CONDITION: During the calendar year 2022, the City did not record the necessary adjustments to the various ‘Fund’ general ledgers of the City to properly reconcile the balance sheet accounts, such as cash, receivables, payables, and payroll-related liabilities to the underlying supporting documentation available at the City (which includes reconciliations of cash prepared independently by City personnel but do not agree to amounts reported in the various general ledgers). This included ‘Funds” containing significant federal funding such as the City’s Community Development Block Grant (CDBG) Program and American Rescue Plan Act (ARPA) funding known as the Coronavirus State and Local Fiscal Recovery Fund. As a result, the financial position and results of operations as shown throughout the calendar year were inaccurately stated. However, it should be noted that the Community Development Department of the City and other City personnel maintain separate financial reporting for these federal funds, independent of the aforementioned ‘Fund’ general ledgers sufficient to ascertain the revenues and expenditures of the federal programs. This is a repeat finding (2021-001) from the prior year. CRITERIA: Prudent internal control procedures in the areas of general ledger management and financial reporting include the reconciliation of all general ledger account balances to underlying supporting documentation monthly with independent oversight and approval as part of the process. In specific as it relates to federal programs, Section 2 CFR 200.403(g) of the Uniform Guidance requires that federal costs must be adequately documented which would include the applicable general ledgers of the City. EFFECT: The lack of procedures in place for reconciling balance sheet accounts throughout the calendar year, with independent oversight, 1) reduces the City’s internal control over the financial reporting processes, 2) exposes the City to inaccurate financial reporting to management for decision-making purposes, and 3) increases the potential for irregularities that may result (unintentional or otherwise) that are not detected in a timely manner. Had these reconciliations been performed, issues such as non-postings, and inaccurate postings to the City’s various general ledgers could have been detected and corrected in a timely manner to enhance internal controls and financial reporting in this important area of financial management. As a result, the City is not incompliance with Section 2 CFR 200.403(g) of the Uniform Guidance which requires federal costs to be adequately documented in the applicable general ledgers of the City. CAUSE: City business office personnel perform a variety of duties such as accounting for deposits, invoice processing, reconciliation of cash (but not to the various general ledger accounts of the City), preparation of payroll, and posting of financial transactions to the City’s general ledgers. However, no one individual is responsible for managing and reconciling all of the aforementioned procedures to the various ‘Fund’ general ledgers at the City. RECOMMENDATION: I am recommending that the management of the City establish written procedures for all accounting functions, but most notably for recording the necessary adjustments to the City’s general ledgers throughout the calendar year (monthly) to ensure that all balance sheet account balances are supported by the underlying documentation available at the City. It is anticipated that additional training will be required for in-house personnel to perform this function, or the City may want to consider contracting these services to a third-party professional with the expertise to perform these functions for the City on a monthly or quarterly basis throughout the year. These procedures should significantly enhance the internal control over the financial accounting and reporting process relative to the City’s general ledgers for each Fund. VIEWS OF RESPONSIBLE OFFICIALS: The City concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During the calendar year 2022, the City did not record the necessary adjustments to the various ‘Fund’ general ledgers of the City to properly reconcile the balance sheet accounts, such as cash, receivables, payables, and payroll-related liabilities to the underlying supporting documentation available at the City (which includes reconciliations of cash prepared independently by City personnel but do not agree to amounts reported in the various general ledgers). This included ‘Funds” containing significant federal funding such as the City’s Community Development Block Grant (CDBG) Program and American Rescue Plan Act (ARPA) funding known as the Coronavirus State and Local Fiscal Recovery Fund. As a result, the financial position and results of operations as shown throughout the calendar year were inaccurately stated. However, it should be noted that the Community Development Department of the City and other City personnel maintain separate financial reporting for these federal funds, independent of the aforementioned ‘Fund’ general ledgers sufficient to ascertain the revenues and expenditures of the federal programs. This is a repeat finding (2021-001) from the prior year. CRITERIA: Prudent internal control procedures in the areas of general ledger management and financial reporting include the reconciliation of all general ledger account balances to underlying supporting documentation monthly with independent oversight and approval as part of the process. In specific as it relates to federal programs, Section 2 CFR 200.403(g) of the Uniform Guidance requires that federal costs must be adequately documented which would include the applicable general ledgers of the City. EFFECT: The lack of procedures in place for reconciling balance sheet accounts throughout the calendar year, with independent oversight, 1) reduces the City’s internal control over the financial reporting processes, 2) exposes the City to inaccurate financial reporting to management for decision-making purposes, and 3) increases the potential for irregularities that may result (unintentional or otherwise) that are not detected in a timely manner. Had these reconciliations been performed, issues such as non-postings, and inaccurate postings to the City’s various general ledgers could have been detected and corrected in a timely manner to enhance internal controls and financial reporting in this important area of financial management. As a result, the City is not incompliance with Section 2 CFR 200.403(g) of the Uniform Guidance which requires federal costs to be adequately documented in the applicable general ledgers of the City. CAUSE: City business office personnel perform a variety of duties such as accounting for deposits, invoice processing, reconciliation of cash (but not to the various general ledger accounts of the City), preparation of payroll, and posting of financial transactions to the City’s general ledgers. However, no one individual is responsible for managing and reconciling all of the aforementioned procedures to the various ‘Fund’ general ledgers at the City. RECOMMENDATION: I am recommending that the management of the City establish written procedures for all accounting functions, but most notably for recording the necessary adjustments to the City’s general ledgers throughout the calendar year (monthly) to ensure that all balance sheet account balances are supported by the underlying documentation available at the City. It is anticipated that additional training will be required for in-house personnel to perform this function, or the City may want to consider contracting these services to a third-party professional with the expertise to perform these functions for the City on a monthly or quarterly basis throughout the year. These procedures should significantly enhance the internal control over the financial accounting and reporting process relative to the City’s general ledgers for each Fund. VIEWS OF RESPONSIBLE OFFICIALS: The City concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During the calendar year 2022, the City did not record the necessary adjustments to the various ‘Fund’ general ledgers of the City to properly reconcile the balance sheet accounts, such as cash, receivables, payables, and payroll-related liabilities to the underlying supporting documentation available at the City (which includes reconciliations of cash prepared independently by City personnel but do not agree to amounts reported in the various general ledgers). This included ‘Funds” containing significant federal funding such as the City’s Community Development Block Grant (CDBG) Program and American Rescue Plan Act (ARPA) funding known as the Coronavirus State and Local Fiscal Recovery Fund. As a result, the financial position and results of operations as shown throughout the calendar year were inaccurately stated. However, it should be noted that the Community Development Department of the City and other City personnel maintain separate financial reporting for these federal funds, independent of the aforementioned ‘Fund’ general ledgers sufficient to ascertain the revenues and expenditures of the federal programs. This is a repeat finding (2021-001) from the prior year. CRITERIA: Prudent internal control procedures in the areas of general ledger management and financial reporting include the reconciliation of all general ledger account balances to underlying supporting documentation monthly with independent oversight and approval as part of the process. In specific as it relates to federal programs, Section 2 CFR 200.403(g) of the Uniform Guidance requires that federal costs must be adequately documented which would include the applicable general ledgers of the City. EFFECT: The lack of procedures in place for reconciling balance sheet accounts throughout the calendar year, with independent oversight, 1) reduces the City’s internal control over the financial reporting processes, 2) exposes the City to inaccurate financial reporting to management for decision-making purposes, and 3) increases the potential for irregularities that may result (unintentional or otherwise) that are not detected in a timely manner. Had these reconciliations been performed, issues such as non-postings, and inaccurate postings to the City’s various general ledgers could have been detected and corrected in a timely manner to enhance internal controls and financial reporting in this important area of financial management. As a result, the City is not incompliance with Section 2 CFR 200.403(g) of the Uniform Guidance which requires federal costs to be adequately documented in the applicable general ledgers of the City. CAUSE: City business office personnel perform a variety of duties such as accounting for deposits, invoice processing, reconciliation of cash (but not to the various general ledger accounts of the City), preparation of payroll, and posting of financial transactions to the City’s general ledgers. However, no one individual is responsible for managing and reconciling all of the aforementioned procedures to the various ‘Fund’ general ledgers at the City. RECOMMENDATION: I am recommending that the management of the City establish written procedures for all accounting functions, but most notably for recording the necessary adjustments to the City’s general ledgers throughout the calendar year (monthly) to ensure that all balance sheet account balances are supported by the underlying documentation available at the City. It is anticipated that additional training will be required for in-house personnel to perform this function, or the City may want to consider contracting these services to a third-party professional with the expertise to perform these functions for the City on a monthly or quarterly basis throughout the year. These procedures should significantly enhance the internal control over the financial accounting and reporting process relative to the City’s general ledgers for each Fund. VIEWS OF RESPONSIBLE OFFICIALS: The City concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During the calendar year 2022, the City did not record the necessary adjustments to the various ‘Fund’ general ledgers of the City to properly reconcile the balance sheet accounts, such as cash, receivables, payables, and payroll-related liabilities to the underlying supporting documentation available at the City (which includes reconciliations of cash prepared independently by City personnel but do not agree to amounts reported in the various general ledgers). This included ‘Funds” containing significant federal funding such as the City’s Community Development Block Grant (CDBG) Program and American Rescue Plan Act (ARPA) funding known as the Coronavirus State and Local Fiscal Recovery Fund. As a result, the financial position and results of operations as shown throughout the calendar year were inaccurately stated. However, it should be noted that the Community Development Department of the City and other City personnel maintain separate financial reporting for these federal funds, independent of the aforementioned ‘Fund’ general ledgers sufficient to ascertain the revenues and expenditures of the federal programs. This is a repeat finding (2021-001) from the prior year. CRITERIA: Prudent internal control procedures in the areas of general ledger management and financial reporting include the reconciliation of all general ledger account balances to underlying supporting documentation monthly with independent oversight and approval as part of the process. In specific as it relates to federal programs, Section 2 CFR 200.403(g) of the Uniform Guidance requires that federal costs must be adequately documented which would include the applicable general ledgers of the City. EFFECT: The lack of procedures in place for reconciling balance sheet accounts throughout the calendar year, with independent oversight, 1) reduces the City’s internal control over the financial reporting processes, 2) exposes the City to inaccurate financial reporting to management for decision-making purposes, and 3) increases the potential for irregularities that may result (unintentional or otherwise) that are not detected in a timely manner. Had these reconciliations been performed, issues such as non-postings, and inaccurate postings to the City’s various general ledgers could have been detected and corrected in a timely manner to enhance internal controls and financial reporting in this important area of financial management. As a result, the City is not incompliance with Section 2 CFR 200.403(g) of the Uniform Guidance which requires federal costs to be adequately documented in the applicable general ledgers of the City. CAUSE: City business office personnel perform a variety of duties such as accounting for deposits, invoice processing, reconciliation of cash (but not to the various general ledger accounts of the City), preparation of payroll, and posting of financial transactions to the City’s general ledgers. However, no one individual is responsible for managing and reconciling all of the aforementioned procedures to the various ‘Fund’ general ledgers at the City. RECOMMENDATION: I am recommending that the management of the City establish written procedures for all accounting functions, but most notably for recording the necessary adjustments to the City’s