconciliations been performed, issues such as non-postings, and inaccurate postings to the City’s various general ledgers could have been detected and corrected in a timely manner to enhance internal controls and financial reporting in this important area of financial management. As a result, the City is not incompliance with Section 2 CFR 200.403(g) of the Uniform Guidance which requires federal costs to be adequately documented in the applicable general ledgers of the City. CAUSE: City business office personnel perform a variety of duties such as accounting for deposits, invoice processing, reconciliation of cash (but not to the various general ledger accounts of the City), preparation of payroll, and posting of financial transactions to the City’s general ledgers. However, no one individual is responsible for managing and reconciling all of the aforementioned procedures to the various ‘Fund’ general ledgers at the City. RECOMMENDATION: I am recommending that the management of the City establish written procedures for all accounting functions, but most notably for recording the necessary adjustments to the City’s general ledgers throughout the calendar year (monthly) to ensure that all balance sheet account balances are supported by the underlying documentation available at the City. It is anticipated that additional training will be required for in-house personnel to perform this function, or the City may want to consider contracting these services to a third-party professional with the expertise to perform these functions for the City on a monthly or quarterly basis throughout the year. These procedures should significantly enhance the internal control over the financial accounting and reporting process relative to the City’s general ledgers for each Fund. VIEWS OF RESPONSIBLE OFFICIALS: The City concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During the calendar year 2022, the City did not record the necessary adjustments to the various ‘Fund’ general ledgers of the City to properly reconcile the balance sheet accounts, such as cash, receivables, payables, and payroll-related liabilities to the underlying supporting documentation available at the City (which includes reconciliations of cash prepared independently by City personnel but do not agree to amounts reported in the various general ledgers). This included ‘Funds” containing significant federal funding such as the City’s Community Development Block Grant (CDBG) Program and American Rescue Plan Act (ARPA) funding known as the Coronavirus State and Local Fiscal Recovery Fund. As a result, the financial position and results of operations as shown throughout the calendar year were inaccurately stated. However, it should be noted that the Community Development Department of the City and other City personnel maintain separate financial reporting for these federal funds, independent of the aforementioned ‘Fund’ general ledgers sufficient to ascertain the revenues and expenditures of the federal programs. This is a repeat finding (2021-001) from the prior year. CRITERIA: Prudent internal control procedures in the areas of general ledger management and financial reporting include the reconciliation of all general ledger account balances to underlying supporting documentation monthly with independent oversight and approval as part of the process. In specific as it relates to federal programs, Section 2 CFR 200.403(g) of the Uniform Guidance requires that federal costs must be adequately documented which would include the applicable general ledgers of the City. EFFECT: The lack of procedures in place for reconciling balance sheet accounts throughout the calendar year, with independent oversight, 1) reduces the City’s internal control over the financial reporting processes, 2) exposes the City to inaccurate financial reporting to management for decision-making purposes, and 3) increases the potential for irregularities that may result (unintentional or otherwise) that are not detected in a timely manner. Had these reconciliations been performed, issues such as non-postings, and inaccurate postings to the City’s various general ledgers could have been detected and corrected in a timely manner to enhance internal controls and financial reporting in this important area of financial management. As a result, the City is not incompliance with Section 2 CFR 200.403(g) of the Uniform Guidance which requires federal costs to be adequately documented in the applicable general ledgers of the City. CAUSE: City business office personnel perform a variety of duties such as accounting for deposits, invoice processing, reconciliation of cash (but not to the various general ledger accounts of the City), preparation of payroll, and posting of financial transactions to the City’s general ledgers. However, no one individual is responsible for managing and reconciling all of the aforementioned procedures to the various ‘Fund’ general ledgers at the City. RECOMMENDATION: I am recommending that the management of the City establish written procedures for all accounting functions, but most notably for recording the necessary adjustments to the City’s general ledgers throughout the calendar year (monthly) to ensure that all balance sheet account balances are supported by the underlying documentation available at the City. It is anticipated that additional training will be required for in-house personnel to perform this function, or the City may want to consider contracting these services to a third-party professional with the expertise to perform these functions for the City on a monthly or quarterly basis throughout the year. These procedures should significantly enhance the internal control over the financial accounting and reporting process relative to the City’s general ledgers for each Fund. VIEWS OF RESPONSIBLE OFFICIALS: The City concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During the calendar year 2022, the City did not record the necessary adjustments to the various ‘Fund’ general ledgers of the City to properly reconcile the balance sheet accounts, such as cash, receivables, payables, and payroll-related liabilities to