Finding No. 2022-035 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.767 Children’s Health Insurance Program Federal Award No.: 7510515, 7520515 Area: Period of Performance Questioned Costs: $38,556 Criteria: 1. A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). 2. A non-federal entity must liquidate all financial obligations incurred under the federal award not later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the federal award (2 CFR section 200.344(b)). Condition: CNMI was unable to provide supporting documents (i.e. invoices, contracts, etc.) to support compliance with period of performance requirements for two (or 25%) of eight expenditures tested totaling $2,105,155 of a total population of $2,163,439 . Cause: CNMI lacks monitoring control over adequate documentation and systematic filing of relevant documentations supporting program costs. Effect: CNMI is in noncompliance with applicable period of performance requirements and questioned cost of $38,556 result. Recommendation: CNMI should implement more stringent record-keeping mechanisms to ensure timely submission of audit documents upon request of the auditors used for the testing of compliance requirements. Views of Responsible Officials: The CNMI Medicaid Office disagrees with this finding. Due to internal scheduling constraints and the compressed timeline required to complete the FY2022 audit, the requested documents were not submitted by the specified deadline, resulting in this finding. However, the office maintains all relevant supporting documentation and is prepared to provide it upon request from the Grantor. Refer to CNMI’s Corrective Action Plan for additional information. Auditor Response: CNMI states disagreement; however, CNMI also acknowledges that documentation supporting program costs were not provided.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 21.019, Department of Treasury, Covid-19: Coronavirus Relief Fund Federal Award Identification Number and Year: n/a Pass-through Entity ? Oakland County Finding Type ? Material weakness in internal control over compliance Repeat Finding ? No Criteria ? Per 2 CFR ? 200.403(h), costs must be incurred during the approved budget period. Budget period means the time interval from the start date of a funded portion of an award to the end date of that funded portion during which recipients are authorized to expend the funds awarded, including any funds carried forward or other revisions pursuant to 200.308. A non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance. Condition ? During our testing for Period of Performance, it was noted that 8 out of 49 disbursements tested did not comply with the Period of Performance requirements as specified in the Oakland County grant agreement. Funds were disbursed for expenses incurred after the expiration date of the grant. Identification of How Questioned Costs Were Computed ? Actual error of $28,801 was extrapolated to the entire population. Likely questioned cost, (extrapolated amount) are $44,725. Likely Questioned Costs ? $44,725 Known Questioned Costs ? $28,801Cause ? Management did not follow their internal controls to ensure that compliance with Period of Performance requirements were met. Effect ? Certain expenditures were disbursed for expenses incurred after the expiration date of the grant. Recommendation ? We recommend that all expenditures charged under the grant fall within the required Period of Performance requirements as specified in the grant agreement. View of Responsible Officials and Corrective Action Plan ? Grant expenditures that specify a period of coverage and/or performance will be amortized based on the service contract terms. Amortization costs that go beyond a grant?s expiration date will not be recorded against the expired grant.
2022-004 Period of Performance Federal Agency: U.S. Department of Homeland Security Federal Program Title: Homeland Security Grant Program (HSGP) ALN: 97.067 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 3708603, 3902402, 4164001 3/1/2020 ? 630/2022, 4/1/2020 ? 5/31/2022, 9/1/2020 ? 2/28/2022 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403(h) cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to ? 200.308(e)(3). Condition: The Office of the Texas Governor (OOG) is the prime recipient of federal awards for the Homeland Security Grant Program. The Department of Public Safety (DPS) receives allocations of these funds for individual projects. A Statement of Grant Award (SOGA) is issued by OOG to DPS for each project with start, end, and liquidation dates. For projects with period of performance ending dates during the fiscal year, as stipulated by OOG, audit procedures included testing transactions posted to the general ledger during the last month and after the period of performance end date. We noted the following instances of noncompliance: ? For the twelve sampled transactions, totaling $1,240,691, five of the expenditures, totaling $78,749, were related to costs incurred after the period of performance end date or liquidated after the liquidation period end date. Questioned costs: $78,749 Context: See ?Condition.? Cause: Current controls are not at the correct precision level to detect costs charged outside of the period of performance or paid after the liquidation date as specified in the project grant agreement. Effect: Ineffective internal controls may result in questioned costs and noncompliance with the terms of the grant. Repeat Finding: No Recommendation: DPS should enhance and/or modify existing controls (both manual and automated) to ensure that costs are not charged to a project unless (1) the service dates fall within the period of performance stated in the SOGA, and (2) the costs have been paid prior to the liquidation period end date. Views of responsible officials: The Department of Public Safety acknowledges and agrees with the findings. Through analysis of the exceptions identified in the audit, the Department of Public Safety will work to develop and implement corrective action to further improve the processes.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 21.019, Department of Treasury, Covid-19: Coronavirus Relief Fund Federal Award Identification Number and Year: n/a Pass-through Entity ? Oakland County Finding Type ? Material weakness in internal control over compliance Repeat Finding ? No Criteria ? Per 2 CFR ? 200.403(h), costs must be incurred during the approved budget period. Budget period means the time interval from the start date of a funded portion of an award to the end date of that funded portion during which recipients are authorized to expend the funds awarded, including any funds carried forward or other revisions pursuant to 200.308. A non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance. Condition ? During our testing for Period of Performance, it was noted that 8 out of 49 disbursements tested did not comply with the Period of Performance requirements as specified in the Oakland County grant agreement. Funds were disbursed for expenses incurred after the expiration date of the grant. Identification of How Questioned Costs Were Computed ? Actual error of $28,801 was extrapolated to the entire population. Likely questioned cost, (extrapolated amount) are $44,725. Likely Questioned Costs ? $44,725 Known Questioned Costs ? $28,801Cause ? Management did not follow their internal controls to ensure that compliance with Period of Performance requirements were met. Effect ? Certain expenditures were disbursed for expenses incurred after the expiration date of the grant. Recommendation ? We recommend that all expenditures charged under the grant fall within the required Period of Performance requirements as specified in the grant agreement. View of Responsible Officials and Corrective Action Plan ? Grant expenditures that specify a period of coverage and/or performance will be amortized based on the service contract terms. Amortization costs that go beyond a grant?s expiration date will not be recorded against the expired grant.
2022-004 Period of Performance Federal Agency: U.S. Department of Homeland Security Federal Program Title: Homeland Security Grant Program (HSGP) ALN: 97.067 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 3708603, 3902402, 4164001 3/1/2020 ? 630/2022, 4/1/2020 ? 5/31/2022, 9/1/2020 ? 2/28/2022 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403(h) cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to ? 200.308(e)(3). Condition: The Office of the Texas Governor (OOG) is the prime recipient of federal awards for the Homeland Security Grant Program. The Department of Public Safety (DPS) receives allocations of these funds for individual projects. A Statement of Grant Award (SOGA) is issued by OOG to DPS for each project with start, end, and liquidation dates. For projects with period of performance ending dates during the fiscal year, as stipulated by OOG, audit procedures included testing transactions posted to the general ledger during the last month and after the period of performance end date. We noted the following instances of noncompliance: ? For the twelve sampled transactions, totaling $1,240,691, five of the expenditures, totaling $78,749, were related to costs incurred after the period of performance end date or liquidated after the liquidation period end date. Questioned costs: $78,749 Context: See ?Condition.? Cause: Current controls are not at the correct precision level to detect costs charged outside of the period of performance or paid after the liquidation date as specified in the project grant agreement. Effect: Ineffective internal controls may result in questioned costs and noncompliance with the terms of the grant. Repeat Finding: No Recommendation: DPS should enhance and/or modify existing controls (both manual and automated) to ensure that costs are not charged to a project unless (1) the service dates fall within the period of performance stated in the SOGA, and (2) the costs have been paid prior to the liquidation period end date. Views of responsible officials: The Department of Public Safety acknowledges and agrees with the findings. Through analysis of the exceptions identified in the audit, the Department of Public Safety will work to develop and implement corrective action to further improve the processes.
Assistance listing program: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) Assistance Listing Number: 84.425F Award identification number: P425F204999 Award period: September 29, 2020 to June 30, 2023 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control / Compliance Finding Type: Material Weakness Compliance requirement: Allowed Cost / Cost Principles Condition and context In testing compliance and internal controls over cost allowability / cost principles, we selected a sample of ten (10) transactions which amounted to $445,522 of HEERF Institutional aid funds expenditures. Our sample was a statistically valid sample. During our expenditure test, we noted the following deficiencies: a) In one transaction of a sample of ten (10) disbursements (10%) the vendor quote was not available for examination. The transaction amounted to $5,899. The Institution indicated that they followed the micro purchase threshold of $10,000 as defined in 48CFR Part 2, subpart 2.1. However, this determination was not properly documented. b) In two (2) transactions of our sample (20%) the cost per quote did not agree with the amount of the invoice. The amount invoiced in excess of the quote cost was $1,090. c) In three (3) transactions of our sample (30%) we did not find documentation that the equipment was received (date and the employee who received the item). We inquired the Institution?s Management about this matter, and they explained that the Institution does not have a formal procedure or form to document the receipt of goods. Management confirmed and represented us that the items were properly received. d) In one transaction of our sample (10%) the expenditure was related to the amount of lost revenue claimed by the Institution in the fiscal year 2021-22. Upon examination of the Institution analysis, we noted that the lost revenue was not properly determined because the following situations: 1. For the loss of revenue calculation, the Institution used the unaudited figures for the fiscal year ended July 31, 2021. 2. We noted that the Institution considered in its analysis revenue that was not in accordance with the program guidelines (transactions that were not reimbursable under the HEERF grant program). 3. We noted that the lost revenue determined by the Institution was incorrectly determined (lost revenue claimed was understated by approximately $80,000) as result of the net effect of the deficiencies 1 and 2, above. Criteria 2 CFR 200.302 (b) (3) and (7) require records that identify adequately the source and application of funds for federally funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income, and interest and be supported by source documentation. 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. 2 CFR 200.303 (a) to (d) establish that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. 2 CFR 200.400 (a) to (d) establish that the application of these cost principles is based on the fundamental premises that: (a) The non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices. (b) The non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. (c) The non-Federal entity, in recognition of its own unique combination of staff, facilities, and experience, has the primary responsibility for employing whatever form of sound organization and management techniques may be necessary in order to assure proper and efficient administration of the Federal award. (d) The application of these cost principles should require no significant changes in the internal accounting policies and practices of the non-Federal entity. However, the accounting practices of the non-Federal entity must be consistent with these cost principles and support the accumulation of costs as required by the principles and must provide for adequate documentation to support costs charged to the Federal awards. 2 CFR 200.403, related to factors affecting allowability of cost, (c) and (g) establish that except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity, and be adequately documented. 2 CFR 200.404 establishes that a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award; (b) the restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award; (c) market prices for comparable goods or services for the geographic area; (d) whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government; and (e) whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost. 2 CFR 200.406 (a) establishes that applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the Federal awards as direct or indirect (F&A) costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. 2 CFR 200.334 establishes that financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. 2 CFR 200.337 (a) establishes that the Federal awarding agency, Inspectors General, the Comptroller General of the United States, and the pass-through entity, or any of their authorized representatives, must have the right of access to any documents, papers, or other records of the non-Federal entity which are pertinent to the Federal award, in order to make audits, examinations, excerpts, and transcripts. The right also includes timely and reasonable access to the non-Federal entity's personnel for the purpose of interview and discussion related to such documents. The Higher Education Emergency Relief Fund (HEERF I, II, and III) Lost Revenue Frequently Asked Questions (FAQs) published on March 19, 2021, in question number four establishes that sources of lost revenue that are not reimbursable under the HEERF grant programs include the following: capital outlays associated with facilities related to athletics (including fees assessed for capital athletic facility construction), acquisition of real property (including bond revenue), contributions or donations to the institution, marketing or recruitment activities, revenue related to sectarian instruction or religious worship, alcohol sales, and investment income (including endowment and quasi-endowment revenue. Cause The cause of the deficiencies noted were the result of the following situations: a) Lack of written policies and procedures did not provide the Institution?s personnel responsible for the purchasing process a guidance on how to perform and document the purchase transactions under this federal program. b) The vendor invoice was not compared to the quote and no inquiries were made and/or documented explaining the cause of the difference. c) The Institution does not have formal and written procedures to document when materials and/or equipment are received by the Institution?s personnel. d) The Institution management did not consult or requested assistance from the Department of Education program coordinator to ascertain that the request was properly performed and to clarify questions related to the allowable revenue to be considered in the analysis. Also, the Institution failed to review the financial figures of the audited trial balance for 2021. Effect Noncompliance with the above-mentioned requirements could lead to administrative actions by the grantor. It could also be interpreted as a failure to manage federal awards in compliance with laws, regulations, and provisions of contracts and grant agreements. Also, the above conditions could result in the reimbursement of federal funds to the grantors for those disbursements not properly supported and reviewed by the Institution?s management. Questioned costs Refer to finding 2022-010. Identification as a Repeat Finding No repeated finding. Recommendations We recommend the Institution to establish adequate procedures and controls, which shall consider, among others, the following: ? Maintain adequate documentation to support the allowability of its expenditures. ? Purchases must be properly documented to provide the appropriate audit trail of the transactions and allow proper review of the transactions. Adequate documentation should be sufficient to explain the Institution?s analysis and determination. ? Improve its policies and procedures, and internal controls to incorporate the comparison of the vendor invoices with the quotes after the invoice is received to ascertain that expenses and liabilities are properly recorded. Instruct personnel of accounts payable to contact the vendor when discrepancies are identified and document in writing the inquiry performed, the results, and conclusions. ? Implement a formal process with receiving reports or checklist where upon receipt of equipment and/or materials purchased could detail description, amount received, date of receipt, and a reference to the invoice. Copies of the receiving reports and invoices should then be forwarded to the accounting department for processing. Payment of a vendor?s invoice should not be made unless a copy of a receiving report is attached. ? The Institution management should review the Loss of Revenue claims and/or analysis performed by any employee or consultant that was designated to perform such a task. The Institution?s management should verify and ascertain that the analysis performed using the Institution?s financial information agree with the Institution?s audited financial statements. ? The Institution?s management should consult with the US Department of Education program coordinator when questions or concerns arise, especially if management is not familiar with program regulations and/or the federal program is new. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