general ledgers throughout the calendar year (monthly) to ensure that all balance sheet account balances are supported by the underlying documentation available at the City. It is anticipated that additional training will be required for in-house personnel to perform this function, or the City may want to consider contracting these services to a third-party professional with the expertise to perform these functions for the City on a monthly or quarterly basis throughout the year. These procedures should significantly enhance the internal control over the financial accounting and reporting process relative to the City’s general ledgers for each Fund. VIEWS OF RESPONSIBLE OFFICIALS: The City concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During the calendar year 2022, the City did not record the necessary adjustments to the various ‘Fund’ general ledgers of the City to properly reconcile the balance sheet accounts, such as cash, receivables, payables, and payroll-related liabilities to the underlying supporting documentation available at the City (which includes reconciliations of cash prepared independently by City personnel but do not agree to amounts reported in the various general ledgers). This included ‘Funds” containing significant federal funding such as the City’s Community Development Block Grant (CDBG) Program and American Rescue Plan Act (ARPA) funding known as the Coronavirus State and Local Fiscal Recovery Fund. As a result, the financial position and results of operations as shown throughout the calendar year were inaccurately stated. However, it should be noted that the Community Development Department of the City and other City personnel maintain separate financial reporting for these federal funds, independent of the aforementioned ‘Fund’ general ledgers sufficient to ascertain the revenues and expenditures of the federal programs. This is a repeat finding (2021-001) from the prior year. CRITERIA: Prudent internal control procedures in the areas of general ledger management and financial reporting include the reconciliation of all general ledger account balances to underlying supporting documentation monthly with independent oversight and approval as part of the process. In specific as it relates to federal programs, Section 2 CFR 200.403(g) of the Uniform Guidance requires that federal costs must be adequately documented which would include the applicable general ledgers of the City. EFFECT: The lack of procedures in place for reconciling balance sheet accounts throughout the calendar year, with independent oversight, 1) reduces the City’s internal control over the financial reporting processes, 2) exposes the City to inaccurate financial reporting to management for decision-making purposes, and 3) increases the potential for irregularities that may result (unintentional or otherwise) that are not detected in a timely manner. Had these reconciliations been performed, issues such as non-postings, and inaccurate postings to the City’s various general ledgers could have been detected and corrected in a timely manner to enhance internal controls and financial reporting in this important area of financial management. As a result, the City is not incompliance with Section 2 CFR 200.403(g) of the Uniform Guidance which requires federal costs to be adequately documented in the applicable general ledgers of the City. CAUSE: City business office personnel perform a variety of duties such as accounting for deposits, invoice processing, reconciliation of cash (but not to the various general ledger accounts of the City), preparation of payroll, and posting of financial transactions to the City’s general ledgers. However, no one individual is responsible for managing and reconciling all of the aforementioned procedures to the various ‘Fund’ general ledgers at the City. RECOMMENDATION: I am recommending that the management of the City establish written procedures for all accounting functions, but most notably for recording the necessary adjustments to the City’s general ledgers throughout the calendar year (monthly) to ensure that all balance sheet account balances are supported by the underlying documentation available at the City. It is anticipated that additional training will be required for in-house personnel to perform this function, or the City may want to consider contracting these services to a third-party professional with the expertise to perform these functions for the City on a monthly or quarterly basis throughout the year. These procedures should significantly enhance the internal control over the financial accounting and reporting process relative to the City’s general ledgers for each Fund. VIEWS OF RESPONSIBLE OFFICIALS: The City concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During the calendar year 2022, the City did not record the necessary adjustments to the various ‘Fund’ general ledgers of the City to properly reconcile the balance sheet accounts, such as cash, receivables, payables, and payroll-related liabilities to the underlying supporting documentation available at the City (which includes reconciliations of cash prepared independently by City personnel but do not agree to amounts reported in the various general ledgers). This included ‘Funds” containing significant federal funding such as the City’s Community Development Block Grant (CDBG) Program and American Rescue Plan Act (ARPA) funding known as the Coronavirus State and Local Fiscal Recovery Fund. As a result, the financial position and results of operations as shown throughout the calendar year were inaccurately stated. However, it should be noted that the Community Development Department of the City and other City personnel maintain separate financial reporting for these federal funds, independent of the aforementioned ‘Fund’ general ledgers sufficient to ascertain the revenues and expenditures of the federal programs. This is a repeat finding (2021-001) from the prior year. CRITERIA: Prudent internal control procedures in the areas of general ledger management and financial reporting include the reconciliation of all general ledger account balances to underlying supporting documentation monthly with independent oversight and approval as part of the process. In specific as it relates to federal programs, Section 2 CFR 200.403(g) of the Uniform Guidance requires that federal costs must be adequately documented which would include the applicable general ledgers of the City. EFFECT: The lack of procedures in place for reconciling balance sheet accounts throughout the calendar year, with independent oversight, 1) reduces the City’s internal control over the financial reporting processes, 2) exposes the City to inaccurate financial reporting to management for decision-making purposes, and 3) increases the potential for irregularities that may result (unintentional or otherwise) that are not detected in a timely manner. Had these reconciliations been performed, issues such as non-postings, and inaccurate postings to the City’s various general ledgers could have been detected and corrected in a timely manner to enhance internal controls and financial reporting in this important area of financial management. As a result, the City is not incompliance with Section 2 CFR 200.403(g) of the Uniform Guidance which requires federal costs to be adequately documented in the applicable general ledgers of the City. CAUSE: City business office personnel perform a variety of duties such as accounting for deposits, invoice processing, reconciliation of cash (but not to the various general ledger accounts of the City), preparation of payroll, and posting of financial transactions to the City’s general ledgers. However, no one individual is responsible for managing and reconciling all of the aforementioned procedures to the various ‘Fund’ general ledgers at the City. RECOMMENDATION: I am recommending that the management of the City establish written procedures for all accounting functions, but most notably for recording the necessary adjustments to the City’s general ledgers throughout the calendar year (monthly) to ensure that all balance sheet account balances are supported by the underlying documentation available at the City. It is anticipated that additional training will be required for in-house personnel to perform this function, or the City may want to consider contracting these services to a third-party professional with the expertise to perform these functions for the City on a monthly or quarterly basis throughout the year. These procedures should significantly enhance the internal control over the financial accounting and reporting process relative to the City’s general ledgers for each Fund. VIEWS OF RESPONSIBLE OFFICIALS: The City concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During the calendar year 2022, the City did not record the necessary adjustments to the various ‘Fund’ general ledgers of the City to properly reconcile the balance sheet accounts, such as cash, receivables, payables, and payroll-related liabilities to the underlying supporting documentation available at the City (which includes reconciliations of cash prepared independently by City personnel but do not agree to amounts reported in the various general ledgers). This included ‘Funds” containing significant federal funding such as the City’s Community Development Block Grant (CDBG) Program and American Rescue Plan Act (ARPA) funding known as the Coronavirus State and Local Fiscal Recovery Fund. As a result, the financial position and results of operations as shown throughout the calendar year were inaccurately stated. However, it should be noted that the Community Development Department of the City and other City personnel maintain separate financial reporting for these federal funds, independent of the aforementioned ‘Fund’ general ledgers sufficient to ascertain the revenues and expenditures of the federal programs. This is a repeat finding (2021-001) from the prior year. CRITERIA: Prudent internal control procedures in the areas of general ledger management and financial reporting include the reconciliation of all general ledger account balances to underlying supporting documentation monthly with independent oversight and approval as part of the process. In specific as it relates to federal programs, Section 2 CFR 200.403(g) of the Uniform Guidance requires that federal costs must be adequately documented which would include the applicable general ledgers of the City. EFFECT: The lack of procedures in place for reconciling balance sheet accounts throughout the calendar year, with independent oversight, 1) reduces the City’s internal control over the financial reporting processes, 2) exposes the City to inaccurate financial reporting to management for decision-making purposes, and 3) increases the potential for irregularities that may result (unintentional or otherwise) that are not detected in a timely manner. Had these reconciliations been performed, issues such as non-postings, and inaccurate postings to the City’s various general ledgers could have been detected and corrected in a timely manner to enhance internal controls and financial reporting in this important area of financial management. As a result, the City is not incompliance with Section 2 CFR 200.403(g) of the Uniform Guidance which requires federal costs to be adequately documented in the applicable general ledgers of the City. CAUSE: City business office personnel perform a variety of duties such as accounting for deposits, invoice processing, reconciliation of cash (but not to the various general ledger accounts of the City), preparation of payroll, and posting of financial transactions to the City’s general ledgers. However, no one individual is responsible for managing and reconciling all of the aforementioned procedures to the various ‘Fund’ general ledgers at the City. RECOMMENDATION: I am recommending that the management of the City establish written procedures for all accounting functions, but most notably for recording the necessary adjustments to the City’s general ledgers throughout the calendar year (monthly) to ensure that all balance sheet account balances are supported by the underlying documentation available at the City. It is anticipated that additional training will be required for in-house personnel to perform this function, or the City may want to consider contracting these services to a third-party professional with the expertise to perform these functions for the City on a monthly or quarterly basis throughout the year. These procedures should significantly enhance the internal control over the financial accounting and reporting process relative to the City’s general ledgers for each Fund. VIEWS OF RESPONSIBLE OFFICIALS: The City concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During the calendar year 2022, the City did not record the necessary adjustments to the various ‘Fund’ general ledgers of the City to properly reconcile the balance sheet accounts, such as cash, receivables, payables, and payroll-related liabilities to the underlying supporting documentation available at the City (which includes reconciliations of cash prepared independently by City personnel but do not agree to amounts reported in the various general ledgers). This included ‘Funds” containing significant federal funding such as the City’s Community Development Block Grant (CDBG) Program and American Rescue Plan Act (ARPA) funding known as the Coronavirus State and Local Fiscal Recovery Fund. As a result, the financial position and results of operations as shown throughout the calendar year were inaccurately stated. However, it should be noted that the Community Development Department of the City and other City personnel maintain separate financial reporting for these federal funds, independent of the aforementioned ‘Fund’ general ledgers sufficient to ascertain the revenues and expenditures of the federal programs. This is a repeat finding (2021-001) from the prior year. CRITERIA: Prudent internal control procedures in the areas of general ledger management and financial reporting include the reconciliation of all general ledger account balances to underlying supporting documentation monthly with independent oversight and approval as part of the process. In specific as it relates to federal programs, Section 2 CFR 200.403(g) of the Uniform Guidance requires that federal costs must be adequately documented which would include the applicable general ledgers of the City. EFFECT: The lack of procedures in place for reconciling balance sheet accounts throughout the calendar year, with independent oversight, 1) reduces the City’s internal control over the financial reporting processes, 2) exposes the City to inaccurate financial reporting to management for decision-making purposes, and 3) increases the potential for irregularities that may result (unintentional or otherwise) that are not detected in a timely manner. Had these reconciliations been performed, issues such as non-postings, and inaccurate postings to the City’s various general ledgers could have been detected and corrected in a timely manner to enhance internal controls and financial reporting in this important area of financial management. As a result, the City is not incompliance with Section 2 CFR 200.403(g) of the Uniform Guidance which requires federal costs to be adequately documented in the applicable general ledgers of the City. CAUSE: City business office personnel perform a variety of duties such as accounting for deposits, invoice processing, reconciliation of cash (but not to the various general ledger accounts of the City), preparation of payroll, and posting of financial transactions to the City’s general ledgers. However, no one individual is responsible for managing and reconciling all of the aforementioned procedures to the various ‘Fund’ general ledgers at the City. RECOMMENDATION: I am recommending that the management of the City establish written procedures for all accounting functions, but most notably for recording the necessary adjustments to the City’s general ledgers throughout the calendar year (monthly) to ensure that all balance sheet account balances are supported by the underlying documentation available at the City. It is anticipated that additional training will be required for in-house personnel to perform this function, or the City may want to consider contracting these services to a third-party professional with the expertise to perform these functions for the City on a monthly or quarterly basis throughout the year. These procedures should significantly enhance the internal control over the financial accounting and reporting process relative to the City’s general ledgers for each Fund. VIEWS OF RESPONSIBLE OFFICIALS: The City concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