the underlying supporting documentation available at the City (which includes reconciliations of cash prepared independently by City personnel but do not agree to amounts reported in the various general ledgers). This included ‘Funds” containing significant federal funding such as the City’s Community Development Block Grant (CDBG) Program and American Rescue Plan Act (ARPA) funding known as the Coronavirus State and Local Fiscal Recovery Fund. As a result, the financial position and results of operations as shown throughout the calendar year were inaccurately stated. However, it should be noted that the Community Development Department of the City and other City personnel maintain separate financial reporting for these federal funds, independent of the aforementioned ‘Fund’ general ledgers sufficient to ascertain the revenues and expenditures of the federal programs. This is a repeat finding (2021-001) from the prior year. CRITERIA: Prudent internal control procedures in the areas of general ledger management and financial reporting include the reconciliation of all general ledger account balances to underlying supporting documentation monthly with independent oversight and approval as part of the process. In specific as it relates to federal programs, Section 2 CFR 200.403(g) of the Uniform Guidance requires that federal costs must be adequately documented which would include the applicable general ledgers of the City. EFFECT: The lack of procedures in place for reconciling balance sheet accounts throughout the calendar year, with independent oversight, 1) reduces the City’s internal control over the financial reporting processes, 2) exposes the City to inaccurate financial reporting to management for decision-making purposes, and 3) increases the potential for irregularities that may result (unintentional or otherwise) that are not detected in a timely manner. Had these reconciliations been performed, issues such as non-postings, and inaccurate postings to the City’s various general ledgers could have been detected and corrected in a timely manner to enhance internal controls and financial reporting in this important area of financial management. As a result, the City is not incompliance with Section 2 CFR 200.403(g) of the Uniform Guidance which requires federal costs to be adequately documented in the applicable general ledgers of the City. CAUSE: City business office personnel perform a variety of duties such as accounting for deposits, invoice processing, reconciliation of cash (but not to the various general ledger accounts of the City), preparation of payroll, and posting of financial transactions to the City’s general ledgers. However, no one individual is responsible for managing and reconciling all of the aforementioned procedures to the various ‘Fund’ general ledgers at the City. RECOMMENDATION: I am recommending that the management of the City establish written procedures for all accounting functions, but most notably for recording the necessary adjustments to the City’s general ledgers throughout the calendar year (monthly) to ensure that all balance sheet account balances are supported by the underlying documentation available at the City. It is anticipated that additional training will be required for in-house personnel to perform this function, or the City may want to consider contracting these services to a third-party professional with the expertise to perform these functions for the City on a monthly or quarterly basis throughout the year. These procedures should significantly enhance the internal control over the financial accounting and reporting process relative to the City’s general ledgers for each Fund. VIEWS OF RESPONSIBLE OFFICIALS: The City concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During the calendar year 2022, the City did not record the necessary adjustments to the various ‘Fund’ general ledgers of the City to properly reconcile the balance sheet accounts, such as cash, receivables, payables, and payroll-related liabilities to the underlying supporting documentation available at the City (which includes reconciliations of cash prepared independently by City personnel but do not agree to amounts reported in the various general ledgers). This included ‘Funds” containing significant federal funding such as the City’s Community Development Block Grant (CDBG) Program and American Rescue Plan Act (ARPA) funding known as the Coronavirus State and Local Fiscal Recovery Fund. As a result, the financial position and results of operations as shown throughout the calendar year were inaccurately stated. However, it should be noted that the Community Development Department of the City and other City personnel maintain separate financial reporting for these federal funds, independent of the aforementioned ‘Fund’ general ledgers sufficient to ascertain the revenues and expenditures of the federal programs. This is a repeat finding (2021-001) from the prior year. CRITERIA: Prudent internal control procedures in the areas of general ledger management and financial reporting include the reconciliation of all general ledger account balances to underlying supporting documentation monthly with independent oversight and approval as part of the process. In specific as it relates to federal programs, Section 2 CFR 200.403(g) of the Uniform Guidance requires that federal costs must be adequately documented which would include the applicable general ledgers of the City. EFFECT: The lack of procedures in place for reconciling balance sheet accounts throughout the calendar year, with independent oversight, 1) reduces the City’s internal control over the financial reporting processes, 2) exposes the City to inaccurate financial reporting to management for decision-making purposes, and 3) increases the potential for irregularities that may result (unintentional or otherwise) that are not detected in a timely manner. Had these reconciliations been performed, issues such as non-postings, and inaccurate postings to the City’s various general ledgers could have been detected and corrected in a timely manner to enhance internal controls and financial reporting in