Assistance listing program: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) Assistance Listing Number: 84.425F Award identification number: P425F204999 Award period: September 29, 2020 to June 30, 2023 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control / Compliance Finding Type: Material Weakness Compliance requirement: Allowed Cost / Cost Principles Condition and context In testing compliance and internal controls over cost allowability / cost principles, we selected a sample of ten (10) transactions which amounted to $445,522 of HEERF Institutional aid funds expenditures. Our sample was a statistically valid sample. During our expenditure test, we noted the following deficiencies: a) In one transaction of a sample of ten (10) disbursements (10%) the vendor quote was not available for examination. The transaction amounted to $5,899. The Institution indicated that they followed the micro purchase threshold of $10,000 as defined in 48CFR Part 2, subpart 2.1. However, this determination was not properly documented. b) In two (2) transactions of our sample (20%) the cost per quote did not agree with the amount of the invoice. The amount invoiced in excess of the quote cost was $1,090. c) In three (3) transactions of our sample (30%) we did not find documentation that the equipment was received (date and the employee who received the item). We inquired the Institution?s Management about this matter, and they explained that the Institution does not have a formal procedure or form to document the receipt of goods. Management confirmed and represented us that the items were properly received. d) In one transaction of our sample (10%) the expenditure was related to the amount of lost revenue claimed by the Institution in the fiscal year 2021-22. Upon examination of the Institution analysis, we noted that the lost revenue was not properly determined because the following situations: 1. For the loss of revenue calculation, the Institution used the unaudited figures for the fiscal year ended July 31, 2021. 2. We noted that the Institution considered in its analysis revenue that was not in accordance with the program guidelines (transactions that were not reimbursable under the HEERF grant program). 3. We noted that the lost revenue determined by the Institution was incorrectly determined (lost revenue claimed was understated by approximately $80,000) as result of the net effect of the deficiencies 1 and 2, above. Criteria 2 CFR 200.302 (b) (3) and (7) require records that identify adequately the source and application of funds for federally funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income, and interest and be supported by source documentation. 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. 2 CFR 200.303 (a) to (d) establish that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. 2 CFR 200.400 (a) to (d) establish that the application of these cost principles is based on the fundamental premises that: (a) The non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices. (b) The non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. (c) The non-Federal entity, in recognition of its own unique combination of staff, facilities, and experience, has the primary responsibility for employing whatever form of sound organization and management techniques may be necessary in order to assure proper and efficient administration of the Federal award. (d) The application of these cost principles should require no significant changes in the internal accounting policies and practices of the non-Federal entity. However, the accounting practices of the non-Federal entity must be consistent with these cost principles and support the accumulation of costs as required by the principles and must provide for adequate documentation to support costs charged to the Federal awards. 2 CFR 200.403, related to factors affecting allowability of cost, (c) and (g) establish that except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity, and be adequately documented. 2 CFR 200.404 establishes that a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award; (b) the restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award; (c) market prices for comparable goods or services for the geographic area; (d) whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government; and (e) whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost. 2 CFR 200.406 (a) establishes that applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the Federal awards as direct or indirect (F&A) costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. 2 CFR 200.334 establishes that financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. 2 CFR 200.337 (a) establishes that the Federal awarding agency, Inspectors General, the Comptroller General of the United States, and the pass-through entity, or any of their authorized representatives, must have the right of access to any documents, papers, or other records of the non-Federal entity which are pertinent to the Federal award, in order to make audits, examinations, excerpts, and transcripts. The right also includes timely and reasonable access to the non-Federal entity's personnel for the purpose of interview and discussion related to such documents. The Higher Education Emergency Relief Fund (HEERF I, II, and III) Lost Revenue Frequently Asked Questions (FAQs) published on March 19, 2021, in question number four establishes that sources of lost revenue that are not reimbursable under the HEERF grant programs include the following: capital outlays associated with facilities related to athletics (including fees assessed for capital athletic facility construction), acquisition of real property (including bond revenue), contributions or donations to the institution, marketing or recruitment activities, revenue related to sectarian instruction or religious worship, alcohol sales, and investment income (including endowment and quasi-endowment revenue. Cause The cause of the deficiencies noted were the result of the following situations: a) Lack of written policies and procedures did not provide the Institution?s personnel responsible for the purchasing process a guidance on how to perform and document the purchase transactions under this federal program. b) The vendor invoice was not compared to the quote and no inquiries were made and/or documented explaining the cause of the difference. c) The Institution does not have formal and written procedures to document when materials and/or equipment are received by the Institution?s personnel. d) The Institution management did not consult or requested assistance from the Department of Education program coordinator to ascertain that the request was properly performed and to clarify questions related to the allowable revenue to be considered in the analysis. Also, the Institution failed to review the financial figures of the audited trial balance for 2021. Effect Noncompliance with the above-mentioned requirements could lead to administrative actions by the grantor. It could also be interpreted as a failure to manage federal awards in compliance with laws, regulations, and provisions of contracts and grant agreements. Also, the above conditions could result in the reimbursement of federal funds to the grantors for those disbursements not properly supported and reviewed by the Institution?s management. Questioned costs Refer to finding 2022-010. Identification as a Repeat Finding No repeated finding. Recommendations We recommend the Institution to establish adequate procedures and controls, which shall consider, among others, the following: ? Maintain adequate documentation to support the allowability of its expenditures. ? Purchases must be properly documented to provide the appropriate audit trail of the transactions and allow proper review of the transactions. Adequate documentation should be sufficient to explain the Institution?s analysis and determination. ? Improve its policies and procedures, and internal controls to incorporate the comparison of the vendor invoices with the quotes after the invoice is received to ascertain that expenses and liabilities are properly recorded. Instruct personnel of accounts payable to contact the vendor when discrepancies are identified and document in writing the inquiry performed, the results, and conclusions. ? Implement a formal process with receiving reports or checklist where upon receipt of equipment and/or materials purchased could detail description, amount received, date of receipt, and a reference to the invoice. Copies of the receiving reports and invoices should then be forwarded to the accounting department for processing. Payment of a vendor?s invoice should not be made unless a copy of a receiving report is attached. ? The Institution management should review the Loss of Revenue claims and/or analysis performed by any employee or consultant that was designated to perform such a task. The Institution?s management should verify and ascertain that the analysis performed using the Institution?s financial information agree with the Institution?s audited financial statements. ? The Institution?s management should consult with the US Department of Education program coordinator when questions or concerns arise, especially if management is not familiar with program regulations and/or the federal program is new. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
CRITERIA Campus management is responsible for establishing and maintaining internal controls over disbursements that are adequate to ensure that all financial activities are properly processed and reported. Additionally, the Campus is required, except where otherwise authorized by statute, to ensure costs meet the general criteria outlined in 2 CFR 200.403 in order to be allowable under federal awards, including the costs be necessary and reasonable for the performance of the federal award and be allocable thereto under these principles. The Single Audit Reporting Package must have a report date nine months after fiscal year-end. CONDITION The Campus did not follow its Board adopted policies for federal regulations regarding disbursements to ensure all financial activities were properly processed, recorded in the appropriate fiscal year, and supported. The Campus did not provide all of the audit information for fiscal year 2021-22 in a timely manner to allow sufficient time for the audit to be completed by the deadline. CAUSE The Campus has not implemented controls over disbursement transactions. In addition, documentation was not always maintained. EFFECT The Campus was not in compliance with Board adopted policies for federal regulations and guidelines. CONTEXT The following items were noted during our review of disbursement transactions: For four of 40 disbursements reviewed, supporting documentation was not maintained. The Campus did not maintain credit card statements for all credit cards. The Campus did not maintain a complete list of credit card users to ensure possession was monitored. For six of 40 disbursements reviewed, dual signatures were not obtained when issuing the check.
CRITERIA Campus management is responsible for establishing and maintaining internal controls over disbursements that are adequate to ensure that all financial activities are properly processed and reported. Additionally, the Campus is required, except where otherwise authorized by statute, to ensure costs meet the general criteria outlined in 2 CFR 200.403 in order to be allowable under federal awards, including the costs be necessary and reasonable for the performance of the federal award and be allocable thereto under these principles. The Single Audit Reporting Package must have a report date nine months after fiscal year-end. CONDITION The Campus did not follow its Board adopted policies for federal regulations regarding disbursements to ensure all financial activities were properly processed, recorded in the appropriate fiscal year, and supported. The Campus did not provide all of the audit information for fiscal year 2021-22 in a timely manner to allow sufficient time for the audit to be completed by the deadline. CAUSE The Campus has not implemented controls over disbursement transactions. In addition, documentation was not always maintained. EFFECT The Campus was not in compliance with Board adopted policies for federal regulations and guidelines. CONTEXT The following items were noted during our review of disbursement transactions: For four of 40 disbursements reviewed, supporting documentation was not maintained. The Campus did not maintain credit card statements for all credit cards. The Campus did not maintain a complete list of credit card users to ensure possession was monitored. For six of 40 disbursements reviewed, dual signatures were not obtained when issuing the check.
Information on Federal Program(s) - Department of Health and Human Services, Assistance Listing Number 93.498 COVID-19 - Provider Relief Fund and American Rescue Plan Rural Distribution, Schedule of Expenditures of Federal Awards Reporting Periods 2 and 3, Agency Fiscal Year-Ended June 30, 2022. Criteria – The Code of Federal Regulations Section 200.403(g) states that for costs to be allowable under Federal awards, they must be adequately documented. Pursuant to 2 CFR section 200.303(a), the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition – During our testing of direct expenditures, we noted the following exceptions: • Two of the sixty expenditures sampled did not have necessary approvals. The original invoices with approvals could not be found, however we were able to determine that the invoices were properly recorded to the general ledger. • Two of the sixty expenditures sampled did not have adequate supporting documentation. • Two of the sixty expenditures had supporting documentation that was coded to cost centers and/or accounts that were inconsistent with what was recorded in the general ledger. However, the actual postings to the general ledger were recorded to the correct cost centers and/or accounts. Cause - Policies and procedures were not appropriately adhered to in certain instances to ensure that supporting documentation was maintained correctly to evidence that costs were allowable and that an appropriate level of review and approval was completed prior to charging costs to a federal program. Effect or Potential Effect - We were unable to confirm the allowability, validity, or completeness of the two expenses lacking supporting documentation that were claimed as federal expenditures. Questioned Costs – Likely questioned costs were projected to be less than $25,000 based on the sampling procedures that were performed. Context – We tested a sample of forty direct expense transactions using a statistically valid sample and found four exceptions relating to the absence of supporting documentation and/or necessary approvals. At that point, a significant deficiency was raised and we revised our risk assessment over compliance and determined it to be high risk. We then selected an additional twenty direct expense transactions using a statistically valid sample and found two additional exceptions relating to improper adherence to certain activity level controls, however, no additional compliance deviations were identified. Views of Responsible Officials – The nature of the COVID emergency, and local shutdown orders, as well as the timing of the funding made available to prevent the viruses spread, challenged long established and effective internal control procedures. In response the Agency, under the direction of the Controller, created emergency overrides to existing protocols to be administered within the accounting department that in the cases above were not documented as they would have been under non-emergency circumstances. In order to mitigate the possible impact of these emergency overrides a detailed review for reasonableness of all items funded with the funds appropriated was performed by the Controller prior to the completion of the audit. Internal control procedures for use in future emergency situations will be developed that will address the deficiencies or challenges identified above. Recommendation - We recommend that the Agency ensure its policies and procedures are followed on a consistent basis and for emergency situations, have alternative policies and procedures that can be implemented without delay.