• CONDITION: During the calendar year 2022, the City did not utilize a formal general ledger system of accounting to track the financial activity (financial position and results of operations) for several ‘Funds’ held at the City. The activity of these funds is either 1) maintained in spreadsheet fashion similar to a checkbook used in personal finances, 2) recorded partially (expenses only with no revenue), or 3) not tracked at all. As these funds are not maintained using the City’s accounting software package, management does not have the ability to efficiently generate financial reports necessary to provide management with the proper fiscal oversight. This condition included the American Rescue Plan Act (ARPA) funding known as the Coronavirus State and Local Fiscal Recovery Fund. However, it should be noted that City personnel were able to prepare spreadsheets to document which expenditures were utilized to prepare the necessary quarterly reporting requirements to the Department of Treasury. This is a repeat finding (2021-002) from the prior year. CRITERIA: Prudent internal control procedures in the areas of general ledger management and financial reporting include maintaining a formal general ledger system of accounting to track the activity of all ‘Funds’ maintained by the City. In specific as it relates to federal programs, Section 2 CFR 200.403(g) of the Uniform Guidance requires that federal costs must be adequately documented which would include the maintaining of a formal general ledger system of accounting for all ‘Funds’ of the City. EFFECT: The lack of procedures in place for maintaining a formal general ledger system of accounting for all ‘Funds’ of the City 1) reduces the City’s internal control over the financial reporting processes, 2) exposes the City to inaccurate financial reporting to management for decision-making purposes, and 3) increases the potential for irregularities that may result (unintentional or otherwise) that are not detected in a timely manner. As a result, the City is not incompliance with Section 2 CFR 200.403(g) of the Uniform Guidance which requires federal costs to be adequately documented in the applicable general ledgers of the City. CAUSE: The City began the process during calendar year 2019 of creating general ledgers on the computer accounting software system for all funds of the City, however due to changes in business office personnel, and other workload responsibilities, the City has not been able to fully complete this process. RECOMMENDATION: I am recommending that the City continue the process of making sure the financial activity for all funds individually is entered into the software accounting system. It is anticipated that additional training will be required for in-house personnel to perform this function, or the City may want to consider contracting these services to a third-party professional with the expertise to perform these functions for the City on a monthly or quarterly basis throughout the year. These procedures should significantly enhance the internal control over the financial accounting and reporting process relative to the City’s general ledgers for each Fund. VIEWS OF RESPONSIBLE OFFICIALS: The City concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
Federal Agency: U.S. Department of Agriculture Forest Service Federal Program Name: Cooperative Forestry Assistance - Pass-Through Agency: N/A Assistance Listing Number: 10.664 Federal Award Identification Year: 2021 Award Period: 09/01/21-08/31/26 Type of Finding: Other Matters - Significant Deficiency in Internal Control Criteria: 2 CFR 200.403(a) - Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Condition: For one payroll sample that was selected, the amount of time charged to the grant was greater than the amount of time work was performed for the grant. As such, the program was overcharged. Context: A nonstatistical sample of 25 out of > 250 payroll entries were selected for testing for the Cooperative Forestry Assistance program. The condition noted above was identified during our procedures over the CFSC’s allowable costs provisions. Effect: CFSC did not identify the error to be able to make the appropriate corrections before receiving reimbursement for incorrect payroll related expenditures. Cause: CFSC did not consistently ensure that the hours worked by each employee related to the federal program were accurate applying the cost to the grant. Repeat Finding: The finding is a repeat finding. Recommendation: We recommend that management strengthen its current policies and procedures to ensure that all payroll amounts applied to the grant were for actual hours worked based on employee timesheets. Management’s Views: See separate corrective action plan.
Federal Agency: U.S. Department of Agriculture Forest Service Federal Program Name: Cooperative Forestry Assistance - Pass-Through Agency: N/A Assistance Listing Number: 10.664 Federal Award Identification Year: 2021 Award Period: 09/01/21-08/31/26 Type of Finding: Other Matters - Significant Deficiency in Internal Control Criteria: 2 CFR 200.403(a) - When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: For two subrecipient samples that were selected, verification of subrecipient's suspension or debarment status was not verified until after the subaward agreement was effective. Context: A nonstatistical sample of 6 out of 20 subrecipients were selected for testing for the Cooperative Forestry Assistance program. The condition noted above was identified during our procedures over CFSC’s subrecipients. Effect: CFSC did not verify suspension or debarment status timely which could result in naming a subrecipient as an award recipient who is potentially suspended or debarred. Cause: CFSC did not consistently ensure that Suspension or Debarment status was verified timely before naming the subrecipients tested as award recipients. Repeat Finding: The finding is not a repeat finding. Recommendation: We recommend that management strengthen its current policies and procedures to ensure that Suspension and Debarment Status is verified for each subrecipient applicant during its pre-award subrecipient screening process. Management’s Views: See separate corrective action plan.
Federal Agency: United States Department of Commerce Federal Program Name: Office for Coastal Management Assistance Listing Number: 11.473 Federal Award Identification Year: 2020 Pass-Through Agency: National Fish and Wildlife Grant Agreement Award Period: 9/1/20-08/31/23 Type of Finding: Other Matters - Significant Deficiency in Internal Control Criteria: 2 CFR 200.403(a) - Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Condition: For two payroll samples that were selected, the amount of time charged to the grant was greater than the amount of time work was performed for the grant. As such, the program was overcharged. Context: A nonstatistical sample of 8 out of 48 payroll entries were selected for testing for the Office for Coastal Management program. The condition noted above was identified during our procedures over the CFSC’s allowable costs provisions. Effect: CFSC did not identify the error to be able to make the appropriate corrections before receiving reimbursement for incorrect payroll related expenditures. Cause: CFSC did not consistently ensure that the hours worked by each employee related to the federal program were accurate applying the cost to the grant. Repeat Finding: The finding is a repeat finding. Recommendation: We recommend that management strengthen its current policies and procedures to ensure that all payroll amounts applied to the grant were for actual hours worked based on employee timesheets. Management’s Views: See separate corrective action plan.
Federal Agency: United States Department of Commerce Federal Program Name: Office for Coastal Management Assistance Listing Number: 11.473 Federal Award Identification Year: 2020 Award Period: 9/1/20-08/31/23 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance (Modified Opinion) Criteria: 2 CFR 200.403(a) - When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: For two subrecipient samples that were selected, verification of subrecipient's suspension or debarment status was not verified. Context: A nonstatistical sample of 2 of 4 subrecipients were selected for testing for the Office for Coastal Management program. Condition noted above was identified during our procedures over subrecipients. Effect: CFSC did not verify suspension or debarment status, which could result in naming a subrecipient as an award recipient, which is potentially suspended or debarred. Cause: CFSC did not consistently ensure that Suspension or Debarment status was verified before naming the subrecipients tested as award recipients. Repeat Finding: The finding is not a repeat finding. Recommendation: We recommend that management strengthen its current policies and procedures to ensure that Suspension and Debarment Status is verified for each subrecipient applicant during its pre-award subrecipient screening process. Management’s Views: See separate corrective action plan.
Federal Agency: United States Department of Commerce Federal Program Name: Office for Coastal Management Assistance Listing Number: 11.473 Federal Award Identification Year: 2020 Pass-Through Agency: National Fish and Wildlife Grant Agreement Award Period: 9/1/20-08/31/23 Type of Finding: Other Matters – Material Weakness in Internal Control Criteria: 2 CFR 200.414(c) - Federal award recipients must negotiate an indirect cost rate with the cognizant agency for indirect costs, which is typically the federal agency that provides the most funding to the recipient.2 CFR 200.403(d) - The negotiated rate must be applied consistently across all federal awards to ensure uniformity in cost allocation. 2 CFR 200.302(b)(3) - Recipients must maintain adequate documentation to support the indirect costs charged to federal awards, ensuring compliance with the cost principles outlined in the regulation. Condition: For two reimbursement requests from the grantor, an indirect cost rate was used, for which CSFC did not have a provisional or final rate agreement from the USDA. Context: Of the 2 reimbursements invoiced, 2 were selected for testing for the Office for Coastal Management program. The condition noted above was identified during our procedures over CFSC’s subrecipients. Effect: CFSC did not identify the error to be able to make the appropriate corrections before receiving reimbursement for incorrect indirect cost rate invoiced. Cause: CFSC’s procedures did not ensure that the negotiated provisional rate was invoiced properly. Repeat Finding: The finding is not a repeat finding. Recommendation: We recommend that CFSC modify and strengthen its current policies and procedures to perform review over the indirect cost rate utilized when submitting invoices to the grantor. Management’s Views: See separate corrective action plan.
Material Weakness 2022-08 Federal ALN Number 94.011 - Deficiencies in Complying with 2 CFR Section 200.403(g) - Adequate Documentation Criteria: Compliance with 2 CFR Section 200.403(g) necessitates adequate documentation of expenses. Invoices aid in the organization's expense tracking efforts, facilitating the allocation of costs to specific accounts or projects. Additionally, they serve as a tool for reconciling financial statements and accounts, ensuring the alignment of recorded disbursements with actual expenditures, and fostering financial integrity. Condition: We have observed the following issues related to Federal ALN Number 94.011: a. We selected samples for cash disbursements testing and noted that out of the 40 samples selected, 19 of them lack supporting invoices. b. Schedule of federal awards (SEFA) total disbursements does not tie up with the total expenditures per general ledger (GL). Cause of Condition: This internal control over financial closing and reporting process is not being observed: a. All journal entries, including nonstandard/nonroutine entries, have adequate supporting documentation and are reviewed and approved independently prior to posting. b. The organization has accounting procedures, charts of accounts, etc., for identifying and recording receipts and expenditures of program funds separately and in the appropriate cost category for each award or grant. Effect: The absence of supporting invoices and checks can lead to inaccuracies, incompleteness in the financial records and non-compliance with regulatory standards, especially 2 CFR Section 200.403(g). Without proper documentation, it becomes challenging to verify the legitimacy and details of the disbursements, which may result in errors or omissions and possibility of disallowed cost. Lack of supporting invoices may also result to difficulty in properly allocating expenses to different programs of the Organization. Questioned Cost: $11,261 for the lack of invoices while $1,336 for the variance between SEFA and GL Recommendation: Implement a documentary management system that can help the Organization keep its financial documents organized and easily accessible. Also, develop a document retention policy which sets guidelines that determine how long financial documents should be retained and when they should be disposed of. A well-designed document retention policy can help the Organization comply with legal and regulatory requirements while reducing storage costs. Recommendation: Implement a documentary management system that can help the Organization keep its financial documents organized and easily accessible. Also, develop a document retention policy which sets guidelines that determine how long financial documents should be retained and when they should be disposed of. A well-designed document retention policy can help the Organization comply with legal and regulatory requirements while reducing storage costs.