this important area of financial management. As a result, the City is not incompliance with Section 2 CFR 200.403(g) of the Uniform Guidance which requires federal costs to be adequately documented in the applicable general ledgers of the City. CAUSE: City business office personnel perform a variety of duties such as accounting for deposits, invoice processing, reconciliation of cash (but not to the various general ledger accounts of the City), preparation of payroll, and posting of financial transactions to the City’s general ledgers. However, no one individual is responsible for managing and reconciling all of the aforementioned procedures to the various ‘Fund’ general ledgers at the City. RECOMMENDATION: I am recommending that the management of the City establish written procedures for all accounting functions, but most notably for recording the necessary adjustments to the City’s general ledgers throughout the calendar year (monthly) to ensure that all balance sheet account balances are supported by the underlying documentation available at the City. It is anticipated that additional training will be required for in-house personnel to perform this function, or the City may want to consider contracting these services to a third-party professional with the expertise to perform these functions for the City on a monthly or quarterly basis throughout the year. These procedures should significantly enhance the internal control over the financial accounting and reporting process relative to the City’s general ledgers for each Fund. VIEWS OF RESPONSIBLE OFFICIALS: The City concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During the calendar year 2022, the City did not record the necessary adjustments to the various ‘Fund’ general ledgers of the City to properly reconcile the balance sheet accounts, such as cash, receivables, payables, and payroll-related liabilities to the underlying supporting documentation available at the City (which includes reconciliations of cash prepared independently by City personnel but do not agree to amounts reported in the various general ledgers). This included ‘Funds” containing significant federal funding such as the City’s Community Development Block Grant (CDBG) Program and American Rescue Plan Act (ARPA) funding known as the Coronavirus State and Local Fiscal Recovery Fund. As a result, the financial position and results of operations as shown throughout the calendar year were inaccurately stated. However, it should be noted that the Community Development Department of the City and other City personnel maintain separate financial reporting for these federal funds, independent of the aforementioned ‘Fund’ general ledgers sufficient to ascertain the revenues and expenditures of the federal programs. This is a repeat finding (2021-001) from the prior year. CRITERIA: Prudent internal control procedures in the areas of general ledger management and financial reporting include the reconciliation of all general ledger account balances to underlying supporting documentation monthly with independent oversight and approval as part of the process. In specific as it relates to federal programs, Section 2 CFR 200.403(g) of the Uniform Guidance requires that federal costs must be adequately documented which would include the applicable general ledgers of the City. EFFECT: The lack of procedures in place for reconciling balance sheet accounts throughout the calendar year, with independent oversight, 1) reduces the City’s internal control over the financial reporting processes, 2) exposes the City to inaccurate financial reporting to management for decision-making purposes, and 3) increases the potential for irregularities that may result (unintentional or otherwise) that are not detected in a timely manner. Had these reconciliations been performed, issues such as non-postings, and inaccurate postings to the City’s various general ledgers could have been detected and corrected in a timely manner to enhance internal controls and financial reporting in this important area of financial management. As a result, the City is not incompliance with Section 2 CFR 200.403(g) of the Uniform Guidance which requires federal costs to be adequately documented in the applicable general ledgers of the City. CAUSE: City business office personnel perform a variety of duties such as accounting for deposits, invoice processing, reconciliation of cash (but not to the various general ledger accounts of the City), preparation of payroll, and posting of financial transactions to the City’s general ledgers. However, no one individual is responsible for managing and reconciling all of the aforementioned procedures to the various ‘Fund’ general ledgers at the City. RECOMMENDATION: I am recommending that the management of the City establish written procedures for all accounting functions, but most notably for recording the necessary adjustments to the City’s general ledgers throughout the calendar year (monthly) to ensure that all balance sheet account balances are supported by the underlying documentation available at the City. It is anticipated that additional training will be required for in-house personnel to perform this function, or the City may want to consider contracting these services to a third-party professional with the expertise to perform these functions for the City on a monthly or quarterly basis throughout the year. These procedures should significantly enhance the internal control over the financial accounting and reporting process relative to the City’s general ledgers for each Fund. VIEWS OF RESPONSIBLE OFFICIALS: The City concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During the calendar year 2022, the City did not record the necessary adjustments to the various ‘Fund’ general ledgers of the City to properly reconcile the balance sheet accounts, such as cash, receivables, payables, and payroll-related liabilities to the underlying supporting documentation available at the City (which includes reconciliations of cash prepared independently by City personnel but do not agree to amounts reported in the various general ledgers). This included ‘Funds” containing