Finding 2022-004 Lack of Internal Controls over Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: Office of Naval Research Federal Program: Office of Naval Research Technology and Innovation Development in Alaska ALN Number: 12.300 Award Number: N00014-19-1-2030 Award Years: 2022 Type of Finding: Material Weakness over compliance and noncompliance Criteria: 2 CFR Part 200.403.g states that costs must be adequately documented in order to be allowable under Federal awards. Condition and Context: There was not an adequate system in place to track the payroll costs charged to this program. The client was unable to provide support for the salary expenses charged to this program, or support for which employees were eligible to be paid from this award, making it impossible to test transactions for allowable costs. Cause: Lack of internal control over allowable payroll transactions charged to the major program. Repeat Finding: This is not a repeat finding. Effect: The lack of supporting documentation allows for the potential for misstatement of expenditures due to employees being incorrectly charged to funding sources for which their payroll is an unallowable cost. Questioned Costs: The total amount of salary and fringe expenditures charged to the program was $749,570. Recommendation: We recommend that Launch Alaska begins to maintain documentation for employees eligible to charge to various programs, as well as maintaining documentation for tracking the payroll costs charged to each program. Management Response: Management concurs with this finding. See Corrective Action Plan.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Federal Communications Commission AL Number and Title: COVID-19 – 32.009 – Emergency Connectivity Fund Federal Award Number: ECF202105452 (Year: 2022) Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D210012 (Year: 2021) Questioned Costs: $63,399 Description: A review of expenditures charged to the Emergency Connectivity Fund and Elementary and Secondary School Emergency Relief Fund programs revealed that the School District’s internal control procedures were not operating appropriately to ensure that expenditures were allowable. Background Information: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. Additionally, Congress established the Emergency Connectivity Fund (ECF) through the American Rescue Plan Act and appropriated $7.2 billion for the purchase of eligible equipment, advanced telecommunications, and information services for use by students, school staff, and library patrons at locations that include locations other than at a school or library. The ECF program provides funding to meet the remote learning needs of students, school staff, and library patrons who would otherwise lack access to connected devices and broadband connections sufficient to engage in remote learning during the COVID-19 emergency period. ECF funds totaling $491,994.00 and ESSER funds totaling $3,963,756.96 were expended and reported on the Jeff Davis County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (f) Not be included as a cost or used to meet the cost sharing or matching requirements of any other federally-financed program in either the current or a prior period, (g) Be adequately documented…” Furthermore, provisions included in Title 47 CFR Section 54.1712 – Duplicate Support state that “Entities participating in the Emergency Connectivity Fund may not seek Emergency Connectivity Fund support or reimbursement for eligible equipment or services that have been purchased with or reimbursed in full from other Federal pandemic-relief funding, targeted state funding, other external sources of targeted funding or targeted gifts, or eligible for discounts from the schools and libraries universal service support mechanism or other universal service support mechanisms.” Condition: All expenditures related to the ECF program were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. It was noted that expenditures for electronic devices totaling $63,399 were approved through the budget process and recorded under the ESSER program. Upon further review, it was noted that reimbursement was requested and received through the ECF program during fiscal year 2022 and the ESSER program after year-end. Additionally, a refund of such funding had not been processed for either of the programs until the issue was pointed out by auditors. Therefore, duplicate federal funding was received for the same expenditure. Questioned Costs: Known questioned costs of $63,399 were identified for expenditures that were reimbursed through both the ECF and ESSER programs. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: In discussing these deficiencies with management, they stated that these expenditures were initially charged to the ESSER program on the general ledger. However, the director over the ECF program was unaware of this and submitted and received reimbursement through the ECF program, as well. Once this occurred, the duplicate expenditures were not removed from the ESSER program, and ESSER funding was requested in the subsequent period. Effect: The School District is not in compliance with the Uniform Guidance, the U.S. Federal Communications Commission guidance related to the ECF program, and the U.S. Department of Education guidance related to the ESSER program. Failure to ensure that appropriate controls exist to support the allowability of payments from federal programs may expose the School District to unnecessary financial strains and shortages as the grantor and/or pass-through entity may require the School District to return funds associated with the unallowable expenditures. Recommendation: The School District should review current internal control procedures related to federal program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that duplicate reimbursements are not sought from multiple federal programs for the same expenditure. Additionally, as discussed with management, the School District has initiated a refund in the amount of $63,399 to the ESSER program. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Federal Communications Commission AL Number and Title: COVID-19 – 32.009 – Emergency Connectivity Fund Federal Award Number: ECF202105452 (Year: 2022) Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D210012 (Year: 2021) Questioned Costs: $63,399 Description: A review of expenditures charged to the Emergency Connectivity Fund and Elementary and Secondary School Emergency Relief Fund programs revealed that the School District’s internal control procedures were not operating appropriately to ensure that expenditures were allowable. Background Information: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. Additionally, Congress established the Emergency Connectivity Fund (ECF) through the American Rescue Plan Act and appropriated $7.2 billion for the purchase of eligible equipment, advanced telecommunications, and information services for use by students, school staff, and library patrons at locations that include locations other than at a school or library. The ECF program provides funding to meet the remote learning needs of students, school staff, and library patrons who would otherwise lack access to connected devices and broadband connections sufficient to engage in remote learning during the COVID-19 emergency period. ECF funds totaling $491,994.00 and ESSER funds totaling $3,963,756.96 were expended and reported on the Jeff Davis County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (f) Not be included as a cost or used to meet the cost sharing or matching requirements of any other federally-financed program in either the current or a prior period, (g) Be adequately documented…” Furthermore, provisions included in Title 47 CFR Section 54.1712 – Duplicate Support state that “Entities participating in the Emergency Connectivity Fund may not seek Emergency Connectivity Fund support or reimbursement for eligible equipment or services that have been purchased with or reimbursed in full from other Federal pandemic-relief funding, targeted state funding, other external sources of targeted funding or targeted gifts, or eligible for discounts from the schools and libraries universal service support mechanism or other universal service support mechanisms.” Condition: All expenditures related to the ECF program were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. It was noted that expenditures for electronic devices totaling $63,399 were approved through the budget process and recorded under the ESSER program. Upon further review, it was noted that reimbursement was requested and received through the ECF program during fiscal year 2022 and the ESSER program after year-end. Additionally, a refund of such funding had not been processed for either of the programs until the issue was pointed out by auditors. Therefore, duplicate federal funding was received for the same expenditure. Questioned Costs: Known questioned costs of $63,399 were identified for expenditures that were reimbursed through both the ECF and ESSER programs. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: In discussing these deficiencies with management, they stated that these expenditures were initially charged to the ESSER program on the general ledger. However, the director over the ECF program was unaware of this and submitted and received reimbursement through the ECF program, as well. Once this occurred, the duplicate expenditures were not removed from the ESSER program, and ESSER funding was requested in the subsequent period. Effect: The School District is not in compliance with the Uniform Guidance, the U.S. Federal Communications Commission guidance related to the ECF program, and the U.S. Department of Education guidance related to the ESSER program. Failure to ensure that appropriate controls exist to support the allowability of payments from federal programs may expose the School District to unnecessary financial strains and shortages as the grantor and/or pass-through entity may require the School District to return funds associated with the unallowable expenditures. Recommendation: The School District should review current internal control procedures related to federal program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that duplicate reimbursements are not sought from multiple federal programs for the same expenditure. Additionally, as discussed with management, the School District has initiated a refund in the amount of $63,399 to the ESSER program. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Federal Communications Commission AL Number and Title: COVID-19 – 32.009 – Emergency Connectivity Fund Federal Award Number: ECF202105452 (Year: 2022) Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D210012 (Year: 2021) Questioned Costs: $63,399 Description: A review of expenditures charged to the Emergency Connectivity Fund and Elementary and Secondary School Emergency Relief Fund programs revealed that the School District’s internal control procedures were not operating appropriately to ensure that expenditures were allowable. Background Information: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. Additionally, Congress established the Emergency Connectivity Fund (ECF) through the American Rescue Plan Act and appropriated $7.2 billion for the purchase of eligible equipment, advanced telecommunications, and information services for use by students, school staff, and library patrons at locations that include locations other than at a school or library. The ECF program provides funding to meet the remote learning needs of students, school staff, and library patrons who would otherwise lack access to connected devices and broadband connections sufficient to engage in remote learning during the COVID-19 emergency period. ECF funds totaling $491,994.00 and ESSER funds totaling $3,963,756.96 were expended and reported on the Jeff Davis County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (f) Not be included as a cost or used to meet the cost sharing or matching requirements of any other federally-financed program in either the current or a prior period, (g) Be adequately documented…” Furthermore, provisions included in Title 47 CFR Section 54.1712 – Duplicate Support state that “Entities participating in the Emergency Connectivity Fund may not seek Emergency Connectivity Fund support or reimbursement for eligible equipment or services that have been purchased with or reimbursed in full from other Federal pandemic-relief funding, targeted state funding, other external sources of targeted funding or targeted gifts, or eligible for discounts from the schools and libraries universal service support mechanism or other universal service support mechanisms.” Condition: All expenditures related to the ECF program were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. It was noted that expenditures for electronic devices totaling $63,399 were approved through the budget process and recorded under the ESSER program. Upon further review, it was noted that reimbursement was requested and received through the ECF program during fiscal year 2022 and the ESSER program after year-end. Additionally, a refund of such funding had not been processed for either of the programs until the issue was pointed out by auditors. Therefore, duplicate federal funding was received for the same expenditure. Questioned Costs: Known questioned costs of $63,399 were identified for expenditures that were reimbursed through both the ECF and ESSER programs. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: In discussing these deficiencies with management, they stated that these expenditures were initially charged to the ESSER program on the general ledger. However, the director over the ECF program was unaware of this and submitted and received reimbursement through the ECF program, as well. Once this occurred, the duplicate expenditures were not removed from the ESSER program, and ESSER funding was requested in the subsequent period. Effect: The School District is not in compliance with the Uniform Guidance, the U.S. Federal Communications Commission guidance related to the ECF program, and the U.S. Department of Education guidance related to the ESSER program. Failure to ensure that appropriate controls exist to support the allowability of payments from federal programs may expose the School District to unnecessary financial strains and shortages as the grantor and/or pass-through entity may require the School District to return funds associated with the unallowable expenditures. Recommendation: The School District should review current internal control procedures related to federal program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that duplicate reimbursements are not sought from multiple federal programs for the same expenditure. Additionally, as discussed with management, the School District has initiated a refund in the amount of $63,399 to the ESSER program. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425C – Coronavirus Aid, Relief and Economic Security Act – Governor’s Emergency Education Relief Fund COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425W – American Rescue Plan Elementary and Secondary School Emergency Relief Fund – Homeless Children and Youth Federal Award Numbers: S425C210012 (Year: 2021), S425D200012 (Year: 2020), S425D210012 (Year: 2021), S425U210012 (Year: 2021) S425W210011 (Year: 2021) Questioned Costs: $101,681 Description: A review of expenditures charged to the Elementary and Secondary School Emergency Relief Fund program revealed that the School District’s internal control procedures were not operating appropriately to ensure that expenditures were allowable for the program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $6,346,257 were expended and reported on the Brooks County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented… (h) Cost must be incurred during the approved budget period…” Additionally, provisions included in the Uniform Guidance, Section 200.77 state, “Period of performance means the time during which the non-Federal entity may incur new obligations to carry out the work authorized under the Federal award.” Further, to assist school districts in improving their financial management systems and associated compliance over federal programs, GaDOE published the Financial Management for Georgia Local Units of Administration (FMGLUA) manual. The FMGLUA manual requires that LEAs submit a budget as part of each federal program’s Consolidated Application process. The program budget reflects details regarding the manner in which each school district intends to expend the program funds. The Consolidated Application, including the budget, for each program must be reviewed and approved by GaDOE personnel before the LEA is authorized to expend program funds. Amendments to the budget are to be submitted to and approved by GaDOE when a school district intends to spend funds in a manner not initially reported. Lastly, LEA personnel must also provide program-specific assurances related to the ESSER program within the Consolidated Application system. These assurances are reflected in the Uniform Guidance, Section 200.415 – Required Certifications, and include provisions that require LEAs “to assure that expenditures are proper and in accordance with the terms and conditions of the Federal award and approved project budgets...” Condition: A sample of 60 non-personal services expenditures was randomly selected for testing using a nonstatistical sampling approach. In addition, seven individually significant items were selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. It was noted that subscription charges related to learning software were prepaid for a five-year period. Because the period of performance for this funding ends on September 30, 2024 and the liquidation period for the program ends 120 days thereafter, it was determined that $85,681 of these expenditures were unallowable as the amounts were incurred after the period of performance and School District personnel did not maintain appropriate documentation to evidence its analysis leading to the decision to enter into the multi-year contract as required by ED. Additionally, a sample of 60 personal services expenditures was randomly selected for testing using a non-statistical sampling approach. Two individually significant items were also selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. It was noted that eight employees were paid a $2,000 bonus, which totaled $16,000, that was not approved by GaDOE through the Consolidated Application process, as required. Questioned Costs: Upon testing a sample of $444,121 in personal services expenditures, known questioned costs of $16,000 were identified. Using the total personal services expenditures population of $1,560,088, we project the likely questioned costs to be approximately $56,204. In addition, known questioned costs of $85,681 were also identified for non-personal services expenditures that were not tested as part of a sample and were not incurred during the appropriate period. Therefore, the known and likely questioned costs identified for all unallowable payments totaled $101,681 and $56,204, respectively. Cause: In discussing these deficiencies with management, they stated that unallowable bonuses paid were due to human error since they were intended to be paid from QBE funds in Fund 100. In addition, management was unaware of the documentation requirements for the multi-year service agreements that extend beyond the period of performance. Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the ESSER program. Additionally, failure to verify compliance with applicable policies and regulations, including reviewing approved budgets prior to the expenditure of federal program funds and ensuring that expenditures are incurred for a necessary and reasonable purpose and within the appropriate period of performance, may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unapproved and unallowable expenditures. Recommendation: The School District should develop and/or modify its policies and procedures to ensure that potential expenditures are approved through the Consolidated Application process, fall within the respective federal program’s period of performance, and are deemed to be allowable before spending federal funds. Further, management should develop and implement a monitoring process to ensure that control procedures are being followed. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425C – Coronavirus Aid, Relief and Economic Security Act – Governor’s Emergency Education Relief Fund COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425W – American Rescue Plan Elementary and Secondary School Emergency Relief Fund – Homeless Children and Youth Federal Award Numbers: S425C210012 (Year: 2021), S425D200012 (Year: 2020), S425D210012 (Year: 2021), S425U210012 (Year: 2021) S425W210011 (Year: 2021) Questioned Costs: $101,681 Description: A review of expenditures charged to the Elementary and Secondary School Emergency Relief Fund program revealed that the School District’s internal control procedures were not operating appropriately to ensure that expenditures were allowable for the program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $6,346,257 were expended and reported on the Brooks County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented… (h) Cost must be incurred during the approved budget period…” Additionally, provisions included in the Uniform Guidance, Section 200.77 state, “Period of performance means the time during which the non-Federal entity may incur new obligations to carry out the work authorized under the Federal award.” Further, to assist school districts in improving their financial management systems and associated compliance over federal programs, GaDOE published the Financial Management for Georgia Local Units of Administration (FMGLUA) manual. The FMGLUA manual requires that LEAs submit a budget as part of each federal program’s Consolidated Application process. The program budget reflects details regarding the manner in which each school district intends to expend the program funds. The Consolidated Application, including the budget, for each program must be reviewed and approved by GaDOE personnel before the LEA is authorized to expend program funds. Amendments to the budget are to be submitted to and approved by GaDOE when a school district intends to spend funds in a manner not initially reported. Lastly, LEA personnel must also provide program-specific assurances related to the ESSER program within the Consolidated Application system. These assurances are reflected in the Uniform Guidance, Section 200.415 – Required Certifications, and include provisions that require LEAs “to assure that expenditures are proper and in accordance with the terms and conditions of the Federal award and approved project budgets...” Condition: A sample of 60 non-personal services expenditures was randomly selected for testing using a nonstatistical sampling approach. In addition, seven individually significant items were selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. It was noted that subscription charges related to learning software were prepaid for a five-year period. Because the period of performance for this funding ends on September 30, 2024 and the liquidation period for the program ends 120 days thereafter, it was determined that $85,681 of these expenditures were unallowable as the amounts were incurred after the period of performance and School District personnel did not maintain appropriate documentation to evidence its analysis leading to the decision to enter into the multi-year contract as required by ED. Additionally, a sample of 60 personal services expenditures was randomly selected for testing using a non-statistical sampling approach. Two individually significant items were also selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. It was noted that eight employees were paid a $2,000 bonus, which totaled $16,000, that was not approved by GaDOE through the Consolidated Application process, as required. Questioned Costs: Upon testing a sample of $444,121 in personal services expenditures, known questioned costs of $16,000 were identified. Using the total personal services expenditures population of $1,560,088, we project the likely questioned costs to be approximately $56,204. In addition, known questioned costs of $85,681 were also identified for non-personal services expenditures that were not tested as part of a sample and were not incurred during the appropriate period. Therefore, the known and likely questioned costs identified for all unallowable payments totaled $101,681 and $56,204, respectively. Cause: In discussing these deficiencies with management, they stated that unallowable bonuses paid were due to human error since they were intended to be paid from QBE funds in Fund 100. In addition, management was unaware of the documentation requirements for the multi-year service agreements that extend beyond the period of performance. Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the ESSER program. Additionally, failure to verify compliance with applicable policies and regulations, including reviewing approved budgets prior to the expenditure of federal program funds and ensuring that expenditures are incurred for a necessary and reasonable purpose and within the appropriate period of performance, may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unapproved and unallowable expenditures. Recommendation: The School District should develop and/or modify its policies and procedures to ensure that potential expenditures are approved through the Consolidated Application process, fall within the respective federal program’s period of performance, and are deemed to be allowable before spending federal funds. Further, management should develop and implement a monitoring process to ensure that control procedures are being followed. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425C – Coronavirus Aid, Relief and Economic Security Act – Governor’s Emergency Education Relief Fund COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425W – American Rescue Plan Elementary and Secondary School Emergency Relief Fund – Homeless Children and Youth Federal Award Numbers: S425C210012 (Year: 2021), S425D200012 (Year: 2020), S425D210012 (Year: 2021), S425U210012 (Year: 2021) S425W210011 (Year: 2021) Questioned Costs: $101,681 Description: A review of expenditures charged to the Elementary and Secondary School Emergency Relief Fund program revealed that the School District’s internal control procedures were not operating appropriately to ensure that expenditures were allowable for the program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $6,346,257 were expended and reported on the Brooks County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented… (h) Cost must be incurred during the approved budget period…” Additionally, provisions included in the Uniform Guidance, Section 200.77 state, “Period of performance means the time during which the non-Federal entity may incur new obligations to carry out the work authorized under the Federal award.” Further, to assist school districts in improving their financial management systems and associated compliance over federal programs, GaDOE published the Financial Management for Georgia Local Units of Administration (FMGLUA) manual. The FMGLUA manual requires that LEAs submit a budget as part of each federal program’s Consolidated Application process. The program budget reflects details regarding the manner in which each school district intends to expend the program funds. The Consolidated Application, including the budget, for each program must be reviewed and approved by GaDOE personnel before the LEA is authorized to expend program funds. Amendments to the budget are to be submitted to and approved by GaDOE when a school district intends to spend funds in a manner not initially reported. Lastly, LEA personnel must also provide program-specific assurances related to the ESSER program within the Consolidated Application system. These assurances are reflected in the Uniform Guidance, Section 200.415 – Required Certifications, and include provisions that require LEAs “to assure that expenditures are proper and in accordance with the terms and conditions of the Federal award and approved project budgets...” Condition: A sample of 60 non-personal services expenditures was randomly selected for testing using a nonstatistical sampling approach. In addition, seven individually significant items were selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. It was noted that subscription charges related to learning software were prepaid for a five-year period. Because the period of performance for this funding ends on September 30, 2024 and the liquidation period for the program ends 120 days thereafter, it was determined that $85,681 of these expenditures were unallowable as the amounts were incurred after the period of performance and School District personnel did not maintain appropriate documentation to evidence its analysis leading to the decision to enter into the multi-year contract as required by ED. Additionally, a sample of 60 personal services expenditures was randomly selected for testing using a non-statistical sampling approach. Two individually significant items were also selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. It was noted that eight employees were paid a $2,000 bonus, which totaled $16,000, that was not approved by GaDOE through the Consolidated Application process, as required. Questioned Costs: Upon testing a sample of $444,121 in personal services expenditures, known questioned costs of $16,000 were identified. Using the total personal services expenditures population of $1,560,088, we project the likely questioned costs to be approximately $56,204. In addition, known questioned costs of $85,681 were also identified for non-personal services expenditures that were not tested as part of a sample and were not incurred during the appropriate period. Therefore, the known and likely questioned costs identified for all unallowable payments totaled $101,681 and $56,204, respectively. Cause: In discussing these deficiencies with management, they stated that unallowable bonuses paid were due to human error since they were intended to be paid from QBE funds in Fund 100. In addition, management was unaware of the documentation requirements for the multi-year service agreements that extend beyond the period of performance. Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the ESSER program. Additionally, failure to verify compliance with applicable policies and regulations, including reviewing approved budgets prior to the expenditure of federal program funds and ensuring that expenditures are incurred for a necessary and reasonable purpose and within the appropriate period of performance, may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unapproved and unallowable expenditures. Recommendation: The School District should develop and/or modify its policies and procedures to ensure that potential expenditures are approved through the Consolidated Application process, fall within the respective federal program’s period of performance, and are deemed to be allowable before spending federal funds. Further, management should develop and implement a monitoring process to ensure that control procedures are being followed. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425C – Coronavirus Aid, Relief and Economic Security Act – Governor’s Emergency Education Relief Fund COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425W – American Rescue Plan Elementary and Secondary School Emergency Relief Fund – Homeless Children and Youth Federal Award Numbers: S425C210012 (Year: 2021), S425D200012 (Year: 2020), S425D210012 (Year: 2021), S425U210012 (Year: 2021) S425W210011 (Year: 2021) Questioned Costs: $101,681 Description: A review of expenditures charged to the Elementary and Secondary School Emergency Relief Fund program revealed that the School District’s internal control procedures were not operating appropriately to ensure that expenditures were allowable for the program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $6,346,257 were expended and reported on the Brooks County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented… (h) Cost must be incurred during the approved budget period…” Additionally, provisions included in the Uniform Guidance, Section 200.77 state, “Period of performance means the time during which the non-Federal entity may incur new obligations to carry out the work authorized under the Federal award.” Further, to assist school districts in improving their financial management systems and associated compliance over federal programs, GaDOE published the Financial Management for Georgia Local Units of Administration (FMGLUA) manual. The FMGLUA manual requires that LEAs submit a budget as part of each federal program’s Consolidated Application process. The program budget reflects details regarding the manner in which each school district intends to expend the program funds. The Consolidated Application, including the budget, for each program must be reviewed and approved by GaDOE personnel before the LEA is authorized to expend program funds. Amendments to the budget are to be submitted to and approved by GaDOE when a school district intends to spend funds in a manner not initially reported. Lastly, LEA personnel must also provide program-specific assurances related to the ESSER program within the Consolidated Application system. These assurances are reflected in the Uniform Guidance, Section 200.415 – Required Certifications, and include provisions that require LEAs “to assure that expenditures are proper and in accordance with the terms and conditions of the Federal award and approved project budgets...” Condition: A sample of 60 non-personal services expenditures was randomly selected for testing using a nonstatistical sampling approach. In addition, seven individually significant items were selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. It was noted that subscription charges related to learning software were prepaid for a five-year period. Because the period of performance for this funding ends on September 30, 2024 and the liquidation period for the program ends 120 days thereafter, it was determined that $85,681 of these expenditures were unallowable as the amounts were incurred after the period of performance and School District personnel did not maintain appropriate documentation to evidence its analysis leading to the decision to enter into the multi-year contract as required by ED. Additionally, a sample of 60 personal services expenditures was randomly selected for testing using a non-statistical sampling approach. Two individually significant items were also selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. It was noted that eight employees were paid a $2,000 bonus, which totaled $16,000, that was not approved by GaDOE through the Consolidated Application process, as required. Questioned Costs: Upon testing a sample of $444,121 in personal services expenditures, known questioned costs of $16,000 were identified. Using the total personal services expenditures population of $1,560,088, we project the likely questioned costs to be approximately $56,204. In addition, known questioned costs of $85,681 were also identified for non-personal services expenditures that were not tested as part of a sample and were not incurred during the appropriate period. Therefore, the known and likely questioned costs identified for all unallowable payments totaled $101,681 and $56,204, respectively. Cause: In discussing these deficiencies with management, they stated that unallowable bonuses paid were due to human error since they were intended to be paid from QBE funds in Fund 100. In addition, management was unaware of the documentation requirements for the multi-year service agreements that extend beyond the period of performance. Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the ESSER program. Additionally, failure to verify compliance with applicable policies and regulations, including reviewing approved budgets prior to the expenditure of federal program funds and ensuring that expenditures are incurred for a necessary and reasonable purpose and within the appropriate period of performance, may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unapproved and unallowable expenditures. Recommendation: The School District should develop and/or modify its policies and procedures to ensure that potential expenditures are approved through the Consolidated Application process, fall within the respective federal program’s period of performance, and are deemed to be allowable before spending federal funds. Further, management should develop and implement a monitoring process to ensure that control procedures are being followed. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425C – Coronavirus Aid, Relief and Economic Security Act – Governor’s Emergency Education Relief Fund COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425W – American Rescue Plan Elementary and Secondary School Emergency Relief Fund – Homeless Children and Youth Federal Award Numbers: S425C210012 (Year: 2021), S425D200012 (Year: 2020), S425D210012 (Year: 2021), S425U210012 (Year: 2021) S425W210011 (Year: 2021) Questioned Costs: $101,681 Description: A review of expenditures charged to the Elementary and Secondary School Emergency Relief Fund program revealed that the School District’s internal control procedures were not operating appropriately to ensure that expenditures were allowable for the program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $6,346,257 were expended and reported on the Brooks County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented… (h) Cost must be incurred during the approved budget period…” Additionally, provisions included in the Uniform Guidance, Section 200.77 state, “Period of performance means the time during which the non-Federal entity may incur new obligations to carry out the work authorized under the Federal award.” Further, to assist school districts in improving their financial management systems and associated compliance over federal programs, GaDOE published the Financial Management for Georgia Local Units of Administration (FMGLUA) manual. The FMGLUA manual requires that LEAs submit a budget as part of each federal program’s Consolidated Application process. The program budget reflects details regarding the manner in which each school district intends to expend the program funds. The Consolidated Application, including the budget, for each program must be reviewed and approved by GaDOE personnel before the LEA is authorized to expend program funds. Amendments to the budget are to be submitted to and approved by GaDOE when a school district intends to spend funds in a manner not initially reported. Lastly, LEA personnel must also provide program-specific assurances related to the ESSER program within the Consolidated Application system. These assurances are reflected in the Uniform Guidance, Section 200.415 – Required Certifications, and include provisions that require LEAs “to assure that expenditures are proper and in accordance with the terms and conditions of the Federal award and approved project budgets...” Condition: A sample of 60 non-personal services expenditures was randomly selected for testing using a nonstatistical sampling approach. In addition, seven individually significant items were selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. It was noted that subscription charges related to learning software were prepaid for a five-year period. Because the period of performance for this funding ends on September 30, 2024 and the liquidation period for the program ends 120 days thereafter, it was determined that $85,681 of these expenditures were unallowable as the amounts were incurred after the period of performance and School District personnel did not maintain appropriate documentation to evidence its analysis leading to the decision to enter into the multi-year contract as required by ED. Additionally, a sample of 60 personal services expenditures was randomly selected for testing using a non-statistical sampling approach. Two individually significant items were also selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. It was noted that eight employees were paid a $2,000 bonus, which totaled $16,000, that was not approved by GaDOE through the Consolidated Application process, as required. Questioned Costs: Upon testing a sample of $444,121 in personal services expenditures, known questioned costs of $16,000 were identified. Using the total personal services expenditures population of $1,560,088, we project the likely questioned costs to be approximately $56,204. In addition, known questioned costs of $85,681 were also identified for non-personal services expenditures that were not tested as part of a sample and were not incurred during the appropriate period. Therefore, the known and likely questioned costs identified for all unallowable payments totaled $101,681 and $56,204, respectively. Cause: In discussing these deficiencies with management, they stated that unallowable bonuses paid were due to human error since they were intended to be paid from QBE funds in Fund 100. In addition, management was unaware of the documentation requirements for the multi-year service agreements that extend beyond the period of performance. Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the ESSER program. Additionally, failure to verify compliance with applicable policies and regulations, including reviewing approved budgets prior to the expenditure of federal program funds and ensuring that expenditures are incurred for a necessary and reasonable purpose and within the appropriate period of performance, may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unapproved and unallowable expenditures. Recommendation: The School District should develop and/or modify its policies and procedures to ensure that potential expenditures are approved through the Consolidated Application process, fall within the respective federal program’s period of performance, and are deemed to be allowable before spending federal funds. Further, management should develop and implement a monitoring process to ensure that control procedures are being followed. Views of Responsible Officials: We concur with this finding.
Information on the federal program: Federal Agency: Department of Labor Pass-Through Entity: Indiana Department of Workforce Development Federal Program: WIOA Assistance Listing Number: 17.258, 17.259, 17.278 Compliance Requirement: Activities Allowed or Unallowed Audit Findings: Material Weakness, Noncompliance 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 non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. Condition: For 8 of the 60 samples selected, EmployIndy was unable to reconcile the provided support to the selection amounts. As a result, we were unable to determine the allowability of these sample selections under the WIOA grant. Cause: The condition was caused by a lack of internal controls over WIOA subrecipient/service provider claims for accrued expenditures. Effect: As a result of these matters, expenditures could be inaccurately charged to the federal grant. Questioned costs: There are $265,000 of known questioned costs as this is the amount of the WIOA expenditures tested that could not be reconciled to source documents. Context: During our testing procedures over WIOA disbursements for the activities allowed or unallowed compliance requirement, Crowe was unable to reconcile and tie 8 of the 60 samples to source documents after multiple attempts of asking management to aid in reconciling the support to selection totals. Identification as a repeat finding, if applicable: Not applicable. This is not a repeat finding. Recommendation: We recommend that management implement a consistent multi-stage review process for expenditures that are to be allocated to the WIOA cluster and that management clearly organize and retain records of purchase to support amounts being listed as expenditures on their SEFA. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.