2022-009 Cash Disbursements (Material Weakness) Criteria: CFR 200 §200.403. Allowable costs under Federal awards must be necessary and reasonable for the performance of the Federal award and be allocable thereto. CFR 200 §200.302. Effective control and accountability must be maintained, all assets must be safeguarded and used solely for authorized purposes. Condition: In June 2022, the former Executive Director authorized bonuses for himself and two other senior management members without the knowledge of the board of directors and accounting staff. In December 2022, holiday bonuses were paid without documentation to ensure the expenditure was reasonable and necessary. In addition, approval was not documented on invoices selected for testing. Cause: As discussed at Finding 2022-003, the Organization’s policies and procedures were not adequately designed for the proper segregation of accounting and banking functions. As discussed at Finding 2022-004, the Organization’s policy requiring two signatures on all checks over $1,000 was not followed and no policy existed to ensure all invoices are approved and evidence of approval retained. Effect: Disbursements were made that were not in compliance with applicable regulations and grant agreement. Allowing these functions to be performed without separating incompatible duties and requiring appropriate documentation and review increases the risk that errors or misappropriation could occur. Questioned Costs: Unauthorized bonuses $39,342. Perspective: The unauthorized bonuses are a known amount (not projected). As noted at 2022-004, none of the transactions selected for testing contained evidence of approval. Repeat Finding: Yes Recommendation: We recommend policies and procedures over the segregation of duties between the accounting and banking functions be strengthened. In addition, policies and procedures should be implemented to ensure support for expenditures is retained and includes evidence of approval. Additional oversight should be provided by those charged with governance. Views of Responsible Officials: Management acknowledges the control weaknesses as described above as there was not a proper segregation of duties in place. The Organization has undertaken a review of its policies and procedures, including consultation of an outside accounting firm to ensure proper control procedures are in place including appropriate segregation of duties.
AL number: 14.231, AL title: Emergency Solutions Grant Program Federal award identification number and year: LAHSA agreements: GT-BH-ABH-021, GT-BH-RTV-001, GT-BH-RTV-002, GT-BH-RTV-003, GT-BH-RTV-004, GT-BH-RTV-009, GT-TLS-N-013, GTRRH- RR-02, GT-CH-WS-001, GT-1878-2102-001 Name of federal agency: U.S. Department of Housing and Urban Development Name of pass-through entity: Los Angeles Homeless Services Authority Repeat finding: No Criteria: Per 2 CFR §200.403, allowable costs must be "necessary, reasonable, and adequately documented." Additionally, 2 CFR §200.302(b)(3) requires non- Federal entities to maintain records that sufficiently detail financial transactions to support Federal expenditures. Condition: During our testing of 40 payments charged to Federal grants, we noted that 9 payments (22.5%) lacked evidence of invoice review and approval before payment. Federal regulations require that expenditures charged to Federal awards be properly reviewed, approved, and documented to ensure allowability and compliance with grant terms. Cause: The lack of documentation appears to be due to inadequate enforcement of the Organization’s invoice approval process, which may stem from insufficient training, oversight, or procedural weaknesses. Questioned cost: N/A Recommendation: We recommend that management: - Reinforce policies requiring documented approval of invoices before payment. - Conduct training for staff responsible for invoice processing to ensure awareness of Federal documentation requirements. - Implement regular monitoring to ensure compliance with invoice review procedures. Views of responsible officials: Management acknowledges this finding and agrees that during the period under audit—while the organization was experiencing rapid growth and increased program activity—our documentation and approval processes did not consistently keep pace with operational demands. Since that time, we have taken significant steps to strengthen accounting procedures and internal controls, reinforce our invoice approval policies, and ensure all expenditures charged to Federal awards are properly reviewed and authorized prior to processing. We have enhanced our Accounts Payable workflow by implementing standardized process approval requirements, added additional leadership staffing and oversight within the Finance and Accounting team and provided targeted training to all personnel involved in invoice processing to ensure understanding of Federal cost principles and documentation standards. These corrective actions have improved our control environment since the audit period, and management is committed to continuing to develop and maintain strong financial controls and to prevent recurrence of this issue.
Assistance Listing Number, Federal Agency, and Program Name 97.036, U.S. Department of Homeland Security Disaster Grants Public Assistance (Presidentially Declared Disasters) Federal Award Identification Number and Year 4507 2022 Pass through Entity Ohio Office of Emergency Management Services Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria According to 2 CFR § 200.403(f), which outlines factors affecting the allowability of costs under federal awards, costs must 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. This provision is intended to prevent duplication of federal funding and ensure that each program bears only its fair share of costs. Condition Costs charged to ALN 97.036 Disaster Grants Public Assistance were also charged to ALN 93.498, U.S. Department of Health and Human Services Provider Relief Fund in a prior fiscal year, as reported in the Period 1 submission to the Provider Relief Fund portal. Questioned Costs $275,952 Identification of How Questioned Costs Were Computed Questioned costs represent all expenditures reported on the schedule of expenditures of federal awards (SEFA) for costs charged to ALN 97.036 Disaster Grants Public Assistance. Context All expenditures reported as ALN 97.036 expenditures on the December 31, 2022 SEFA, which are amounts obligated during the year ended December 31, 2022 based on the application submitted by the Hospital, were also reported as expenditures on the Period 1 PRF portal submission. Cause and Effect Appropriate and effective review of the request for funding submitted under ALN 97.036 was not completed to ensure that the costs were not reimbursed by another funding source. As a result, all costs charged to ALN 97.036 were already reimbursed under ALN 93.498. Recommendation We recommend the Hospital implement controls, including levels of review, to ensure that all costs submitted on funding applications were not already reimbursed under a separate grant. Views of Responsible Officials and Corrective Action Plan Management agrees and has revised existing internal control processes and policies to implement review and approval procedures to ensure expenditures submitted were not already reimbursed under a separate grant.
Finding 2022-03 – Inability to Support Allowable Costs and Cost Principles Federal Program Information Program Number: 93.224, 93.225, 93.493, 93.527 Type of Finding: Internal Control, Compliance and Material Weakness Condition During our audit, we were unable to perform sufficient testing of allowable costs and allocability due to inadequate and inconsistent supporting documentation. Management primarily provided journal entries and limited supporting invoices, with significant gaps in documentation necessary to support cost allowability, reasonableness, and allocability under federal requirements. Specifically: ▪ Supporting invoices and contracts were missing or incomplete for a significant portion of transactions ▪ Documentation supporting the nature, purpose, and benefit of costs to the federal program was not provided ▪ There was no evidence of cost allocation methodologies for shared or indirect costs ▪ Journal entries were recorded without adequate supporting detail or justification As a result, we were unable to determine whether costs charged to the federal program were allowable, reasonable, or allocable. Criteria Under 2 CFR 200.403 (Factors Affecting Allowability of Costs), costs must be: ▪ Necessary and reasonable ▪ Allocable to the federal award ▪ Adequately documented Further, 2 CFR 200.302(b)(3) requires that financial management systems provide records that identify adequately the source and application of funds, including supporting documentation for expenditures. Cause These deficiencies appear to result from weak internal controls over financial reporting and cost documentation, lack of formal procedures for maintaining supporting documentation, and insufficient understanding of Uniform Guidance cost principles. CARESTL HEALTH SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED DECEMBER 31, 2022 40 SECTION III – FEDERAL AWARD FINDINGS AND QUESTION COSTS (Continued) Effect As a result: ▪ We were unable to verify the allowability and allocability of costs charged to the federal program ▪ There is a significant risk that unallowable or unsupported costs were charged to the award ▪ The organization is exposed to potential disallowance of costs, repayment obligations, and increased regulatory scrutiny The lack of documentation significantly impairs auditability and financial transparency Questioned Costs Likely Questioned Costs: Undeterminable due to insufficient documentation The inability to support costs charged to federal awards with adequate documentation constitutes a material weakness in internal control over compliance and results in noncompliance with Uniform Guidance cost principles. Recommendation We recommend that management: ▪ Implement procedures requiring complete supporting documentation for all costs charged to federal awards ▪ Ensure costs are reviewed for allowability, reasonableness, and allocability prior to recording ▪ Establish and document formal cost allocation methodologies ▪ Require approval and documentation of all journal entries affecting federal programs ▪ Provide training to staff on Uniform Guidance cost principles (2 CFR 200 Subpart E) ▪ Conduct periodic internal reviews to ensure compliance Management Response Management respectfully disagrees with the characterization of a material weakness related to the inability to support allowable costs and cost principles. The four cited conditions do not reflect a lack of documentation or internal controls, but rather the limited time afforded to the health center to compile and submit the requested materials. The HRSA mandated April 30, 2026 deadline, during a period of significant operational strain. As a result, the health center was not provided a reasonable opportunity to gather and produce the full set of supporting documentation. CARESTL HEALTH SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED DECEMBER 31, 2022 41 SECTION III – FEDERAL AWARD FINDINGS AND QUESTION COSTS (Continued) Specifically, we disagree with the following statements: • “Supporting invoices and contracts were missing or incomplete for a significant portion of transactions.” The health center maintains invoices, contracts, and supporting documentation; however, due to the compressed audit timeline and competing federal deadlines, staff were unable to assemble and transmit the full set of documents before the cutoff. • “Documentation supporting the nature, purpose, and benefit of costs to the federal program was not provided.” Documentation exists within our financial management system and program files. The inability to provide it during fieldwork was due to time constraints, not the absence of records. • “There was no evidence of cost allocation methodologies for shared or indirect costs.” Cost allocation methodologies are in place and were included in the financial management response submitted to HRSA. The audit team did not receive these materials because the request coincided with overlapping federal reporting requirements and limited staffing capacity. • “Journal entries were recorded without adequate supporting detail or justification.” Supporting detail for journal entries is maintained internally. The challenge was not lack of documentation but insufficient time to compile and submit the supporting files during the abbreviated fieldwork window. • While we disagree with the stated conditions, we fully agree with all recommendations and view them as aligned with the improvements already underway as part of our financial management corrective actions submitted to HRSA. Management is committed to strengthening documentation practices, enhancing internal controls, and ensuring full compliance with Uniform Guidance. • Accordingly, the health center will: o Implement procedures requiring complete supporting documentation for all costs charged to federal awards o Ensure costs are reviewed for allowability, reasonableness, and allocability prior to recording o Establish and document formal cost allocation methodologies o Require approval and documentation of all journal entries affecting federal programs o Provide staff training on Uniform Guidance cost principles (2 CFR 200 Subpart E) o Conduct periodic internal reviews to ensure compliance These actions are already in progress and will be fully integrated into the organization’s financial management and internal control framework.
Inadequate Controls over Allowable Costs Federal Department ? U.S. Department of Health and Human Services Federal Award Identification Number and Year: NH75OT000024 and 2021 COVID-19 - Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises, Federal Assistance Listing # 93.391 County Department ? Department of Public Health Finding 2022 ? 007 CRITERIA 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D - Post Federal Award Requirements Standards for Financial and Program Management, Section 200.303 Internal controls states, ?The non-Federal entity must: (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award.? Subpart E ? Cost Principles, Section 200.403 states 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. ?(g) Be adequately documented.? In addition, Subpart E ? Cost Principles, Section 200.430 (i)(1) Standards for Documentation of Personal Expenses, states, ?Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; and (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities.? CONDITION During the current audit period, the Cook County Department of Public Health (DPH) did not maintain adequate controls over allowable costs as required by Federal regulations. CAUSE Based on discussions with management, the cause of this finding resulted from the Program Leads and Accounts Payable unit not following the established requirements for properly supporting invoices for services provided. The invoices that were attached in EBS Oracle were insufficient as required by County Policy. SECTION III: FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS (Continued) Inadequate Controls over Allowable Costs Federal Department ? U.S. Department of Health and Human Services Federal Award Identification Number and Year: NH75OT000024 and 2021 COVID-19 - Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises, Federal Assistance Listing # 93.391 County Department ? Department of Public Health Finding 2022 ? 007 (Continued) EFFECT The failure to maintain adequate support and/or documentation evidence the review of actual time spent by employees on the program is a violation of federal regulations and could result in additional payroll costs being charged to the federally funded program. QUESTIONED COSTS None. CONTEXT During our test of 38 expenditures, we were provided invoices supporting the total charges to the program. However, we noted 17 of the invoices reviewed included payroll related charges, of which we were unable to determine that DPH reviewed the detailed payroll records (such as time and effort reports) of those employees charged to the grant to verify that the related services were performed and were within the period specified on the invoices. This was due to the fact, that information was not maintained in the Oracle accounting system. IDENTIFICATION OF REPEATED FINDINGS None. RECOMMENDATION We recommend DPH develop and implement procedures to ensure all expenditures, including personnel costs, are properly reviewed, approved, and supporting documentation maintained in accordance with federal regulations and the County?s policy. Once procedures are developed, adequate staff training should be conducted to ensure all program/grant finance personnel are familiar with the requirements. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS The County agrees with the finding and recommendation. The County?s corrective action plan is on page 63.