significant federal funding such as the City’s Community Development Block Grant (CDBG) Program and American Rescue Plan Act (ARPA) funding known as the Coronavirus State and Local Fiscal Recovery Fund. As a result, the financial position and results of operations as shown throughout the calendar year were inaccurately stated. However, it should be noted that the Community Development Department of the City and other City personnel maintain separate financial reporting for these federal funds, independent of the aforementioned ‘Fund’ general ledgers sufficient to ascertain the revenues and expenditures of the federal programs. This is a repeat finding (2021-001) from the prior year. CRITERIA: Prudent internal control procedures in the areas of general ledger management and financial reporting include the reconciliation of all general ledger account balances to underlying supporting documentation monthly with independent oversight and approval as part of the process. In specific as it relates to federal programs, Section 2 CFR 200.403(g) of the Uniform Guidance requires that federal costs must be adequately documented which would include the applicable general ledgers of the City. EFFECT: The lack of procedures in place for reconciling balance sheet accounts throughout the calendar year, with independent oversight, 1) reduces the City’s internal control over the financial reporting processes, 2) exposes the City to inaccurate financial reporting to management for decision-making purposes, and 3) increases the potential for irregularities that may result (unintentional or otherwise) that are not detected in a timely manner. Had these reconciliations been performed, issues such as non-postings, and inaccurate postings to the City’s various general ledgers could have been detected and corrected in a timely manner to enhance internal controls and financial reporting in this important area of financial management. As a result, the City is not incompliance with Section 2 CFR 200.403(g) of the Uniform Guidance which requires federal costs to be adequately documented in the applicable general ledgers of the City. CAUSE: City business office personnel perform a variety of duties such as accounting for deposits, invoice processing, reconciliation of cash (but not to the various general ledger accounts of the City), preparation of payroll, and posting of financial transactions to the City’s general ledgers. However, no one individual is responsible for managing and reconciling all of the aforementioned procedures to the various ‘Fund’ general ledgers at the City. RECOMMENDATION: I am recommending that the management of the City establish written procedures for all accounting functions, but most notably for recording the necessary adjustments to the City’s general ledgers throughout the calendar year (monthly) to ensure that all balance sheet account balances are supported by the underlying documentation available at the City. It is anticipated that additional training will be required for in-house personnel to perform this function, or the City may want to consider contracting these services to a third-party professional with the expertise to perform these functions for the City on a monthly or quarterly basis throughout the year. These procedures should significantly enhance the internal control over the financial accounting and reporting process relative to the City’s general ledgers for each Fund. VIEWS OF RESPONSIBLE OFFICIALS: The City concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During the calendar year 2022, the City did not record the necessary adjustments to the various ‘Fund’ general ledgers of the City to properly reconcile the balance sheet accounts, such as cash, receivables, payables, and payroll-related liabilities to the underlying supporting documentation available at the City (which includes reconciliations of cash prepared independently by City personnel but do not agree to amounts reported in the various general ledgers). This included ‘Funds” containing significant federal funding such as the City’s Community Development Block Grant (CDBG) Program and American Rescue Plan Act (ARPA) funding known as the Coronavirus State and Local Fiscal Recovery Fund. As a result, the financial position and results of operations as shown throughout the calendar year were inaccurately stated. However, it should be noted that the Community Development Department of the City and other City personnel maintain separate financial reporting for these federal funds, independent of the aforementioned ‘Fund’ general ledgers sufficient to ascertain the revenues and expenditures of the federal programs. This is a repeat finding (2021-001) from the prior year. CRITERIA: Prudent internal control procedures in the areas of general ledger management and financial reporting include the reconciliation of all general ledger account balances to underlying supporting documentation monthly with independent oversight and approval as part of the process. In specific as it relates to federal programs, Section 2 CFR 200.403(g) of the Uniform Guidance requires that federal costs must be adequately documented which would include the applicable general ledgers of the City. EFFECT: The lack of procedures in place for reconciling balance sheet accounts throughout the calendar year, with independent oversight, 1) reduces the City’s internal control over the financial reporting processes, 2) exposes the City to inaccurate financial reporting to management for decision-making purposes, and 3) increases the potential for irregularities that may result (unintentional or otherwise) that are not detected in a timely manner. Had these reconciliations been performed, issues such as non-postings, and inaccurate postings to the City’s various general ledgers could have been detected and corrected in a timely manner to enhance internal controls and financial reporting in this important area of financial management. As a result, the City is not incompliance with Section 2 CFR 200.403(g) of the Uniform Guidance which requires federal costs to be adequately documented in the applicable general ledgers of