Information on the federal program: Federal Agency: Department of Labor Pass-Through Entity: Indiana Department of Workforce Development Federal Program: WIOA Assistance Listing Number: 17.258, 17.259, 17.278 Compliance Requirement: Activities Allowed or Unallowed Audit Findings: Material Weakness, Noncompliance 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 non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. Condition: For 8 of the 60 samples selected, EmployIndy was unable to reconcile the provided support to the selection amounts. As a result, we were unable to determine the allowability of these sample selections under the WIOA grant. Cause: The condition was caused by a lack of internal controls over WIOA subrecipient/service provider claims for accrued expenditures. Effect: As a result of these matters, expenditures could be inaccurately charged to the federal grant. Questioned costs: There are $265,000 of known questioned costs as this is the amount of the WIOA expenditures tested that could not be reconciled to source documents. Context: During our testing procedures over WIOA disbursements for the activities allowed or unallowed compliance requirement, Crowe was unable to reconcile and tie 8 of the 60 samples to source documents after multiple attempts of asking management to aid in reconciling the support to selection totals. Identification as a repeat finding, if applicable: Not applicable. This is not a repeat finding. Recommendation: We recommend that management implement a consistent multi-stage review process for expenditures that are to be allocated to the WIOA cluster and that management clearly organize and retain records of purchase to support amounts being listed as expenditures on their SEFA. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.
Information on the federal program: Federal Agency: Department of Labor Pass-Through Entity: Indiana Department of Workforce Development Federal Program: WIOA Assistance Listing Number: 17.258, 17.259, 17.278 Compliance Requirement: Activities Allowed or Unallowed Audit Findings: Material Weakness, Noncompliance 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 non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. Condition: For 8 of the 60 samples selected, EmployIndy was unable to reconcile the provided support to the selection amounts. As a result, we were unable to determine the allowability of these sample selections under the WIOA grant. Cause: The condition was caused by a lack of internal controls over WIOA subrecipient/service provider claims for accrued expenditures. Effect: As a result of these matters, expenditures could be inaccurately charged to the federal grant. Questioned costs: There are $265,000 of known questioned costs as this is the amount of the WIOA expenditures tested that could not be reconciled to source documents. Context: During our testing procedures over WIOA disbursements for the activities allowed or unallowed compliance requirement, Crowe was unable to reconcile and tie 8 of the 60 samples to source documents after multiple attempts of asking management to aid in reconciling the support to selection totals. Identification as a repeat finding, if applicable: Not applicable. This is not a repeat finding. Recommendation: We recommend that management implement a consistent multi-stage review process for expenditures that are to be allocated to the WIOA cluster and that management clearly organize and retain records of purchase to support amounts being listed as expenditures on their SEFA. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.
Information on the federal program: Federal Agency: Department of Labor Pass-Through Entity: Indiana Department of Workforce Development Federal Program: WIOA Assistance Listing Number: 17.258, 17.259, 17.278 Compliance Requirement: Activities Allowed or Unallowed Audit Findings: Material Weakness, Noncompliance 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 non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. Condition: For 8 of the 60 samples selected, EmployIndy was unable to reconcile the provided support to the selection amounts. As a result, we were unable to determine the allowability of these sample selections under the WIOA grant. Cause: The condition was caused by a lack of internal controls over WIOA subrecipient/service provider claims for accrued expenditures. Effect: As a result of these matters, expenditures could be inaccurately charged to the federal grant. Questioned costs: There are $265,000 of known questioned costs as this is the amount of the WIOA expenditures tested that could not be reconciled to source documents. Context: During our testing procedures over WIOA disbursements for the activities allowed or unallowed compliance requirement, Crowe was unable to reconcile and tie 8 of the 60 samples to source documents after multiple attempts of asking management to aid in reconciling the support to selection totals. Identification as a repeat finding, if applicable: Not applicable. This is not a repeat finding. Recommendation: We recommend that management implement a consistent multi-stage review process for expenditures that are to be allocated to the WIOA cluster and that management clearly organize and retain records of purchase to support amounts being listed as expenditures on their SEFA. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.
Federal Agency: Department of Labor Pass-Through Entity: Indiana Department of Workforce Development Federal Program: WIOA Assistance Listing Number: 17.258, 17.259, 17.278 Compliance Requirement: Activities Allowed or Unallowed Audit Findings: 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 non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. Condition: EmployIndy did not formally review and approve 16 selected WIOA non-payroll expenditures in a sample of 60 to determine that they are allowable under the WIOA federal regulations. Cause: The condition was caused by a lack of internal controls over WIOA subrecipient/service provider claims for accrued expenditures. Effect: As a result of these matters, expenditures could be inaccurately charged to the federal grant. Questioned costs: There are no questioned costs. Context: During our testing procedures over WIOA disbursements for the activities allowed or unallowed compliance requirement, we identified recurring monthly expenditures that are not formally reviewed by management for allowability under the WIOA grant. We also identified expenditures submitted to EmployIndy by service providers that did not have a formal sign-off/review by EmployIndy management appropriately allocating these expenses to the WIOA grant. We noted that 16 of the 60 non-payroll items selected for testing did not have appropriate documented review. Identification as a repeat finding, if applicable: Not applicable. This is not a repeat finding. Recommendation: We recommend that management implement a consistent multi-stage review process for expenditures that are to be allocated to the WIOA cluster and that management clearly organize and retain records of purchase to support amounts being listed as expenditures on their SEFA. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.
Federal Agency: Department of Labor Pass-Through Entity: Indiana Department of Workforce Development Federal Program: WIOA Assistance Listing Number: 17.258, 17.259, 17.278 Compliance Requirement: Activities Allowed or Unallowed Audit Findings: 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 non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. Condition: EmployIndy did not formally review and approve 16 selected WIOA non-payroll expenditures in a sample of 60 to determine that they are allowable under the WIOA federal regulations. Cause: The condition was caused by a lack of internal controls over WIOA subrecipient/service provider claims for accrued expenditures. Effect: As a result of these matters, expenditures could be inaccurately charged to the federal grant. Questioned costs: There are no questioned costs. Context: During our testing procedures over WIOA disbursements for the activities allowed or unallowed compliance requirement, we identified recurring monthly expenditures that are not formally reviewed by management for allowability under the WIOA grant. We also identified expenditures submitted to EmployIndy by service providers that did not have a formal sign-off/review by EmployIndy management appropriately allocating these expenses to the WIOA grant. We noted that 16 of the 60 non-payroll items selected for testing did not have appropriate documented review. Identification as a repeat finding, if applicable: Not applicable. This is not a repeat finding. Recommendation: We recommend that management implement a consistent multi-stage review process for expenditures that are to be allocated to the WIOA cluster and that management clearly organize and retain records of purchase to support amounts being listed as expenditures on their SEFA. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.
Federal Agency: Department of Labor Pass-Through Entity: Indiana Department of Workforce Development Federal Program: WIOA Assistance Listing Number: 17.258, 17.259, 17.278 Compliance Requirement: Activities Allowed or Unallowed Audit Findings: 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 non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. Condition: EmployIndy did not formally review and approve 16 selected WIOA non-payroll expenditures in a sample of 60 to determine that they are allowable under the WIOA federal regulations. Cause: The condition was caused by a lack of internal controls over WIOA subrecipient/service provider claims for accrued expenditures. Effect: As a result of these matters, expenditures could be inaccurately charged to the federal grant. Questioned costs: There are no questioned costs. Context: During our testing procedures over WIOA disbursements for the activities allowed or unallowed compliance requirement, we identified recurring monthly expenditures that are not formally reviewed by management for allowability under the WIOA grant. We also identified expenditures submitted to EmployIndy by service providers that did not have a formal sign-off/review by EmployIndy management appropriately allocating these expenses to the WIOA grant. We noted that 16 of the 60 non-payroll items selected for testing did not have appropriate documented review. Identification as a repeat finding, if applicable: Not applicable. This is not a repeat finding. Recommendation: We recommend that management implement a consistent multi-stage review process for expenditures that are to be allocated to the WIOA cluster and that management clearly organize and retain records of purchase to support amounts being listed as expenditures on their SEFA. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.
Federal Agency: Department of Labor Pass-Through Entity: Indiana Department of Workforce Development Federal Program: WIOA Assistance Listing Number: 17.258, 17.259, 17.278 Compliance Requirement: Activities Allowed or Unallowed Audit Findings: 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 non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. Condition: EmployIndy did not formally review and approve 16 selected WIOA non-payroll expenditures in a sample of 60 to determine that they are allowable under the WIOA federal regulations. Cause: The condition was caused by a lack of internal controls over WIOA subrecipient/service provider claims for accrued expenditures. Effect: As a result of these matters, expenditures could be inaccurately charged to the federal grant. Questioned costs: There are no questioned costs. Context: During our testing procedures over WIOA disbursements for the activities allowed or unallowed compliance requirement, we identified recurring monthly expenditures that are not formally reviewed by management for allowability under the WIOA grant. We also identified expenditures submitted to EmployIndy by service providers that did not have a formal sign-off/review by EmployIndy management appropriately allocating these expenses to the WIOA grant. We noted that 16 of the 60 non-payroll items selected for testing did not have appropriate documented review. Identification as a repeat finding, if applicable: Not applicable. This is not a repeat finding. Recommendation: We recommend that management implement a consistent multi-stage review process for expenditures that are to be allocated to the WIOA cluster and that management clearly organize and retain records of purchase to support amounts being listed as expenditures on their SEFA. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.
Information on the federal program: Federal Agency: Department of Labor Pass-Through Entity: Indiana Department of Workforce Development Federal Program: WIOA Assistance Listing Number: 17.258, 17.259, 17.278 Compliance Requirement: Activities Allowed or Unallowed Audit Findings: Material Weakness, Noncompliance 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 non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. Condition: EmployIndy did not retain up-to-date contracts for 5 out of 8 employees tested and was unable to reconcile fund codes and employee payroll charged to the WIOA grant. It was also noted that for 8 out of 13 timecards selected for testing, it did not appear that the time was approved to be recorded to the WIOA grant. Cause: The condition was caused by a lack of internal controls over EmployIndy administrative payroll processing. Effect: As a result of these matters, expenditures could be inaccurately charged to the federal grant. Questioned costs: There are $23,000 of known questioned costs related to this issue. Context: During our testing procedures over WIOA disbursements for the activities allowed or unallowed compliance requirement, we identified several payroll expenditures charged to the WIOA cluster for which valid contracts were not provided, employee time records did not reflect hours spent on WIOA activities, and reconciliations for the allocation of employee payroll to WIOA were not provided. Identification as a repeat finding, if applicable: Not applicable. This is not a repeat finding. Recommendation: We recommend that management implement a consistent multi-stage review process for expenditures that are to be allocated to the WIOA cluster and that management clearly organize and retain records of purchase to support amounts being listed as expenditures on their SEFA. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.
Information on the federal program: Federal Agency: Department of Labor Pass-Through Entity: Indiana Department of Workforce Development Federal Program: WIOA Assistance Listing Number: 17.258, 17.259, 17.278 Compliance Requirement: Activities Allowed or Unallowed Audit Findings: Material Weakness, Noncompliance 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 non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. Condition: EmployIndy did not retain up-to-date contracts for 5 out of 8 employees tested and was unable to reconcile fund codes and employee payroll charged to the WIOA grant. It was also noted that for 8 out of 13 timecards selected for testing, it did not appear that the time was approved to be recorded to the WIOA grant. Cause: The condition was caused by a lack of internal controls over EmployIndy administrative payroll processing. Effect: As a result of these matters, expenditures could be inaccurately charged to the federal grant. Questioned costs: There are $23,000 of known questioned costs related to this issue. Context: During our testing procedures over WIOA disbursements for the activities allowed or unallowed compliance requirement, we identified several payroll expenditures charged to the WIOA cluster for which valid contracts were not provided, employee time records did not reflect hours spent on WIOA activities, and reconciliations for the allocation of employee payroll to WIOA were not provided. Identification as a repeat finding, if applicable: Not applicable. This is not a repeat finding. Recommendation: We recommend that management implement a consistent multi-stage review process for expenditures that are to be allocated to the WIOA cluster and that management clearly organize and retain records of purchase to support amounts being listed as expenditures on their SEFA. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.
Information on the federal program: Federal Agency: Department of Labor Pass-Through Entity: Indiana Department of Workforce Development Federal Program: WIOA Assistance Listing Number: 17.258, 17.259, 17.278 Compliance Requirement: Activities Allowed or Unallowed Audit Findings: Material Weakness, Noncompliance 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 non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. Condition: EmployIndy did not retain up-to-date contracts for 5 out of 8 employees tested and was unable to reconcile fund codes and employee payroll charged to the WIOA grant. It was also noted that for 8 out of 13 timecards selected for testing, it did not appear that the time was approved to be recorded to the WIOA grant. Cause: The condition was caused by a lack of internal controls over EmployIndy administrative payroll processing. Effect: As a result of these matters, expenditures could be inaccurately charged to the federal grant. Questioned costs: There are $23,000 of known questioned costs related to this issue. Context: During our testing procedures over WIOA disbursements for the activities allowed or unallowed compliance requirement, we identified several payroll expenditures charged to the WIOA cluster for which valid contracts were not provided, employee time records did not reflect hours spent on WIOA activities, and reconciliations for the allocation of employee payroll to WIOA were not provided. Identification as a repeat finding, if applicable: Not applicable. This is not a repeat finding. Recommendation: We recommend that management implement a consistent multi-stage review process for expenditures that are to be allocated to the WIOA cluster and that management clearly organize and retain records of purchase to support amounts being listed as expenditures on their SEFA. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.