Allowable Costs Federal Department ? U.S. Department of Health and Human Services Federal Award Identification Number and Year: 6NU5OCK000559-01-08 and 2020 Pass-through Illinois Department of Public Health COVID-19 ? Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), Federal Assistance Listing #93.323 County Department ? Department of Public Health Finding 2022 ? 005 CRITERIA 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D - Post Federal Award Requirements Standards for Financial and Program Management, Section 200.303 Internal controls states, ?The non-Federal entity must: (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award.? Subpart E ? Cost Principles, Section 200.403 states 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. ?(g) Be adequately documented.? CONDITION During the current audit period, the Cook County Department of Public Health (DPH) did not adequately comply with federal regulations over allowable costs. CAUSE Based on discussions with management, the cause of this finding resulted from not following the established controls that ensure proper support documentation is included with the journal entry chargeback entries prepared by Finance staff to justify the charges incurred to the Grant. Additionally, the Program Lead (key personnel) assigned to the program left the organization prior to the Grant ending which affected the periodic review for allowable costs/charges. EFFECT The failure to maintain adequate supporting documentation and to ensure all expenditures are allowable, reasonable, and properly reviewed and approved resulted in the identification of questioned costs and is a violation of federal regulations. QUESTIONED COSTS We noted total potential questioned costs in the amount of $336,583. SECTION III: FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS (Continued) Allowable Costs Federal Department ? U.S. Department of Health and Human Services Federal Award Identification Number and Year: 6NU5OCK000559-01-08 and 2020 Pass-through Illinois Department of Public Health COVID-19 ? Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), Federal Assistance Listing #93.323 County Department ? Department of Public Health Finding 2022 ? 005 (Continued) CONTEXT During fiscal year 2022, we noted total program expenditures were incurred under five grant agreements (three with the Illinois Department of Public Health (IDPH) and two with the City of Chicago). For the IDPH grants, we tested 6 expenditure samples (from a population of 28), noting for two expenditures (totaling $1,618,957), adequate documentation was not initially provided to support the total amount charged to the program. As a result, DPH management subsequently provided a reconciliation of additional grant expenditures to support these charges. Upon further review, we noted that only $1,282,374 represents allowable costs that could be charged to the program, as other amounts noted were previously transferred to the grant in prior periods. The unreconciled difference of $336,583 remains unsupported and as such, represented potential questioned costs under the IDPH funded portion of the program. IDENTIFICATION OF REPEATED FINDINGS None. RECOMMENDATION We recommend DPH ensure adequate documentation is maintained to support charges to the federal program and comply with federal regulations. Also, procedures should be developed and implemented to ensure all expenditures are allowable, reasonable, and properly reviewed and approved prior to charging the expenditures to the federally funded program. Finally, periodic and timely reconciliation of grant activities should be performed to ensure only allowable costs are being reported under the program. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS The County agrees with the finding and recommendation. The County?s corrective action plan is on page 63.
Inadequate Controls over Allowable Costs Federal Department ? U.S. Department of Health and Human Services Federal Award Identification Number and Year: NH23IP922637 and 2021 Pass-through the Illinois Department of Public Health COVID-19 ? Immunization Cooperative Agreements, Federal Assistance Listing #93.268 County Department ? Department of Public Health Finding 2022 ? 004 CRITERIA 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D - Post Federal Award Requirements Standards for Financial and Program Management, Section 200.303 Internal controls states, ?The non-Federal entity must: (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award.? Subpart E ? Cost Principles, Section 200.403 states 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. ?(g) Be adequately documented.? In addition, Subpart E ? Cost Principles, Section 200.430 (i)(1) Standards for Documentation of Personal Expenses, states, ?Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; and (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities.? CONDITION During the current audit period, the Cook County Department of Public Health (DPH) did not maintain adequate controls over allowable costs as required by Federal regulations. CAUSE Based on discussions with management, the cause of this finding resulted from Program Leads and the Accounts Payable unit not following the established requirements for properly supporting invoices for services provided. The invoices that were attached in EBS Oracle were insufficient as required by the established County Policy. SECTION III: FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS (Continued) Inadequate Controls over Allowable Costs Federal Department ? U.S. Department of Health and Human Services Federal Award Identification Number and Year: NH23IP922637 and 2021 Pass-through the Illinois Department of Public Health COVID-19 ? Immunization Cooperative Agreements, Federal Assistance Listing #93.268 County Department ? Department of Public Health Finding 2022 ? 004 (Continued) EFFECT The failure to maintain adequate support and/or documentation evidencing the review of actual time spent by employees on the program is a violation of federal regulations and could result in additional payroll costs being charged to the federally funded program. QUESTIONED COSTS None. CONTEXT During our test of 35 expenditures, we were provided invoices supporting the total charges to the program. However, we noted 12 of the invoices reviewed included payroll related charges, of which we were unable to determine that DPH reviewed the detailed payroll records (such as time and effort reports) of those employees charged to the grant to verify that the related services were performed and were within the period specified on the invoices. This was due to the fact, that information was not maintained in the Oracle accounting system. IDENTIFICATION OF REPEATED FINDINGS None. RECOMMENDATION We recommend DPH develop and implement procedures to ensure all expenditures, including personnel costs, are properly reviewed, approved, and supporting documentation maintained in accordance with federal regulations and the County?s policy. Once procedures are developed, adequate staff training should be conducted to ensure all program/grant finance personnel are familiar with the requirements. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS The County agrees with the finding and recommendation. The County?s corrective action plan is on page 62.
Inadequate Controls over Allowable Costs Federal Department ? U.S. Department of Health and Human Services Federal Award Identification Number and Year: NH75OT000024 and 2021 COVID-19 - Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises, Federal Assistance Listing # 93.391 County Department ? Department of Public Health Finding 2022 ? 007 CRITERIA 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D - Post Federal Award Requirements Standards for Financial and Program Management, Section 200.303 Internal controls states, ?The non-Federal entity must: (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award.? Subpart E ? Cost Principles, Section 200.403 states 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. ?(g) Be adequately documented.? In addition, Subpart E ? Cost Principles, Section 200.430 (i)(1) Standards for Documentation of Personal Expenses, states, ?Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; and (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities.? CONDITION During the current audit period, the Cook County Department of Public Health (DPH) did not maintain adequate controls over allowable costs as required by Federal regulations. CAUSE Based on discussions with management, the cause of this finding resulted from the Program Leads and Accounts Payable unit not following the established requirements for properly supporting invoices for services provided. The invoices that were attached in EBS Oracle were insufficient as required by County Policy. SECTION III: FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS (Continued) Inadequate Controls over Allowable Costs Federal Department ? U.S. Department of Health and Human Services Federal Award Identification Number and Year: NH75OT000024 and 2021 COVID-19 - Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises, Federal Assistance Listing # 93.391 County Department ? Department of Public Health Finding 2022 ? 007 (Continued) EFFECT The failure to maintain adequate support and/or documentation evidence the review of actual time spent by employees on the program is a violation of federal regulations and could result in additional payroll costs being charged to the federally funded program. QUESTIONED COSTS None. CONTEXT During our test of 38 expenditures, we were provided invoices supporting the total charges to the program. However, we noted 17 of the invoices reviewed included payroll related charges, of which we were unable to determine that DPH reviewed the detailed payroll records (such as time and effort reports) of those employees charged to the grant to verify that the related services were performed and were within the period specified on the invoices. This was due to the fact, that information was not maintained in the Oracle accounting system. IDENTIFICATION OF REPEATED FINDINGS None. RECOMMENDATION We recommend DPH develop and implement procedures to ensure all expenditures, including personnel costs, are properly reviewed, approved, and supporting documentation maintained in accordance with federal regulations and the County?s policy. Once procedures are developed, adequate staff training should be conducted to ensure all program/grant finance personnel are familiar with the requirements. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS The County agrees with the finding and recommendation. The County?s corrective action plan is on page 63.
Allowable Costs Federal Department ? U.S. Department of Health and Human Services Federal Award Identification Number and Year: 6NU5OCK000559-01-08 and 2020 Pass-through Illinois Department of Public Health COVID-19 ? Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), Federal Assistance Listing #93.323 County Department ? Department of Public Health Finding 2022 ? 005 CRITERIA 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D - Post Federal Award Requirements Standards for Financial and Program Management, Section 200.303 Internal controls states, ?The non-Federal entity must: (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award.? Subpart E ? Cost Principles, Section 200.403 states 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. ?(g) Be adequately documented.? CONDITION During the current audit period, the Cook County Department of Public Health (DPH) did not adequately comply with federal regulations over allowable costs. CAUSE Based on discussions with management, the cause of this finding resulted from not following the established controls that ensure proper support documentation is included with the journal entry chargeback entries prepared by Finance staff to justify the charges incurred to the Grant. Additionally, the Program Lead (key personnel) assigned to the program left the organization prior to the Grant ending which affected the periodic review for allowable costs/charges. EFFECT The failure to maintain adequate supporting documentation and to ensure all expenditures are allowable, reasonable, and properly reviewed and approved resulted in the identification of questioned costs and is a violation of federal regulations. QUESTIONED COSTS We noted total potential questioned costs in the amount of $336,583. SECTION III: FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS (Continued) Allowable Costs Federal Department ? U.S. Department of Health and Human Services Federal Award Identification Number and Year: 6NU5OCK000559-01-08 and 2020 Pass-through Illinois Department of Public Health COVID-19 ? Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), Federal Assistance Listing #93.323 County Department ? Department of Public Health Finding 2022 ? 005 (Continued) CONTEXT During fiscal year 2022, we noted total program expenditures were incurred under five grant agreements (three with the Illinois Department of Public Health (IDPH) and two with the City of Chicago). For the IDPH grants, we tested 6 expenditure samples (from a population of 28), noting for two expenditures (totaling $1,618,957), adequate documentation was not initially provided to support the total amount charged to the program. As a result, DPH management subsequently provided a reconciliation of additional grant expenditures to support these charges. Upon further review, we noted that only $1,282,374 represents allowable costs that could be charged to the program, as other amounts noted were previously transferred to the grant in prior periods. The unreconciled difference of $336,583 remains unsupported and as such, represented potential questioned costs under the IDPH funded portion of the program. IDENTIFICATION OF REPEATED FINDINGS None. RECOMMENDATION We recommend DPH ensure adequate documentation is maintained to support charges to the federal program and comply with federal regulations. Also, procedures should be developed and implemented to ensure all expenditures are allowable, reasonable, and properly reviewed and approved prior to charging the expenditures to the federally funded program. Finally, periodic and timely reconciliation of grant activities should be performed to ensure only allowable costs are being reported under the program. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS The County agrees with the finding and recommendation. The County?s corrective action plan is on page 63.