the City. CAUSE: City business office personnel perform a variety of duties such as accounting for deposits, invoice processing, reconciliation of cash (but not to the various general ledger accounts of the City), preparation of payroll, and posting of financial transactions to the City’s general ledgers. However, no one individual is responsible for managing and reconciling all of the aforementioned procedures to the various ‘Fund’ general ledgers at the City. RECOMMENDATION: I am recommending that the management of the City establish written procedures for all accounting functions, but most notably for recording the necessary adjustments to the City’s general ledgers throughout the calendar year (monthly) to ensure that all balance sheet account balances are supported by the underlying documentation available at the City. It is anticipated that additional training will be required for in-house personnel to perform this function, or the City may want to consider contracting these services to a third-party professional with the expertise to perform these functions for the City on a monthly or quarterly basis throughout the year. These procedures should significantly enhance the internal control over the financial accounting and reporting process relative to the City’s general ledgers for each Fund. VIEWS OF RESPONSIBLE OFFICIALS: The City concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
• CONDITION: During the calendar year 2022, the City did not utilize a formal general ledger system of accounting to track the financial activity (financial position and results of operations) for several ‘Funds’ held at the City. The activity of these funds is either 1) maintained in spreadsheet fashion similar to a checkbook used in personal finances, 2) recorded partially (expenses only with no revenue), or 3) not tracked at all. As these funds are not maintained using the City’s accounting software package, management does not have the ability to efficiently generate financial reports necessary to provide management with the proper fiscal oversight. This condition included the American Rescue Plan Act (ARPA) funding known as the Coronavirus State and Local Fiscal Recovery Fund. However, it should be noted that City personnel were able to prepare spreadsheets to document which expenditures were utilized to prepare the necessary quarterly reporting requirements to the Department of Treasury. This is a repeat finding (2021-002) from the prior year. CRITERIA: Prudent internal control procedures in the areas of general ledger management and financial reporting include maintaining a formal general ledger system of accounting to track the activity of all ‘Funds’ maintained by the City. In specific as it relates to federal programs, Section 2 CFR 200.403(g) of the Uniform Guidance requires that federal costs must be adequately documented which would include the maintaining of a formal general ledger system of accounting for all ‘Funds’ of the City. EFFECT: The lack of procedures in place for maintaining a formal general ledger system of accounting for all ‘Funds’ of the City 1) reduces the City’s internal control over the financial reporting processes, 2) exposes the City to inaccurate financial reporting to management for decision-making purposes, and 3) increases the potential for irregularities that may result (unintentional or otherwise) that are not detected in a timely manner. As a result, the City is not incompliance with Section 2 CFR 200.403(g) of the Uniform Guidance which requires federal costs to be adequately documented in the applicable general ledgers of the City. CAUSE: The City began the process during calendar year 2019 of creating general ledgers on the computer accounting software system for all funds of the City, however due to changes in business office personnel, and other workload responsibilities, the City has not been able to fully complete this process. RECOMMENDATION: I am recommending that the City continue the process of making sure the financial activity for all funds individually is entered into the software accounting system. It is anticipated that additional training will be required for in-house personnel to perform this function, or the City may want to consider contracting these services to a third-party professional with the expertise to perform these functions for the City on a monthly or quarterly basis throughout the year. These procedures should significantly enhance the internal control over the financial accounting and reporting process relative to the City’s general ledgers for each Fund. VIEWS OF RESPONSIBLE OFFICIALS: The City concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
Federal Agency: U.S. Department of Agriculture Forest Service Federal Program Name: Cooperative Forestry Assistance - Pass-Through Agency: N/A Assistance Listing Number: 10.664 Federal Award Identification Year: 2021 Award Period: 09/01/21-08/31/26 Type of Finding: Other Matters - Significant Deficiency in Internal Control Criteria: 2 CFR 200.403(a) - Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Condition: For one payroll sample that was selected, the amount of time charged to the grant was greater than the amount of time work was performed for the grant. As such, the program was overcharged. Context: A nonstatistical sample of 25 out of > 250 payroll entries were selected for testing for the Cooperative Forestry Assistance program. The condition noted above was identified during our procedures over the CFSC’s allowable costs provisions. Effect: CFSC did not identify the error to be able to make the appropriate corrections before receiving reimbursement for incorrect payroll related expenditures. Cause: CFSC did not consistently ensure that the hours worked by each employee related to the federal program were accurate applying the cost to the grant. Repeat Finding: The finding is a repeat finding. Recommendation: We recommend that management strengthen its current policies and procedures to ensure that all payroll amounts applied to the grant were for actual hours worked based on employee timesheets. Management’s Views: See separate corrective action plan.