Information on the federal program: Federal Agency: Department of Labor Pass-Through Entity: Indiana Department of Workforce Development Federal Program: WIOA Assistance Listing Number: 17.258, 17.259, 17.278 Compliance Requirement: Activities Allowed or Unallowed Audit Findings: Material Weakness, Noncompliance 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 non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. Condition: EmployIndy did not retain up-to-date contracts for 5 out of 8 employees tested and was unable to reconcile fund codes and employee payroll charged to the WIOA grant. It was also noted that for 8 out of 13 timecards selected for testing, it did not appear that the time was approved to be recorded to the WIOA grant. Cause: The condition was caused by a lack of internal controls over EmployIndy administrative payroll processing. Effect: As a result of these matters, expenditures could be inaccurately charged to the federal grant. Questioned costs: There are $23,000 of known questioned costs related to this issue. Context: During our testing procedures over WIOA disbursements for the activities allowed or unallowed compliance requirement, we identified several payroll expenditures charged to the WIOA cluster for which valid contracts were not provided, employee time records did not reflect hours spent on WIOA activities, and reconciliations for the allocation of employee payroll to WIOA were not provided. Identification as a repeat finding, if applicable: Not applicable. This is not a repeat finding. Recommendation: We recommend that management implement a consistent multi-stage review process for expenditures that are to be allocated to the WIOA cluster and that management clearly organize and retain records of purchase to support amounts being listed as expenditures on their SEFA. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.
FA 2022-001 Strengthen Budgetary Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D200012 (Year: 2020), S425D210012 (Year: 2021), S425U210012 (Year: 2021), Questioned Costs: $31,131 Description: A review of expenditures charged to the Elementary and Secondary School Emergency Relief Fund program revealed instances in which expenditures had not been properly approved by the pass-through entity. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $790,945 were expended and reported on the Calhoun County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” Furthermore, to assist school districts in improving their financial management systems and associated compliance over federal programs, GaDOE published the Financial Management for Georgia Local Units of Administration (FMGLUA) manual. The FMGLUA manual requires that LEAs submit a budget as part of each federal program’s Consolidated Application process. The program budget reflects details regarding the manner in which each school district intends to expend the program funds. The Consolidated Application, including the budget, for each program must be reviewed and approved by GaDOE personnel before the LEA is authorized to expend program funds. Amendments to the budget are to be submitted to and approved by GaDOE when a school district intends to spend funds in a manner not initially reported. Lastly, LEA personnel must also provide program-specific assurances related to the ESSER program within the Consolidated Application system. These assurances are reflected in the Uniform Guidance, Section 200.415 – Required Certifications, and include provisions that require LEAs “to assure that expenditures are proper and in accordance with the terms and conditions of the Federal award and approved project budgets...” Condition: A sample of 25 expenditures was randomly selected for testing using a non-statistical sampling approach. In addition, seven individually significant expenditures were selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. It was noted that prior approval was not obtained from GaDOE for nine expenditures totaling $31,131 as these expenditures were not reflected in the approved budget or subsequent amendments within the Consolidated Application system as required. Questioned Costs: Upon testing a sample of $14,677 in nonpersonal services expenditures, known questioned costs of $10,136 were identified for expenditures not properly approved through the Consolidated Application process. Using the population being sampled, which totaled $201,966, we project the likely questioned costs to be approximately $139,475. In addition, known questioned costs identified for unapproved payments associated with individually significant items tested totaled $20,995; therefore, the known and likely questioned costs identified for all unallowable payments throughout the sample and individually significant items tested totaled $31,131 and $139,475, respectively. Cause: In discussing these deficiencies with management, the School District believed that the Consolidated Application included the unallowable items purchased; however, the description reflected on the Consolidated Application did not agree to the items purchased. In addition, management was unaware that Consolidated Application was not approved by the GaDOE. Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the ESSER program. Failure to accurately develop and amend budget information through the Consolidated Application process and verify compliance with applicable policies and regulations prior to the expenditure of federal program funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unapproved and unallowable expenditures. Recommendation: The School District should revise current internal control procedures related to the ESSER program. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that potential expenditures are approved through the Consolidated Application process and deemed to be allowable before spending federal funds. In addition, management should develop and implement a monitoring process to ensure that control procedures are being followed. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Strengthen Budgetary Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D200012 (Year: 2020), S425D210012 (Year: 2021), S425U210012 (Year: 2021), Questioned Costs: $31,131 Description: A review of expenditures charged to the Elementary and Secondary School Emergency Relief Fund program revealed instances in which expenditures had not been properly approved by the pass-through entity. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $790,945 were expended and reported on the Calhoun County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” Furthermore, to assist school districts in improving their financial management systems and associated compliance over federal programs, GaDOE published the Financial Management for Georgia Local Units of Administration (FMGLUA) manual. The FMGLUA manual requires that LEAs submit a budget as part of each federal program’s Consolidated Application process. The program budget reflects details regarding the manner in which each school district intends to expend the program funds. The Consolidated Application, including the budget, for each program must be reviewed and approved by GaDOE personnel before the LEA is authorized to expend program funds. Amendments to the budget are to be submitted to and approved by GaDOE when a school district intends to spend funds in a manner not initially reported. Lastly, LEA personnel must also provide program-specific assurances related to the ESSER program within the Consolidated Application system. These assurances are reflected in the Uniform Guidance, Section 200.415 – Required Certifications, and include provisions that require LEAs “to assure that expenditures are proper and in accordance with the terms and conditions of the Federal award and approved project budgets...” Condition: A sample of 25 expenditures was randomly selected for testing using a non-statistical sampling approach. In addition, seven individually significant expenditures were selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. It was noted that prior approval was not obtained from GaDOE for nine expenditures totaling $31,131 as these expenditures were not reflected in the approved budget or subsequent amendments within the Consolidated Application system as required. Questioned Costs: Upon testing a sample of $14,677 in nonpersonal services expenditures, known questioned costs of $10,136 were identified for expenditures not properly approved through the Consolidated Application process. Using the population being sampled, which totaled $201,966, we project the likely questioned costs to be approximately $139,475. In addition, known questioned costs identified for unapproved payments associated with individually significant items tested totaled $20,995; therefore, the known and likely questioned costs identified for all unallowable payments throughout the sample and individually significant items tested totaled $31,131 and $139,475, respectively. Cause: In discussing these deficiencies with management, the School District believed that the Consolidated Application included the unallowable items purchased; however, the description reflected on the Consolidated Application did not agree to the items purchased. In addition, management was unaware that Consolidated Application was not approved by the GaDOE. Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the ESSER program. Failure to accurately develop and amend budget information through the Consolidated Application process and verify compliance with applicable policies and regulations prior to the expenditure of federal program funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unapproved and unallowable expenditures. Recommendation: The School District should revise current internal control procedures related to the ESSER program. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that potential expenditures are approved through the Consolidated Application process and deemed to be allowable before spending federal funds. In addition, management should develop and implement a monitoring process to ensure that control procedures are being followed. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Strengthen Budgetary Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D200012 (Year: 2020), S425D210012 (Year: 2021), S425U210012 (Year: 2021), Questioned Costs: $31,131 Description: A review of expenditures charged to the Elementary and Secondary School Emergency Relief Fund program revealed instances in which expenditures had not been properly approved by the pass-through entity. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $790,945 were expended and reported on the Calhoun County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” Furthermore, to assist school districts in improving their financial management systems and associated compliance over federal programs, GaDOE published the Financial Management for Georgia Local Units of Administration (FMGLUA) manual. The FMGLUA manual requires that LEAs submit a budget as part of each federal program’s Consolidated Application process. The program budget reflects details regarding the manner in which each school district intends to expend the program funds. The Consolidated Application, including the budget, for each program must be reviewed and approved by GaDOE personnel before the LEA is authorized to expend program funds. Amendments to the budget are to be submitted to and approved by GaDOE when a school district intends to spend funds in a manner not initially reported. Lastly, LEA personnel must also provide program-specific assurances related to the ESSER program within the Consolidated Application system. These assurances are reflected in the Uniform Guidance, Section 200.415 – Required Certifications, and include provisions that require LEAs “to assure that expenditures are proper and in accordance with the terms and conditions of the Federal award and approved project budgets...” Condition: A sample of 25 expenditures was randomly selected for testing using a non-statistical sampling approach. In addition, seven individually significant expenditures were selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. It was noted that prior approval was not obtained from GaDOE for nine expenditures totaling $31,131 as these expenditures were not reflected in the approved budget or subsequent amendments within the Consolidated Application system as required. Questioned Costs: Upon testing a sample of $14,677 in nonpersonal services expenditures, known questioned costs of $10,136 were identified for expenditures not properly approved through the Consolidated Application process. Using the population being sampled, which totaled $201,966, we project the likely questioned costs to be approximately $139,475. In addition, known questioned costs identified for unapproved payments associated with individually significant items tested totaled $20,995; therefore, the known and likely questioned costs identified for all unallowable payments throughout the sample and individually significant items tested totaled $31,131 and $139,475, respectively. Cause: In discussing these deficiencies with management, the School District believed that the Consolidated Application included the unallowable items purchased; however, the description reflected on the Consolidated Application did not agree to the items purchased. In addition, management was unaware that Consolidated Application was not approved by the GaDOE. Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the ESSER program. Failure to accurately develop and amend budget information through the Consolidated Application process and verify compliance with applicable policies and regulations prior to the expenditure of federal program funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unapproved and unallowable expenditures. Recommendation: The School District should revise current internal control procedures related to the ESSER program. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that potential expenditures are approved through the Consolidated Application process and deemed to be allowable before spending federal funds. In addition, management should develop and implement a monitoring process to ensure that control procedures are being followed. Views of Responsible Officials: We concur with this finding.
Identification of federal program: US DEPARTMENT OF EDUCATION, passed through the Indiana Department of Education, Charter Schools Program 84.282A Criteria : In accordance with 2 CFR 200.403(g), costs must be adequately documented in order to be allowable under Federal awards. Condition : The School was unable to provide documentation for three (3) out of sixty (60) non-payroll expenses. Cause : The School failed to follow its own policies for documentation of expenses and document retention. Effect: The costs were not allowable under the Federal award because they were not adequately documented. Questioned costs: $2,412. Context: Three (3) out of sixty (60) non-payroll expenditures tested did not have original invoice or payment support. Recommendation : We recommend the School implement a document retention system whereby invoices and payment support are retained for the appropriate time period. Recommendation : We recommend the School implement a document retention system whereby invoices and payment support are retained for the appropriate time period. Views of Responsible Officials: See attached Corrective Action Plan.
Finding No. 2022–007 – Activities Allowed or Unallowed, Eligible Uses – FEMA Federal Program ALN 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Program Name of Federal Agency U.S. Department of Homeland Security Pass-through Entity Central Office of Recovery, Reconstruction and Resiliency (COR3) Category Non-compliance / Material weakness in internal controls over compliance Compliance Requirement Activities Allowed or Unallowed, Eligible Uses Criteria As per 2 CFR section 200.403(g), 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. • Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. • Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. • 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. • 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. • 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). • Be adequately documented. See also §§ 200.300 through 200.309 of this part. • Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Condition During the closeout procedures, the Central Office of Recovery, Reconstruction and Resiliency (COR3) office performed a 100% validation on Rental Equipment, supporting documents including contract summary record, invoices, and proofs of payment. As a result of the validation, the total validated amount is $979,259 from an original amount of $1,260,775 submitted by the Corporation for reimbursement. Cause The Corporation claimed ineligible days in rent of equipment, certain invoices were claimed at a greater monthly rate, various expenses were claimed using retroactive memorandum of necessity as well as other transactions were found to not be eligible due to non-compliance with Puerto Rican Contract law, failing to comply with the proper documentation as required by the regulation. Effect The Corporation has to return a total amount of $281,516 due to the unallowed activities that were claimed to the fund. Questioned Cost The known questioned cost was calculated by the amount deemed to be unallowable activity of $281,516. Context • An amount of $26,127 was deducted from invoice #16307820 due to the dates 9/3/18 to 9/15/18 that falls in the 100% cost share." This amount was claimed under a different PW. • For chillers, invoice 16307877 was partially covered (15 days eligible), invoice 16308069 was partially covered (12 days eligible), and invoice 16308131 was partially covered (14 days eligible) due to the service order execution date. • For generators, invoices 16307884, 16307953, 16308033, 16308092, 16308146, 16308207, 16308270, 16308318, 16308357, 16308402, 16308449 and 16308476 were partially covered due to the maximum contract amount. • For generators, invoices 16307820, 16308622, 16308665, and 16308706 were found to not be eligible for reimbursement due to both retroactive execution as well as non-compliance with Puerto Rican Contract law. Identification of a repeat finding This is not a repeat finding from the immediate previous audit. Recommendation The management of the Corporation should reinforce its procedures of the administration of federal funds to ensure the compliance with the requirements with each program. Also, the Corporation should establish communication with the Central Office of Recovery, Reconstruction and Resiliency in order to obtain instructions for the correction of the non-compliance event and the related questioned cost. Views of responsible officials and planned corrective actions The Corporation’s management and responsible officers agree with this finding. Please refer to the corrective action plan section for the Corporation’s response on pages 89 to 98.