Inadequate Controls over Allowable Costs Federal Department ? U.S. Department of Health and Human Services Federal Award Identification Number and Year: NH23IP922637 and 2021 Pass-through the Illinois Department of Public Health COVID-19 ? Immunization Cooperative Agreements, Federal Assistance Listing #93.268 County Department ? Department of Public Health Finding 2022 ? 004 CRITERIA 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D - Post Federal Award Requirements Standards for Financial and Program Management, Section 200.303 Internal controls states, ?The non-Federal entity must: (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award.? Subpart E ? Cost Principles, Section 200.403 states 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. ?(g) Be adequately documented.? In addition, Subpart E ? Cost Principles, Section 200.430 (i)(1) Standards for Documentation of Personal Expenses, states, ?Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; and (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities.? CONDITION During the current audit period, the Cook County Department of Public Health (DPH) did not maintain adequate controls over allowable costs as required by Federal regulations. CAUSE Based on discussions with management, the cause of this finding resulted from Program Leads and the Accounts Payable unit not following the established requirements for properly supporting invoices for services provided. The invoices that were attached in EBS Oracle were insufficient as required by the established County Policy. SECTION III: FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS (Continued) Inadequate Controls over Allowable Costs Federal Department ? U.S. Department of Health and Human Services Federal Award Identification Number and Year: NH23IP922637 and 2021 Pass-through the Illinois Department of Public Health COVID-19 ? Immunization Cooperative Agreements, Federal Assistance Listing #93.268 County Department ? Department of Public Health Finding 2022 ? 004 (Continued) EFFECT The failure to maintain adequate support and/or documentation evidencing the review of actual time spent by employees on the program is a violation of federal regulations and could result in additional payroll costs being charged to the federally funded program. QUESTIONED COSTS None. CONTEXT During our test of 35 expenditures, we were provided invoices supporting the total charges to the program. However, we noted 12 of the invoices reviewed included payroll related charges, of which we were unable to determine that DPH reviewed the detailed payroll records (such as time and effort reports) of those employees charged to the grant to verify that the related services were performed and were within the period specified on the invoices. This was due to the fact, that information was not maintained in the Oracle accounting system. IDENTIFICATION OF REPEATED FINDINGS None. RECOMMENDATION We recommend DPH develop and implement procedures to ensure all expenditures, including personnel costs, are properly reviewed, approved, and supporting documentation maintained in accordance with federal regulations and the County?s policy. Once procedures are developed, adequate staff training should be conducted to ensure all program/grant finance personnel are familiar with the requirements. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS The County agrees with the finding and recommendation. The County?s corrective action plan is on page 62.
2022-002 ALLOWABILITY Federal Program Information: Federal Agency and Program Name: National Endowment for the Humanities: Promotion of the Humanities-Federal/State Partnership Grant Number: SO-268683-20 Federal Assistance Listing Number: 45.129 Criteria: 2 CFR 200.303 requires that a non-federal entity must ?(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States and the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).? 2 CFR 200.403(g) states costs must ?be adequately documented.? Condition: For three of the 40 transactions selected for testing, documentation could not be located to support approval or allowability of the expenditure. Questioned Costs: $5,876 Context: Total federal expenditures for the Promotion of the Humanities-Federal/State Partnership program were $830,848 for the year ended October 31, 2022. Cause: The Council did not retain adequate documentation of all expenditures charged to the federal program. Effect: The Council is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Expenditures were paid that may not be allowable. Recommendation: We recommend that the Council implement controls to ensure that expenditures are properly reviewed and approved before being charged to a federal award and that adequate supporting documentation is maintained. Views of Responsible Officials: Management acknowledges the finding. See corrective action plan.
2022-002 ALLOWABILITY Federal Program Information: Federal Agency and Program Name: National Endowment for the Humanities: Promotion of the Humanities-Federal/State Partnership Grant Number: SO-268683-20 Federal Assistance Listing Number: 45.129 Criteria: 2 CFR 200.303 requires that a non-federal entity must ?(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States and the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).? 2 CFR 200.403(g) states costs must ?be adequately documented.? Condition: For three of the 40 transactions selected for testing, documentation could not be located to support approval or allowability of the expenditure. Questioned Costs: $5,876 Context: Total federal expenditures for the Promotion of the Humanities-Federal/State Partnership program were $830,848 for the year ended October 31, 2022. Cause: The Council did not retain adequate documentation of all expenditures charged to the federal program. Effect: The Council is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Expenditures were paid that may not be allowable. Recommendation: We recommend that the Council implement controls to ensure that expenditures are properly reviewed and approved before being charged to a federal award and that adequate supporting documentation is maintained. Views of Responsible Officials: Management acknowledges the finding. See corrective action plan.
Reference Number: 2022-005 Prior Year Finding: No Federal Agency: U.S. Department of Homeland Security/FEMA Pass-through Agency: Various Federal Program: Emergency Food and Shelter National Board Program ALN Number: 97.024 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency, Non-compliance Criteria or specific requirement: Compliance Supplement Requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Condition: Division receive Emergency Food and Shelter National Board Program funds from the U.S. Department Homeland security/FEMA and various pass-through entities. The Division’s pass-through Contract requires period of performance and also requires funds must be expended by certain date. Of the Sixty (60) files selected for testing We noted that the Division: • For 4 samples, we noted that Division program expenses were recorded prior to Contract starting date. Cause: Division did not ensure that Division 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 pass-through entity made the federal award that were authorized by the pass-through entity. Effect: Division’s will be in noncompliance with its Period of Performance compliance. Questioned costs: Cannot be determined. Recommendation: We recommend Division charge only allowable costs incurred during the approved budget period of a pass-through award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. Views of responsible officials: The Division will charge only allowable costs incurred during the approved budget period of a pass-through award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. See corrective action plan.
Reference Number: 2022-005 Prior Year Finding: No Federal Agency: U.S. Department of Homeland Security/FEMA Pass-through Agency: Various Federal Program: Emergency Food and Shelter National Board Program ALN Number: 97.024 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency, Non-compliance Criteria or specific requirement: Compliance Supplement Requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Condition: Division receive Emergency Food and Shelter National Board Program funds from the U.S. Department Homeland security/FEMA and various pass-through entities. The Division’s pass-through Contract requires period of performance and also requires funds must be expended by certain date. Of the Sixty (60) files selected for testing We noted that the Division: • For 4 samples, we noted that Division program expenses were recorded prior to Contract starting date. Cause: Division did not ensure that Division 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 pass-through entity made the federal award that were authorized by the pass-through entity. Effect: Division’s will be in noncompliance with its Period of Performance compliance. Questioned costs: Cannot be determined. Recommendation: We recommend Division charge only allowable costs incurred during the approved budget period of a pass-through award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. Views of responsible officials: The Division will charge only allowable costs incurred during the approved budget period of a pass-through award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. See corrective action plan.
Reference Number: 2022-005 Prior Year Finding: No Federal Agency: U.S. Department of Homeland Security/FEMA Pass-through Agency: Various Federal Program: Emergency Food and Shelter National Board Program ALN Number: 97.024 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency, Non-compliance Criteria or specific requirement: Compliance Supplement Requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Condition: Division receive Emergency Food and Shelter National Board Program funds from the U.S. Department Homeland security/FEMA and various pass-through entities. The Division’s pass-through Contract requires period of performance and also requires funds must be expended by certain date. Of the Sixty (60) files selected for testing We noted that the Division: • For 4 samples, we noted that Division program expenses were recorded prior to Contract starting date. Cause: Division did not ensure that Division 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 pass-through entity made the federal award that were authorized by the pass-through entity. Effect: Division’s will be in noncompliance with its Period of Performance compliance. Questioned costs: Cannot be determined. Recommendation: We recommend Division charge only allowable costs incurred during the approved budget period of a pass-through award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. Views of responsible officials: The Division will charge only allowable costs incurred during the approved budget period of a pass-through award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. See corrective action plan.
Reference Number: 2022-005 Prior Year Finding: No Federal Agency: U.S. Department of Homeland Security/FEMA Pass-through Agency: Various Federal Program: Emergency Food and Shelter National Board Program ALN Number: 97.024 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency, Non-compliance Criteria or specific requirement: Compliance Supplement Requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Condition: Division receive Emergency Food and Shelter National Board Program funds from the U.S. Department Homeland security/FEMA and various pass-through entities. The Division’s pass-through Contract requires period of performance and also requires funds must be expended by certain date. Of the Sixty (60) files selected for testing We noted that the Division: • For 4 samples, we noted that Division program expenses were recorded prior to Contract starting date. Cause: Division did not ensure that Division 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 pass-through entity made the federal award that were authorized by the pass-through entity. Effect: Division’s will be in noncompliance with its Period of Performance compliance. Questioned costs: Cannot be determined. Recommendation: We recommend Division charge only allowable costs incurred during the approved budget period of a pass-through award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. Views of responsible officials: The Division will charge only allowable costs incurred during the approved budget period of a pass-through award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. See corrective action plan.
Reference Number: 2022-005 Prior Year Finding: No Federal Agency: U.S. Department of Homeland Security/FEMA Pass-through Agency: Various Federal Program: Emergency Food and Shelter National Board Program ALN Number: 97.024 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency, Non-compliance Criteria or specific requirement: Compliance Supplement Requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Condition: Division receive Emergency Food and Shelter National Board Program funds from the U.S. Department Homeland security/FEMA and various pass-through entities. The Division’s pass-through Contract requires period of performance and also requires funds must be expended by certain date. Of the Sixty (60) files selected for testing We noted that the Division: • For 4 samples, we noted that Division program expenses were recorded prior to Contract starting date. Cause: Division did not ensure that Division 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 pass-through entity made the federal award that were authorized by the pass-through entity. Effect: Division’s will be in noncompliance with its Period of Performance compliance. Questioned costs: Cannot be determined. Recommendation: We recommend Division charge only allowable costs incurred during the approved budget period of a pass-through award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. Views of responsible officials: The Division will charge only allowable costs incurred during the approved budget period of a pass-through award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. See corrective action plan.
Reference Number: 2022-005 Prior Year Finding: No Federal Agency: U.S. Department of Homeland Security/FEMA Pass-through Agency: Various Federal Program: Emergency Food and Shelter National Board Program ALN Number: 97.024 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency, Non-compliance Criteria or specific requirement: Compliance Supplement Requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Condition: Division receive Emergency Food and Shelter National Board Program funds from the U.S. Department Homeland security/FEMA and various pass-through entities. The Division’s pass-through Contract requires period of performance and also requires funds must be expended by certain date. Of the Sixty (60) files selected for testing We noted that the Division: • For 4 samples, we noted that Division program expenses were recorded prior to Contract starting date. Cause: Division did not ensure that Division 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 pass-through entity made the federal award that were authorized by the pass-through entity. Effect: Division’s will be in noncompliance with its Period of Performance compliance. Questioned costs: Cannot be determined. Recommendation: We recommend Division charge only allowable costs incurred during the approved budget period of a pass-through award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. Views of responsible officials: The Division will charge only allowable costs incurred during the approved budget period of a pass-through award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. See corrective action plan.