Federal Agency: U.S. Department of Agriculture Forest Service Federal Program Name: Cooperative Forestry Assistance - Pass-Through Agency: N/A Assistance Listing Number: 10.664 Federal Award Identification Year: 2021 Award Period: 09/01/21-08/31/26 Type of Finding: Other Matters - Significant Deficiency in Internal Control Criteria: 2 CFR 200.403(a) - When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: For two subrecipient samples that were selected, verification of subrecipient's suspension or debarment status was not verified until after the subaward agreement was effective. Context: A nonstatistical sample of 6 out of 20 subrecipients were selected for testing for the Cooperative Forestry Assistance program. The condition noted above was identified during our procedures over CFSC’s subrecipients. Effect: CFSC did not verify suspension or debarment status timely which could result in naming a subrecipient as an award recipient who is potentially suspended or debarred. Cause: CFSC did not consistently ensure that Suspension or Debarment status was verified timely before naming the subrecipients tested as award recipients. Repeat Finding: The finding is not a repeat finding. Recommendation: We recommend that management strengthen its current policies and procedures to ensure that Suspension and Debarment Status is verified for each subrecipient applicant during its pre-award subrecipient screening process. Management’s Views: See separate corrective action plan.
Federal Agency: United States Department of Commerce Federal Program Name: Office for Coastal Management Assistance Listing Number: 11.473 Federal Award Identification Year: 2020 Pass-Through Agency: National Fish and Wildlife Grant Agreement Award Period: 9/1/20-08/31/23 Type of Finding: Other Matters - Significant Deficiency in Internal Control Criteria: 2 CFR 200.403(a) - Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Condition: For two payroll samples that were selected, the amount of time charged to the grant was greater than the amount of time work was performed for the grant. As such, the program was overcharged. Context: A nonstatistical sample of 8 out of 48 payroll entries were selected for testing for the Office for Coastal Management program. The condition noted above was identified during our procedures over the CFSC’s allowable costs provisions. Effect: CFSC did not identify the error to be able to make the appropriate corrections before receiving reimbursement for incorrect payroll related expenditures. Cause: CFSC did not consistently ensure that the hours worked by each employee related to the federal program were accurate applying the cost to the grant. Repeat Finding: The finding is a repeat finding. Recommendation: We recommend that management strengthen its current policies and procedures to ensure that all payroll amounts applied to the grant were for actual hours worked based on employee timesheets. Management’s Views: See separate corrective action plan.
Federal Agency: United States Department of Commerce Federal Program Name: Office for Coastal Management Assistance Listing Number: 11.473 Federal Award Identification Year: 2020 Award Period: 9/1/20-08/31/23 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance (Modified Opinion) Criteria: 2 CFR 200.403(a) - When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: For two subrecipient samples that were selected, verification of subrecipient's suspension or debarment status was not verified. Context: A nonstatistical sample of 2 of 4 subrecipients were selected for testing for the Office for Coastal Management program. Condition noted above was identified during our procedures over subrecipients. Effect: CFSC did not verify suspension or debarment status, which could result in naming a subrecipient as an award recipient, which is potentially suspended or debarred. Cause: CFSC did not consistently ensure that Suspension or Debarment status was verified before naming the subrecipients tested as award recipients. Repeat Finding: The finding is not a repeat finding. Recommendation: We recommend that management strengthen its current policies and procedures to ensure that Suspension and Debarment Status is verified for each subrecipient applicant during its pre-award subrecipient screening process. Management’s Views: See separate corrective action plan.