CONDITION -The Municipality’s staff could not provide us with the officially prepared and certified reports that supported compliance with the filing or submission of reports and financial information, as required by federal award and regulatory agreements. Likewise, reconciliations were not provided between the information used to prepare the required and submitted reports with the formal information presented and accounted for in the official Municipality’s accounting system. According to an analysis prepared by the Municipality of the bank account assigned to manage the use of Coronavirus Relief Fund (CRF) PHE - Transfer Funds, and transactions through this bank account during the fiscal year ended June 30, 2022, $1,802,962 has been expended or transferred to the general fund to cover eligible expenses under the terms allowed by the CRF PHE - Transfer Funds. As a consequence of these conditions, compliance with reporting requirements established by the pass-through entity, and related internal controls, could not be verified. CRITERIA - According to the Transfer Agreements, the transferee shall submit reports as the transferor determines are needed to verify use of the funds and compliance with conditions that are imposed on the transfer, and such reports shall be in such form, with such content, as specified by the transferor in the transfer plan and future program instructions directed to all recipients. Transferor will transfer emergency assistance fund to transferee for necessary expenditures related to the COVID-19 emergency by making a transfer on the basis set out in this Agreement and in the Transfer Plan. The reports must be due on the 15th day of each month, the transferee will submit a use of funds transfer report for the prior month’s expenses. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403, states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. CAUSE - There is a lack of knowledge and training to the personnel assigned to the management and reports preparation, as required by this federal award. Additionally, the Municipality does not have an adequate monitoring and internal control regarding the activity, filing and custody of reports, as required by the federal awards and the pass-through entity, and in a way that documents and supports the compliance with reporting requirements. EFFECT - The program is exposed to not being in compliance with the Reporting Requirements as established in agreement. Also, the Municipality is exposed to the Grantor questioning the use of funds. RECOMMENDATION - We recommend that the staff or department in charge locate and document all required reports that were filed according to the requirements of the grant agreement, including the reconciliation thereof with the official Municipality’s accounting subsidiaries. Also, it is absolutely necessary for the Municipality to design, document, establish and provide the necessary and required training, including guidelines and procedures, to all personnel who work directly or indirectly with the management of these federal funds.
CONDITION - The Municipality’s staff could not provide us with the officially prepared and certified reports that supported compliance with the filing or submission of reports and financial information, as required by federal award and regulatory agreements. Likewise, reconciliations were not provided between the information used to prepare the required and submitted reports with the formal information presented and accounted for in the official Municipality’s accounting system. According to an analysis prepared by the Municipality of the bank account assigned to manage the use of Coronavirus Relief Fund (CRF) PHE – Testing and Contact Tracing, and transactions through this bank account during the fiscal year ended June 30, 2022, $156,846 has been expended or transferred to the general fund to cover eligible expenses under the terms allowed by the CRF PHA - Tracing and Contact Tracing. As a consequence of these conditions, compliance with reporting requirements established by the pass-through entity, and related internal controls, could not be verified. CRITERIA - According to the Transfer Agreements, the transferee shall submit reports as the transferor determines are needed to verify use of the funds and compliance with conditions that are imposed on the transfer, and such reports shall be in such form, with such content, as specified by the transferor in the transfer plan and future program instructions directed to all recipients. Transferor will transfer emergency assistance fund to transferee for necessary expenditures related to the COVID-19 emergency by making a transfer on the basis set out in this Agreement and in the Transfer Plan. The reports must be due on the 15th day of each month, the transferee will submit a use of funds transfer report for the prior month’s expenses. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403, states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. CAUSE - There is a lack of knowledge and training to the personnel assigned to the management and reports preparation, as required by this federal award. Additionally, the Municipality does not have an adequate monitoring and internal control regarding the activity, filing and custody of reports, as required by the federal awards and the pass-through entity, and in a way that documents and supports the compliance with reporting requirements. EFFECT - The program is exposed to not being in compliance with the Reporting Requirements as established in agreement. Also, the Municipality is exposed to the Grantor questioning the use of funds. RECOMMENDATION - We recommend that the staff or department in charge locate and document all required reports that were filed according to the requirements of the grant agreement, including the reconciliation thereof with the official Municipality’s accounting subsidiaries. Also, it is absolutely necessary for the Municipality to design, document, establish and provide the necessary and required training, including guidelines and procedures, to all personnel who work directly or indirectly with the management of these federal funds.
CONDITION - The Municipality’s staff could not provide us with the officially prepared and certified reports that supported compliance with the filing or submission of reports and financial information, as required by federal award and regulatory agreements. Likewise, reconciliations were not provided between the information used to prepare the required and submitted reports with the formal information presented and accounted for in the official Municipality’s accounting system. According to an analysis prepared by the Municipality of the bank account assigned to manage the use of Coronavirus State and Local Fiscal Recovery Funds (CSLFRF), and transactions through this bank account during the fiscal year ended June 30, 2022, $625,053 has been expended or transferred to the general fund to cover eligible expenses under the terms allowed by the CSLFRF. As a consequence of these conditions, compliance with reporting requirements established by the federal grantor, and related internal controls, could not be verified. CRITERIA - Per the Compliance and Reporting Guidance – Part I: General Guidance – Section D: Uniform Administrative Requirements – Section 10: Reporting: establishes that: All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Recipients should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropriate, recipients need to establish controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403, states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. CAUSE - There is a lack of knowledge and training to the personnel assigned to the management and reports preparation, as required by this federal award. Additionally, the Municipality does not have an adequate monitoring and internal control regarding the activity, filing and custody of reports, as required by the federal awards and the pass-through entity, and in a way that documents and supports the compliance with reporting requirements. EFFECT - The program is exposed to not being in compliance with the Reporting Requirements as established in agreement. Also, the Municipality is exposed to the Grantor questioning the use of funds. RECOMMENDATION - We recommend that the staff or department in charge locate and document all required reports that were filed according to the requirements of the grant agreement, including the reconciliation thereof with the official Municipality’s accounting subsidiaries. Also, it is absolutely necessary for the Municipality to design, document, establish and provide the necessary and required training, including guidelines and procedures, to all personnel who work directly or indirectly with the management of these federal funds.
CONDITION - The Municipality’s staff could not provide us with the officially prepared and certified reports that supported compliance with the filing or submission of reports and financial information, as required by federal award and regulatory agreements. Likewise, reconciliations were not provided between the information used to prepare the required and submitted reports with the formal information presented and accounted for in the official Municipality’s accounting system. According to an analysis prepared by the Municipality of the bank account assigned to manage the use of Coronavirus State and Local Fiscal Recovery Funds (CSLFRF), and transactions through this bank account during the fiscal year ended June 30, 2022, $625,053 has been expended or transferred to the general fund to cover eligible expenses under the terms allowed by the CSLFRF. As a consequence of these conditions, compliance with reporting requirements established by the federal grantor, and related internal controls, could not be verified. CRITERIA - Per the Compliance and Reporting Guidance – Part I: General Guidance – Section D: Uniform Administrative Requirements – Section 10: Reporting: establishes that: All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Recipients should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropriate, recipients need to establish controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403, states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. CAUSE - There is a lack of knowledge and training to the personnel assigned to the management and reports preparation, as required by this federal award. Additionally, the Municipality does not have an adequate monitoring and internal control regarding the activity, filing and custody of reports, as required by the federal awards and the pass-through entity, and in a way that documents and supports the compliance with reporting requirements. EFFECT - The program is exposed to not being in compliance with the Reporting Requirements as established in agreement. Also, the Municipality is exposed to the Grantor questioning the use of funds. RECOMMENDATION - We recommend that the staff or department in charge locate and document all required reports that were filed according to the requirements of the grant agreement, including the reconciliation thereof with the official Municipality’s accounting subsidiaries. Also, it is absolutely necessary for the Municipality to design, document, establish and provide the necessary and required training, including guidelines and procedures, to all personnel who work directly or indirectly with the management of these federal funds.
CONDITION - The Municipality’s staff could not provide us with the officially prepared and certified reports that supported compliance with the filing or submission of reports and financial information, as required by federal award and regulatory agreements. Likewise, reconciliations were not provided between the information used to prepare the required and submitted reports with the formal information presented and accounted for in the official Municipality’s accounting system. CRITERIA - The state is required to make an accounting to FEMA of eligible costs. Similarly, the subrecipient must make an accounting to the state. In submitting the accounting, the entity is required to certify that reported costs were incurred in performance of eligible work, that the approved work was completed, that the project in in compliance with the provisions of the FEMA-State Agreement, all grants conditions were met, ant the provisions for that project were made in accordance with the applicable payment provisions. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403, states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. CAUSE - There is a lack of knowledge and training to the personnel assigned to the management and reports preparation, as required by this federal award. Additionally, the Municipality does not have an adequate monitoring and internal control regarding the activity, filing and custody of reports, as required by the federal awards and the pass-through entity, and in a way that documents and supports the compliance with reporting requirements. EFFECT - The program is exposed to not being in compliance with the Reporting Requirements as established in agreement. Also, the Municipality is exposed to the Grantor questioning the use of funds. RECOMMENDATION - We recommend that the staff or department in charge locate and document all required reports that were filed according to the requirements of the grant agreement, including the reconciliation thereof with the official Municipality’s accounting subsidiaries. Also, it is absolutely necessary for the Municipality to design, document, establish and provide the necessary and required training, including guidelines and procedures, to all personnel who work directly or indirectly with the management of these federal funds.
FA 2022-02 Strengthen Controls over Expenditures Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Equipment and Real Property Management Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D210012 (Year: 2021), S425U210012 (Year: 2021), S425Q210012 (Year 2021) Questioned Costs: $192,004.45 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures and equipment as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to the coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $3,287,369.95 were expended and reported on the Telfair County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” In addition, provisions included in the Uniform Guidance, Section 202.403 – Reasonable Costs state that “a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm’s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award… (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award’s cost.” Furthermore, as a condition of receiving federal subawards from the GaDOE, LEAs are required to prepare an annual budget that reflects how funding will be expended. This budget is submitted in the Consolidated Application system and is required to be reviewed and approved by the GaDOE program and grants management prior to expending federal program funds. LEA personnel must also provide program-specific assurances related to the ESSER program within the Consolidated Application system. These assurances are reflected in the Uniform Guidance, Section 200.415 – Required Certifications, and include provisions that require LEAs “to assure that expenditures are proper and in accordance with the terms and conditions of the Federal award and approved project budgets...” Lastly, provisions included in the Uniform Guidance, Section 200.313 - Equipment state that "equipment must be used by the non-Federal entity in the program or project for which it was acquired as long as needed, whether or not the project or program continues to be supported by the Federal award, and the non-Federal entity must not encumber the property without prior approval of the Federal awarding agency." Condition: A sample of 23 nonpersonal services expenditures was randomly selected for testing using a nonstatistical sampling approach. In addition, six individually significant expenditures were selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. Furthermore, all equipment items purchased during the period under review were selected for testing to ensure approval was obtained from GaDOE prior to the purchase of the equipment. The following deficiencies were noted: • Two randomly selected expenditures totaling $7,678.24 were not appropriately approved by GaDOE through the Consolidated Application process as required. • Two individually significant items totaling $99,628.33 were not appropriately approved by GaDOE through the Consolidated Application process as required. • The purchase of two servers totaling $35,022.88 was not appropriately approved by GaDOE through the Consolidated Application process as required. • Bonuses totaling $43,900.00 were paid to individuals who were not employees of the School District. These individuals were hired to perform specific functions as detailed within the associated contracts and were paid amounts in excess of the stated rate noted within these contracts. Questioned Costs: Upon testing a sample of $142,102.78 in nonpersonal services expenditures, known questioned costs of $7,678.24 were identified. Using the population being sampled, which totaled $279,079.35, we project the likely questioned costs to be approximately $15,079.50. In addition, known questioned costs identified for unallowable/undocumented payments associated with individually significant items tested totaled $184,326.21; therefore, the known and likely questioned costs identified for all unallowable payments throughout the sample and individually significant items tested totaled $192,004.45 and $199,405.71, respectively. Cause: Per discussion with management, the School District believed that the bonuses were allowable as the expenditures were approved by GaDOE through the Consolidated Application process; however, they were not aware that contract amendments should be initiated prior to the expenditure of funds in this manner. In discussing the expenditures not approved on the Consolidated Application, they stated that the School District management did not update the ESSER Consolidated Application system prior to expending the funds for a different purpose. Effect: The School District is not in compliance with the Uniform Guidance, ED, or GaDOE guidance related to the ESSER program. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are in line with provisions reflected within the associated contract and/or contract amendments. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District’s purchasing and employee compensation policies and procedures. Views of Responsible Officials: The School District does not agree with this finding. The School District feels this was an isolated incident due to the unique circumstances of this atypical grant. All documentation required by the vendors used was provided. The School District believes GaDOE guidelines and district Board approved procedures were followed on all expenditures except for a portion of the bonuses referenced. Auditor’s Concluding Remarks: School District personnel state that the School District “believes GaDOE guidelines and district Board approved procedures were followed”. While the expenditures may be allowable in nature, the School District is still required to get approval from GaDOE to be allowable per the Uniform Guidance. School Districts are expected and required to comply with federal regulations associated with the federal program. When each federal program budget is submitted to GaDOE, School District management signs assurances certifying that “each program will be administered in accordance with all applicable statutes, internal controls in the procurement process for goods and services in accordance with Georgia’s Financial Management for Georgia LUAS Manual.” As noted previously, the School District did follow appropriate procurement policies and procedures. We reaffirm our finding and will review the status of the finding during our next audit.