Reference Number: 2022-005 Prior Year Finding: No Federal Agency: U.S. Department of Homeland Security/FEMA Pass-through Agency: Various Federal Program: Emergency Food and Shelter National Board Program ALN Number: 97.024 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency, Non-compliance Criteria or specific requirement: Compliance Supplement Requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Condition: Division receive Emergency Food and Shelter National Board Program funds from the U.S. Department Homeland security/FEMA and various pass-through entities. The Division’s pass-through Contract requires period of performance and also requires funds must be expended by certain date. Of the Sixty (60) files selected for testing We noted that the Division: • For 4 samples, we noted that Division program expenses were recorded prior to Contract starting date. Cause: Division did not ensure that Division 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 pass-through entity made the federal award that were authorized by the pass-through entity. Effect: Division’s will be in noncompliance with its Period of Performance compliance. Questioned costs: Cannot be determined. Recommendation: We recommend Division charge only allowable costs incurred during the approved budget period of a pass-through award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. Views of responsible officials: The Division will charge only allowable costs incurred during the approved budget period of a pass-through award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. See corrective action plan.
Reference Number: 2022-005 Prior Year Finding: No Federal Agency: U.S. Department of Homeland Security/FEMA Pass-through Agency: Various Federal Program: Emergency Food and Shelter National Board Program ALN Number: 97.024 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency, Non-compliance Criteria or specific requirement: Compliance Supplement Requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Condition: Division receive Emergency Food and Shelter National Board Program funds from the U.S. Department Homeland security/FEMA and various pass-through entities. The Division’s pass-through Contract requires period of performance and also requires funds must be expended by certain date. Of the Sixty (60) files selected for testing We noted that the Division: • For 4 samples, we noted that Division program expenses were recorded prior to Contract starting date. Cause: Division did not ensure that Division 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 pass-through entity made the federal award that were authorized by the pass-through entity. Effect: Division’s will be in noncompliance with its Period of Performance compliance. Questioned costs: Cannot be determined. Recommendation: We recommend Division charge only allowable costs incurred during the approved budget period of a pass-through award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. Views of responsible officials: The Division will charge only allowable costs incurred during the approved budget period of a pass-through award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. See corrective action plan.
Reference Number: 2022-005 Prior Year Finding: No Federal Agency: U.S. Department of Homeland Security/FEMA Pass-through Agency: Various Federal Program: Emergency Food and Shelter National Board Program ALN Number: 97.024 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency, Non-compliance Criteria or specific requirement: Compliance Supplement Requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Condition: Division receive Emergency Food and Shelter National Board Program funds from the U.S. Department Homeland security/FEMA and various pass-through entities. The Division’s pass-through Contract requires period of performance and also requires funds must be expended by certain date. Of the Sixty (60) files selected for testing We noted that the Division: • For 4 samples, we noted that Division program expenses were recorded prior to Contract starting date. Cause: Division did not ensure that Division 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 pass-through entity made the federal award that were authorized by the pass-through entity. Effect: Division’s will be in noncompliance with its Period of Performance compliance. Questioned costs: Cannot be determined. Recommendation: We recommend Division charge only allowable costs incurred during the approved budget period of a pass-through award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. Views of responsible officials: The Division will charge only allowable costs incurred during the approved budget period of a pass-through award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. See corrective action plan.
Reference Number: 2022-005 Prior Year Finding: No Federal Agency: U.S. Department of Homeland Security/FEMA Pass-through Agency: Various Federal Program: Emergency Food and Shelter National Board Program ALN Number: 97.024 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency, Non-compliance Criteria or specific requirement: Compliance Supplement Requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Condition: Division receive Emergency Food and Shelter National Board Program funds from the U.S. Department Homeland security/FEMA and various pass-through entities. The Division’s pass-through Contract requires period of performance and also requires funds must be expended by certain date. Of the Sixty (60) files selected for testing We noted that the Division: • For 4 samples, we noted that Division program expenses were recorded prior to Contract starting date. Cause: Division did not ensure that Division 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 pass-through entity made the federal award that were authorized by the pass-through entity. Effect: Division’s will be in noncompliance with its Period of Performance compliance. Questioned costs: Cannot be determined. Recommendation: We recommend Division charge only allowable costs incurred during the approved budget period of a pass-through award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. Views of responsible officials: The Division will charge only allowable costs incurred during the approved budget period of a pass-through award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. See corrective action plan.
Reference Number: 2022-005 Prior Year Finding: No Federal Agency: U.S. Department of Homeland Security/FEMA Pass-through Agency: Various Federal Program: Emergency Food and Shelter National Board Program ALN Number: 97.024 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency, Non-compliance Criteria or specific requirement: Compliance Supplement Requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Condition: Division receive Emergency Food and Shelter National Board Program funds from the U.S. Department Homeland security/FEMA and various pass-through entities. The Division’s pass-through Contract requires period of performance and also requires funds must be expended by certain date. Of the Sixty (60) files selected for testing We noted that the Division: • For 4 samples, we noted that Division program expenses were recorded prior to Contract starting date. Cause: Division did not ensure that Division 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 pass-through entity made the federal award that were authorized by the pass-through entity. Effect: Division’s will be in noncompliance with its Period of Performance compliance. Questioned costs: Cannot be determined. Recommendation: We recommend Division charge only allowable costs incurred during the approved budget period of a pass-through award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. Views of responsible officials: The Division will charge only allowable costs incurred during the approved budget period of a pass-through award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. See corrective action plan.
Finding 2022-001: Allowable Costs/Cost Principles, Repeat Finding Public Housing Program, Assistance Listing #14.850 Material Weakness/Immaterial Noncompliance, Questioned Costs $4,394 Criteria ? The Agency is required to follow OMB Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards contained in 2CFR Chapter I and Chapter II. One of the general criteria contained in ?200.403, costs must be ?necessary and reasonable for the performance of the Federal Award and be allocable thereto under these principles?. Condition - The Agency has a contract to purchase bulk cable services and is required to pass these costs to the tenants who are the users of the service. During our audit we noted the Agency does not have the monthly cable fee that is charged to tenants high enough to cover the cost incurred for the service. The amount of costs not recovered was $4,394 for the year ended September 30, 2022. In addition, the Authority has been performing management activities for another project in the community owned by the County. The income has been recorded in the Public Housing Program and is being charged on a per unit fee, however the associated costs to generate the respective income is not being allocated based on the actual costs to generate the income. Therefore, it is not known whether or not the costs exceed the amount of fees collected from the County project. If the costs to generate the income is more, then based on the accounting currently used, it is not known whether or not the Public Housing Program is subsidizing this non-Public Housing activity. Cause ? In regards to the bulk cable questioned costs, this finding was repeated from the prior year. The Authority did not increase the amount charged to tenants during the year ended September 30, 2022. For the second item, the Agency did not consider the costs to manage an outside property could exceed the income generated and does not have the accounting system established in a way to allocate the costs. Effect or Potential Effect - The cost of the cable service does not meet the ?necessary and reasonable? criteria and resulted in questioned costs of $4,394. In addition, there maybe additional questioned costs that cannot be determined because the costs are not being allocated properly. Recommendation - We recommend in the future that the Agency consider the basic criteria of being ?necessary and reasonable? before incurring costs in a Federal Award program. The costs of the cable services need to be paid fully by the tenants. During our audit we noted Authority?s contract for the bulk cable had expired and the Agency did not renew the contract. For the second item regarding the allocation of costs associated with the non-Public Program. The Agency should establish a new program for Management type activities and record this income and the respective costs in this general ledger so the feasibility of the program can be established and better management decisions can be made regarding the continuing of the outside management services. View of Responsible Official: Management agrees with the Finding.
Federal Agency: U.S. Department of Health and Human Services Program: Family Violence Prevention and Services/Discretionary Assistance Listing Number: 93.592 Major Program Compliance Requirement: Allowable Costs/Activities Allowed Criteria: In accordance with 200.403(g) in Subpart E of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), all costs must be adequately documented. This includes all invoices or other supporting documentation associated with program expenses should be retained to ensure the expense was in accordance with the requirements of the federal program and reported appropriately. Condition: Accurate and reliable records are necessary to meet ongoing financial reporting and operations needs and requirements. During our testing of the Organization?s compliance with Assistance Listing 93.592 Family Violence Prevention and Services/Discretionary, the Organization was unable to provide approximately 17% of the invoices or other supporting documentation selected for testing that are associated with certain program expenses incurred. Cause: The Organization is understaffed and has experienced significant turnover in the accounting and finance department which makes it difficult to maintain internal controls designed to reasonably assure compliance with federal laws, regulations, and program compliance requirements. Effect: The absence of expenditure supporting documentation inhibits the Organization from complying with federal program requirements and the potential of disallowed costs and/or repayment to the federal agency. Recommendation: The Organization should retain all supporting documentation for reported expenditures. View of Responsible Officials: A former Board member with finance and operations experience has been tasked with reviewing financial policies and procedures to ensure compliance in all areas. Policies and procedures will be updated with new processes. To date there have been two changes implemented. Finance staff must now attach electronic copies of invoices within the accounting system to corresponding transactions in order to process payment. In addition, a report of credit card charges missing required documentation is circulated to management monthly, with follow-up to the individual purchasers. Training for all members of the department will occur on an ongoing and regular basis to ensure best practices are being upheld. Policies and procedures and/or the Financial Procedures Handbook will also be updated to reflect the changes.
Federal Agency: U.S. Department of Health and Human Services Program: Family Violence Prevention and Services/Discretionary Assistance Listing Number: 93.592 Major Program Compliance Requirement: Allowable Costs/Activities Allowed Criteria: In accordance with 200.403(g) in Subpart E of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), all costs must be adequately documented. This includes all invoices or other supporting documentation associated with program expenses should be retained to ensure the expense was in accordance with the requirements of the federal program and reported appropriately. Condition: Accurate and reliable records are necessary to meet ongoing financial reporting and operations needs and requirements. During our testing of the Organization?s compliance with Assistance Listing 93.592 Family Violence Prevention and Services/Discretionary, the Organization was unable to provide approximately 17% of the invoices or other supporting documentation selected for testing that are associated with certain program expenses incurred. Cause: The Organization is understaffed and has experienced significant turnover in the accounting and finance department which makes it difficult to maintain internal controls designed to reasonably assure compliance with federal laws, regulations, and program compliance requirements. Effect: The absence of expenditure supporting documentation inhibits the Organization from complying with federal program requirements and the potential of disallowed costs and/or repayment to the federal agency. Recommendation: The Organization should retain all supporting documentation for reported expenditures. View of Responsible Officials: A former Board member with finance and operations experience has been tasked with reviewing financial policies and procedures to ensure compliance in all areas. Policies and procedures will be updated with new processes. To date there have been two changes implemented. Finance staff must now attach electronic copies of invoices within the accounting system to corresponding transactions in order to process payment. In addition, a report of credit card charges missing required documentation is circulated to management monthly, with follow-up to the individual purchasers. Training for all members of the department will occur on an ongoing and regular basis to ensure best practices are being upheld. Policies and procedures and/or the Financial Procedures Handbook will also be updated to reflect the changes.