Federal Agency: United States Department of Commerce Federal Program Name: Office for Coastal Management Assistance Listing Number: 11.473 Federal Award Identification Year: 2020 Pass-Through Agency: National Fish and Wildlife Grant Agreement Award Period: 9/1/20-08/31/23 Type of Finding: Other Matters – Material Weakness in Internal Control Criteria: 2 CFR 200.414(c) - Federal award recipients must negotiate an indirect cost rate with the cognizant agency for indirect costs, which is typically the federal agency that provides the most funding to the recipient.2 CFR 200.403(d) - The negotiated rate must be applied consistently across all federal awards to ensure uniformity in cost allocation. 2 CFR 200.302(b)(3) - Recipients must maintain adequate documentation to support the indirect costs charged to federal awards, ensuring compliance with the cost principles outlined in the regulation. Condition: For two reimbursement requests from the grantor, an indirect cost rate was used, for which CSFC did not have a provisional or final rate agreement from the USDA. Context: Of the 2 reimbursements invoiced, 2 were selected for testing for the Office for Coastal Management program. The condition noted above was identified during our procedures over CFSC’s subrecipients. Effect: CFSC did not identify the error to be able to make the appropriate corrections before receiving reimbursement for incorrect indirect cost rate invoiced. Cause: CFSC’s procedures did not ensure that the negotiated provisional rate was invoiced properly. Repeat Finding: The finding is not a repeat finding. Recommendation: We recommend that CFSC modify and strengthen its current policies and procedures to perform review over the indirect cost rate utilized when submitting invoices to the grantor. Management’s Views: See separate corrective action plan.
Material Weakness 2022-08 Federal ALN Number 94.011 - Deficiencies in Complying with 2 CFR Section 200.403(g) - Adequate Documentation Criteria: Compliance with 2 CFR Section 200.403(g) necessitates adequate documentation of expenses. Invoices aid in the organization's expense tracking efforts, facilitating the allocation of costs to specific accounts or projects. Additionally, they serve as a tool for reconciling financial statements and accounts, ensuring the alignment of recorded disbursements with actual expenditures, and fostering financial integrity. Condition: We have observed the following issues related to Federal ALN Number 94.011: a. We selected samples for cash disbursements testing and noted that out of the 40 samples selected, 19 of them lack supporting invoices. b. Schedule of federal awards (SEFA) total disbursements does not tie up with the total expenditures per general ledger (GL). Cause of Condition: This internal control over financial closing and reporting process is not being observed: a. All journal entries, including nonstandard/nonroutine entries, have adequate supporting documentation and are reviewed and approved independently prior to posting. b. The organization has accounting procedures, charts of accounts, etc., for identifying and recording receipts and expenditures of program funds separately and in the appropriate cost category for each award or grant. Effect: The absence of supporting invoices and checks can lead to inaccuracies, incompleteness in the financial records and non-compliance with regulatory standards, especially 2 CFR Section 200.403(g). Without proper documentation, it becomes challenging to verify the legitimacy and details of the disbursements, which may result in errors or omissions and possibility of disallowed cost. Lack of supporting invoices may also result to difficulty in properly allocating expenses to different programs of the Organization. Questioned Cost: $11,261 for the lack of invoices while $1,336 for the variance between SEFA and GL Recommendation: Implement a documentary management system that can help the Organization keep its financial documents organized and easily accessible. Also, develop a document retention policy which sets guidelines that determine how long financial documents should be retained and when they should be disposed of. A well-designed document retention policy can help the Organization comply with legal and regulatory requirements while reducing storage costs. Recommendation: Implement a documentary management system that can help the Organization keep its financial documents organized and easily accessible. Also, develop a document retention policy which sets guidelines that determine how long financial documents should be retained and when they should be disposed of. A well-designed document retention policy can help the Organization comply with legal and regulatory requirements while reducing storage costs.
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.