FA 2022-02 Strengthen Controls over Expenditures Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Equipment and Real Property Management Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D210012 (Year: 2021), S425U210012 (Year: 2021), S425Q210012 (Year 2021) Questioned Costs: $192,004.45 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures and equipment as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to the coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $3,287,369.95 were expended and reported on the Telfair County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” In addition, provisions included in the Uniform Guidance, Section 202.403 – Reasonable Costs state that “a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm’s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award… (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award’s cost.” Furthermore, as a condition of receiving federal subawards from the GaDOE, LEAs are required to prepare an annual budget that reflects how funding will be expended. This budget is submitted in the Consolidated Application system and is required to be reviewed and approved by the GaDOE program and grants management prior to expending federal program funds. LEA personnel must also provide program-specific assurances related to the ESSER program within the Consolidated Application system. These assurances are reflected in the Uniform Guidance, Section 200.415 – Required Certifications, and include provisions that require LEAs “to assure that expenditures are proper and in accordance with the terms and conditions of the Federal award and approved project budgets...” Lastly, provisions included in the Uniform Guidance, Section 200.313 - Equipment state that "equipment must be used by the non-Federal entity in the program or project for which it was acquired as long as needed, whether or not the project or program continues to be supported by the Federal award, and the non-Federal entity must not encumber the property without prior approval of the Federal awarding agency." Condition: A sample of 23 nonpersonal services expenditures was randomly selected for testing using a nonstatistical sampling approach. In addition, six individually significant expenditures were selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. Furthermore, all equipment items purchased during the period under review were selected for testing to ensure approval was obtained from GaDOE prior to the purchase of the equipment. The following deficiencies were noted: • Two randomly selected expenditures totaling $7,678.24 were not appropriately approved by GaDOE through the Consolidated Application process as required. • Two individually significant items totaling $99,628.33 were not appropriately approved by GaDOE through the Consolidated Application process as required. • The purchase of two servers totaling $35,022.88 was not appropriately approved by GaDOE through the Consolidated Application process as required. • Bonuses totaling $43,900.00 were paid to individuals who were not employees of the School District. These individuals were hired to perform specific functions as detailed within the associated contracts and were paid amounts in excess of the stated rate noted within these contracts. Questioned Costs: Upon testing a sample of $142,102.78 in nonpersonal services expenditures, known questioned costs of $7,678.24 were identified. Using the population being sampled, which totaled $279,079.35, we project the likely questioned costs to be approximately $15,079.50. In addition, known questioned costs identified for unallowable/undocumented payments associated with individually significant items tested totaled $184,326.21; therefore, the known and likely questioned costs identified for all unallowable payments throughout the sample and individually significant items tested totaled $192,004.45 and $199,405.71, respectively. Cause: Per discussion with management, the School District believed that the bonuses were allowable as the expenditures were approved by GaDOE through the Consolidated Application process; however, they were not aware that contract amendments should be initiated prior to the expenditure of funds in this manner. In discussing the expenditures not approved on the Consolidated Application, they stated that the School District management did not update the ESSER Consolidated Application system prior to expending the funds for a different purpose. Effect: The School District is not in compliance with the Uniform Guidance, ED, or GaDOE guidance related to the ESSER program. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are in line with provisions reflected within the associated contract and/or contract amendments. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District’s purchasing and employee compensation policies and procedures. Views of Responsible Officials: The School District does not agree with this finding. The School District feels this was an isolated incident due to the unique circumstances of this atypical grant. All documentation required by the vendors used was provided. The School District believes GaDOE guidelines and district Board approved procedures were followed on all expenditures except for a portion of the bonuses referenced. Auditor’s Concluding Remarks: School District personnel state that the School District “believes GaDOE guidelines and district Board approved procedures were followed”. While the expenditures may be allowable in nature, the School District is still required to get approval from GaDOE to be allowable per the Uniform Guidance. School Districts are expected and required to comply with federal regulations associated with the federal program. When each federal program budget is submitted to GaDOE, School District management signs assurances certifying that “each program will be administered in accordance with all applicable statutes, internal controls in the procurement process for goods and services in accordance with Georgia’s Financial Management for Georgia LUAS Manual.” As noted previously, the School District did follow appropriate procurement policies and procedures. We reaffirm our finding and will review the status of the finding during our next audit.
FA 2022-001 Improve Controls over Expenditures Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 ? 84.425D ? Elementary and Secondary School Emergency Relief Fund COVID-19 ? 84.425U ? American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Number: S425D200012 (Year: 2020), S425U210012 (Year: 2021) Questioned Costs: $61,000.00 Repeat of Prior Year Finding: None Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $2,583,527.47 were expended and reported on the Atkinson County Board of Education?s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 ? Factors Affecting Allowability of Costs state that ?costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity? (g) Be adequately documented?? In addition, provisions included in the Uniform Guidance, Section 200.404 ? Reasonable Costs state that ?a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm?s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award? (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award?s cost.? Furthermore, provisions included in the Uniform Guidance, Section 200.318 ? General Procurement Standards state that ?the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations? for the acquisition of property or services required under a Federal award or subaward?? Condition: Auditors performed a review of expenditure activity associated with the ESSER program to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed that ?retention? bonuses were paid to individuals who were not employees of the School District. These individuals were hired to perform specific functions as detailed within the associated contracts and were paid amounts in excess of the stated rate noted within these contracts. Furthermore, the School District does not have the authority or ability to retain these individuals as they were not employees of the School District and contract provisions requiring the individuals to remain in the service of the School District for a stated period of time was not reflected within the associated contract. Therefore, expenditures totaling $61,000.00 were not considered to be reasonable and necessary for the performance of the ESSER program and deemed unallowable. Questioned Costs: Known questioned costs of $61,000.00 were identified for expenditures that were not incurred for a necessary and reasonable purpose and did not follow the School District?s policies and procedures. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: Per discussion with management, the School District believed that the expenditures were allowable as the expenditures were approved by GaDOE through the Consolidated Application process and approved by the local Board of Education; however, they were not aware that contract amendments should be initiated prior to the expenditure of funds in this manner. Effect: The School District is not in compliance with the Uniform Guidance, ED, or GaDOE guidance related to the ESSER program. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are in line with provisions reflected within the associated contract and/or contract amendments. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District?s purchasing policies and procedures. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Improve Controls over Expenditures Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 ? 84.425D ? Elementary and Secondary School Emergency Relief Fund COVID-19 ? 84.425U ? American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Number: S425D200012 (Year: 2020), S425U210012 (Year: 2021) Questioned Costs: $61,000.00 Repeat of Prior Year Finding: None Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $2,583,527.47 were expended and reported on the Atkinson County Board of Education?s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 ? Factors Affecting Allowability of Costs state that ?costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity? (g) Be adequately documented?? In addition, provisions included in the Uniform Guidance, Section 200.404 ? Reasonable Costs state that ?a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm?s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award? (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award?s cost.? Furthermore, provisions included in the Uniform Guidance, Section 200.318 ? General Procurement Standards state that ?the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations? for the acquisition of property or services required under a Federal award or subaward?? Condition: Auditors performed a review of expenditure activity associated with the ESSER program to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed that ?retention? bonuses were paid to individuals who were not employees of the School District. These individuals were hired to perform specific functions as detailed within the associated contracts and were paid amounts in excess of the stated rate noted within these contracts. Furthermore, the School District does not have the authority or ability to retain these individuals as they were not employees of the School District and contract provisions requiring the individuals to remain in the service of the School District for a stated period of time was not reflected within the associated contract. Therefore, expenditures totaling $61,000.00 were not considered to be reasonable and necessary for the performance of the ESSER program and deemed unallowable. Questioned Costs: Known questioned costs of $61,000.00 were identified for expenditures that were not incurred for a necessary and reasonable purpose and did not follow the School District?s policies and procedures. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: Per discussion with management, the School District believed that the expenditures were allowable as the expenditures were approved by GaDOE through the Consolidated Application process and approved by the local Board of Education; however, they were not aware that contract amendments should be initiated prior to the expenditure of funds in this manner. Effect: The School District is not in compliance with the Uniform Guidance, ED, or GaDOE guidance related to the ESSER program. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are in line with provisions reflected within the associated contract and/or contract amendments. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District?s purchasing policies and procedures. Views of Responsible Officials: We concur with this finding.
Federal Agency: U.S. Department of Health and Human Services Pass Thru Entity: Oklahoma Department of Human Services-Aging Services Division Federal Program: Aging Cluster Assistance Listing: 93.044; COVID-19 93.044; 93.045; COVID-19 93.045; 93.053 Condition: Expenses reported to program did not have proper approval documented and receipt of goods. Criteria: 2 CFR 200.403(g) costs that meet general criteria in order to be allowable under federal awards must be adequately documented. Context: 2 out of 40 expenses did not have proper approval or receipt of goods. Cause: Invoices did not have proper approval noted before payment. Effect: Possible unallowable costs reported to grant. Recommendation: Expenses should not be paid without proper approval and supporting invoices. The Entity should follow procedures regarding requiring appropriate staff with authority to approve expenses and require support for receipt of goods. Repeat Finding from Prior Year: No Views of Responsible Officials and Planned Corrective Action: Aging expense reported did receive proper approval, however there no approval on actual invoices. Aging Services Director will make sure all invoices have approval by signature and receipt of goods, when signing checks and approval for purchases of any items to be purchased. Director of Aging Services to follow this protocol: 1. Give approval for the purchase of any items to staff to purchase items. 2. Make sure when either an invoice comes in the mail or is put with a check for signature that Director makes sure that she signs both the check and invoice. As a back-up, the accountant will check all invoices for the Director?s signature before completing any Aging Services check.
Federal Agency: U.S. Department of Health and Human Services Pass Thru Entity: Oklahoma Department of Human Services-Aging Services Division Federal Program: Aging Cluster Assistance Listing: 93.044; COVID-19 93.044; 93.045; COVID-19 93.045; 93.053 Condition: Expenses reported to program did not have proper approval documented and receipt of goods. Criteria: 2 CFR 200.403(g) costs that meet general criteria in order to be allowable under federal awards must be adequately documented. Context: 2 out of 40 expenses did not have proper approval or receipt of goods. Cause: Invoices did not have proper approval noted before payment. Effect: Possible unallowable costs reported to grant. Recommendation: Expenses should not be paid without proper approval and supporting invoices. The Entity should follow procedures regarding requiring appropriate staff with authority to approve expenses and require support for receipt of goods. Repeat Finding from Prior Year: No Views of Responsible Officials and Planned Corrective Action: Aging expense reported did receive proper approval, however there no approval on actual invoices. Aging Services Director will make sure all invoices have approval by signature and receipt of goods, when signing checks and approval for purchases of any items to be purchased. Director of Aging Services to follow this protocol: 1. Give approval for the purchase of any items to staff to purchase items. 2. Make sure when either an invoice comes in the mail or is put with a check for signature that Director makes sure that she signs both the check and invoice. As a back-up, the accountant will check all invoices for the Director?s signature before completing any Aging Services check.
Federal Agency: U.S. Department of Health and Human Services Pass Thru Entity: Oklahoma Department of Human Services-Aging Services Division Federal Program: Aging Cluster Assistance Listing: 93.044; COVID-19 93.044; 93.045; COVID-19 93.045; 93.053 Condition: Expenses reported to program did not have proper approval documented and receipt of goods. Criteria: 2 CFR 200.403(g) costs that meet general criteria in order to be allowable under federal awards must be adequately documented. Context: 2 out of 40 expenses did not have proper approval or receipt of goods. Cause: Invoices did not have proper approval noted before payment. Effect: Possible unallowable costs reported to grant. Recommendation: Expenses should not be paid without proper approval and supporting invoices. The Entity should follow procedures regarding requiring appropriate staff with authority to approve expenses and require support for receipt of goods. Repeat Finding from Prior Year: No Views of Responsible Officials and Planned Corrective Action: Aging expense reported did receive proper approval, however there no approval on actual invoices. Aging Services Director will make sure all invoices have approval by signature and receipt of goods, when signing checks and approval for purchases of any items to be purchased. Director of Aging Services to follow this protocol: 1. Give approval for the purchase of any items to staff to purchase items. 2. Make sure when either an invoice comes in the mail or is put with a check for signature that Director makes sure that she signs both the check and invoice. As a back-up, the accountant will check all invoices for the Director?s signature before completing any Aging Services check.
Federal Agency: U.S. Department of Health and Human Services Pass Thru Entity: Oklahoma Department of Human Services-Aging Services Division Federal Program: Aging Cluster Assistance Listing: 93.044; COVID-19 93.044; 93.045; COVID-19 93.045; 93.053 Condition: Expenses reported to program did not have proper approval documented and receipt of goods. Criteria: 2 CFR 200.403(g) costs that meet general criteria in order to be allowable under federal awards must be adequately documented. Context: 2 out of 40 expenses did not have proper approval or receipt of goods. Cause: Invoices did not have proper approval noted before payment. Effect: Possible unallowable costs reported to grant. Recommendation: Expenses should not be paid without proper approval and supporting invoices. The Entity should follow procedures regarding requiring appropriate staff with authority to approve expenses and require support for receipt of goods. Repeat Finding from Prior Year: No Views of Responsible Officials and Planned Corrective Action: Aging expense reported did receive proper approval, however there no approval on actual invoices. Aging Services Director will make sure all invoices have approval by signature and receipt of goods, when signing checks and approval for purchases of any items to be purchased. Director of Aging Services to follow this protocol: 1. Give approval for the purchase of any items to staff to purchase items. 2. Make sure when either an invoice comes in the mail or is put with a check for signature that Director makes sure that she signs both the check and invoice. As a back-up, the accountant will check all invoices for the Director?s signature before completing any Aging Services check.
Federal Agency: U.S. Department of Health and Human Services Pass Thru Entity: Oklahoma Department of Human Services-Aging Services Division Federal Program: Aging Cluster Assistance Listing: 93.044; COVID-19 93.044; 93.045; COVID-19 93.045; 93.053 Condition: Expenses reported to program did not have proper approval documented and receipt of goods. Criteria: 2 CFR 200.403(g) costs that meet general criteria in order to be allowable under federal awards must be adequately documented. Context: 2 out of 40 expenses did not have proper approval or receipt of goods. Cause: Invoices did not have proper approval noted before payment. Effect: Possible unallowable costs reported to grant. Recommendation: Expenses should not be paid without proper approval and supporting invoices. The Entity should follow procedures regarding requiring appropriate staff with authority to approve expenses and require support for receipt of goods. Repeat Finding from Prior Year: No Views of Responsible Officials and Planned Corrective Action: Aging expense reported did receive proper approval, however there no approval on actual invoices. Aging Services Director will make sure all invoices have approval by signature and receipt of goods, when signing checks and approval for purchases of any items to be purchased. Director of Aging Services to follow this protocol: 1. Give approval for the purchase of any items to staff to purchase items. 2. Make sure when either an invoice comes in the mail or is put with a check for signature that Director makes sure that she signs both the check and invoice. As a back-up, the accountant will check all invoices for the Director?s signature before completing any Aging Services check.