Finding 2022-001: Internal Control over Compliance and Compliance with Allowable Costs/Cost Principles Information on the Federal Program: Assistance Listing Number 19.510?Reception and Placement Program, United States Department of State, Bureau for Population, Refugees and Migration. Pass-Through Entity: Lutheran Immigration and Refugee Service. Award Number: 323-21-CNWA-02. Compliance Requirements: Allowable Costs and Cost Principles. Type of Finding: Noncompliance. Criteria: CFR Section 200.303, Internal Controls, Section (a) states the Organization must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Organization is managing the federal awards in compliance with federal statutes, regulations, and terms and conditions of the federal award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its allowable cost/cost principle process. CFR 200.403(b) states that for costs to be allowed under federal awards, they must conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. Program requirements state that allowable costs include having only expenditures during the 90-day reception and placement period of each client. Condition: During our testing of allowable costs for expenditures incurred throughout the year, we noted exception in proper recording of dates for expenditures incurred in federal programs. Cause: Policies and procedures were not appropriately adhered to in certain instances to ensure that proper input of information was entered into the general ledger system to ensure costs allocated to the program 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: An ineffective control system related to review of transactions being entered into the system to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major programs. As a result, the entity recorded an expenditure under the program that did not qualify as it was spent outside the 90-day reception and replacement period of the client for the year ended September 30, 2022, by the amount of questioned costs below. Questioned Costs: $1,190. Context: Of the $75,074 reported as a fiscal year expenditure, $1,190 represented expenditures that were not allowable due to being outside the 90-day reception and replacement period. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization ensure its policies and procedures ensure that the dates are being properly recorded to the general ledger to ensure allowable costs are being reimbursed and that these policies and procedures are followed on a consistent basis.
2022-002 Noncompliance with Period of Performance and Internal Controls Over Compliance ? 93.569 Criteria ? 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, ?200.308, 200.309, and 200.403(h). An entity may charge to the federal award only allowable costs incurred during the approved budget period of a federal award?s period of performance. Condition and Context ? Single audit procedures noted one expenditure that included FY2022 and FY2023 amounts. The expenditure included amounts related to October 2022, which is after the federal award period of performance, but was expensed in full to the award as of September 30, 2022. Cause ? Oversight on reviewing the cutoff of direct expenditures prior to the end of the award?s period of performance. Effect ? An expenditure below compliance materiality that was incurred after the award?s period of performance was expensed. Management posted an adjustment to remove the amounts applicable to FY2023. Questioned Costs ? None Recommendations ? Management should strengthen their processes, controls, and review over direct federal award expenditures and ensure compliance with Uniform Administrative Requirements. In addition, management should seek appropriate training for financial department staff to ensure proper cutoff of program expenditures. Views of Responsible Officials and Planned Corrective Actions ? The Association has emphasized the period of performance for all programs. Management has agreed to strengthen controls and provide training for program expenditure cutoff.
2022-002 Noncompliance with Period of Performance and Internal Controls Over Compliance ? 93.569 Criteria ? 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, ?200.308, 200.309, and 200.403(h). An entity may charge to the federal award only allowable costs incurred during the approved budget period of a federal award?s period of performance. Condition and Context ? Single audit procedures noted one expenditure that included FY2022 and FY2023 amounts. The expenditure included amounts related to October 2022, which is after the federal award period of performance, but was expensed in full to the award as of September 30, 2022. Cause ? Oversight on reviewing the cutoff of direct expenditures prior to the end of the award?s period of performance. Effect ? An expenditure below compliance materiality that was incurred after the award?s period of performance was expensed. Management posted an adjustment to remove the amounts applicable to FY2023. Questioned Costs ? None Recommendations ? Management should strengthen their processes, controls, and review over direct federal award expenditures and ensure compliance with Uniform Administrative Requirements. In addition, management should seek appropriate training for financial department staff to ensure proper cutoff of program expenditures. Views of Responsible Officials and Planned Corrective Actions ? The Association has emphasized the period of performance for all programs. Management has agreed to strengthen controls and provide training for program expenditure cutoff.
2022-002 Noncompliance with Period of Performance and Internal Controls Over Compliance ? 93.569 Criteria ? 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, ?200.308, 200.309, and 200.403(h). An entity may charge to the federal award only allowable costs incurred during the approved budget period of a federal award?s period of performance. Condition and Context ? Single audit procedures noted one expenditure that included FY2022 and FY2023 amounts. The expenditure included amounts related to October 2022, which is after the federal award period of performance, but was expensed in full to the award as of September 30, 2022. Cause ? Oversight on reviewing the cutoff of direct expenditures prior to the end of the award?s period of performance. Effect ? An expenditure below compliance materiality that was incurred after the award?s period of performance was expensed. Management posted an adjustment to remove the amounts applicable to FY2023. Questioned Costs ? None Recommendations ? Management should strengthen their processes, controls, and review over direct federal award expenditures and ensure compliance with Uniform Administrative Requirements. In addition, management should seek appropriate training for financial department staff to ensure proper cutoff of program expenditures. Views of Responsible Officials and Planned Corrective Actions ? The Association has emphasized the period of performance for all programs. Management has agreed to strengthen controls and provide training for program expenditure cutoff.
2022-002 Noncompliance with Period of Performance and Internal Controls Over Compliance ? 93.569 Criteria ? 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, ?200.308, 200.309, and 200.403(h). An entity may charge to the federal award only allowable costs incurred during the approved budget period of a federal award?s period of performance. Condition and Context ? Single audit procedures noted one expenditure that included FY2022 and FY2023 amounts. The expenditure included amounts related to October 2022, which is after the federal award period of performance, but was expensed in full to the award as of September 30, 2022. Cause ? Oversight on reviewing the cutoff of direct expenditures prior to the end of the award?s period of performance. Effect ? An expenditure below compliance materiality that was incurred after the award?s period of performance was expensed. Management posted an adjustment to remove the amounts applicable to FY2023. Questioned Costs ? None Recommendations ? Management should strengthen their processes, controls, and review over direct federal award expenditures and ensure compliance with Uniform Administrative Requirements. In addition, management should seek appropriate training for financial department staff to ensure proper cutoff of program expenditures. Views of Responsible Officials and Planned Corrective Actions ? The Association has emphasized the period of performance for all programs. Management has agreed to strengthen controls and provide training for program expenditure cutoff.
2022-002 (Significant Deficiency) ? Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance Federal Program: AL 21.027 Coronavirus State and Local Fiscal Recovery Funds Criteria: Per Uniform Guidance 2 CFR sections 200.308, 200.309 and 200.403(h), a non-federal entity may charge only allowable costs incurred during the federal award?s period of performance or grant period. Expenses incurred before the grant period can only be charged to the grant if the passthrough entity authorizes those pre-award costs. Condition: The grant period for this grant award began in March 2022. The Organization charged a portion of expenses incurred from October 2021 to February 2022 to this grant. Cause: The Organization failed to consider the grant period start date in their allocation of distribution costs to this grant. Effect: The Organization charged expenses incurred before the grant?s period of performance, which makes these expenses unallowable for this grant. Context: Most of the expenses charged to this federal award was for food purchases incurred during the grant period. Only 7% of the expenses charged were for distribution costs. The Organization followed their regular process for allocating distribution costs to grants using the costs incurred during their fiscal year of October 1, 2021 to September 2022 as their population of total expenses, failing to consider that this grant award period only began in March 2022. However, the Organization was only able to charge a small amount of this allocated distribution costs as most of the grant was reserved for food purchases. The Organization did have sufficient eligible expenses incurred during the grant period. Questioned Costs: None. Repeat Finding: No Recommendation: The Organization should review their policies and procedures for allocating expenses to grants and only allocate expenses incurred during the grant period. View of Responsible Officials: Management agrees with the recommendation and will review their procedures for allocating expenses to grants to ensure only expenses incurred during the grant period are charged to grants.
2022-002 ? Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs/Cost Principles Information on Federal Program(s) - Department of Education Assistance Listing Number: 84.351 Assistance Listing Name: Arts in Education National Program Grant Award Numbers: S351A220001 Award Period: October 4, 2021 to April 30, 2023 Criteria or Specific Requirement ? The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In addition, per 2 CFR Section 200.403, ?Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be 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. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to ? 200.308(e)(3).? Condition ? During our test work of 40 payroll samples, totaling $44,233.99, selected to test the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements, we noted two instances for the same employee for which the employee received compensation at a higher rate than the employee?s approved salary letter that was maintained in the personnel file. For the two samples selected, the employee received a total of $13.45 in compensation in excess of the approved amount per personnel file. Cause ? The Center is not adhering to their internal process to ensure all approved salary information was maintained in the personnel file. Effect or Potential Effect ? Without adequate internal controls in place to ensure costs are properly verified and supported, the Center could incorrectly charge expenditures to the federal program. Questioned Costs - Known questioned costs totaled $13.45 and likely questioned costs totaled $1,876. The likely questioned costs were determined by management through examination of the total salary charged to the federal program for the employee who received compensation in excess of the approved amount per personnel file. Context ? This is a condition based on testing of the Center?s compliance. The prevalence of the finding is detailed in the condition section above. The samples were selected using a non-statistical method. Repeat Finding ? N/A Recommendation - We recommend management ensure the Center strengthen their internal process to ensure that employee salary information recorded in the payroll system are approved and supported by salary documentation in the personnel file. Views of Responsible Officials ? The Center?s management agrees with the finding and will strengthen the internal control surrounding the activities allowed or unallowed and allowable costs and will ensure the adequate documentation is in place. See the Center?s corrective action for more details.
Finding No. 2022-003 Federal Agency: U.S. Department of Education Assistance Listing No. and Title: 84.027 Special Education – Grants to States (IDEA, Part B) Area: Allowable Costs/Cost Principles Questioned Costs: $0 Criteria: The Schedule of Expenditures of Federal Awards (SEFA) must be supported by underlying accounting and other records used in preparing the financial statements. 2 CFR 200.403(g) provides that costs must be adequately documented to be considered allowable under Federal awards. 2 CFR 200.430(i)(1)(i) requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: 1. For the year ended September 30, 2022, the total amount of payroll expense under ALN 84.027 determined from the journal entry details supporting the SEFA (or general ledger) was lower by $480,743 as compared to the total amount of payroll expense per labor cost summary (or subsidiary ledger). It was further noted that $404,198 out of this amount pertains to costs initially charged under the program but were reclassified to the Education Stabilization Fund (ESF) federal program through a general ledger entry only. No questioned costs are raised as the payroll costs that caused the variance were identified in detail. 2. For 3 (or 8%) of 40 transactions tested aggregating $61,202 out of $3,196,892 in total payroll expenditures, employee timecards were not provided. No questioned costs are raised as summary timesheets were provided. See Schedule of Findings and Questioned Costs for chart/table. Cause: PSS did not perform a reconciliation of the general ledger and subsidiary ledger for payroll costs. In addition, PSS failed to ensure that costs charged to the grant are adequately supported. Effect: PSS is in noncompliance with applicable allowable costs/cost principles requirements. Recommendation: PSS should implement a regular reconciliation of its labor cost summary report with the general ledger journal entries and ensure that any discrepancies are resolved or validly supported. Further, PSS should strengthen recordkeeping procedures so that documents are readily available to substantiate costs charged to the grant. Views of responsible officials: The PSS Corrective Action Plan provides a detailed rationale for disagreement with the finding. Auditor response: Condition 1 – The finding does acknowledge that PSS reclassified the amount under ESF funds. Given the knowledge of the journal entry limitation, PSS failed to show evidence of effort to regularly reconcile the labor cost summary report with the general ledger. The condition remains. Condition 2 – Based on our understanding of PSS’ internal controls, timecards are required to be provided every pay period to support the payment of salaries and wages. The condition remains.
Finding No. 2022-003 Federal Agency: U.S. Department of Education Assistance Listing No. and Title: 84.027 Special Education – Grants to States (IDEA, Part B) Area: Allowable Costs/Cost Principles Questioned Costs: $0 Criteria: The Schedule of Expenditures of Federal Awards (SEFA) must be supported by underlying accounting and other records used in preparing the financial statements. 2 CFR 200.403(g) provides that costs must be adequately documented to be considered allowable under Federal awards. 2 CFR 200.430(i)(1)(i) requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: 1. For the year ended September 30, 2022, the total amount of payroll expense under ALN 84.027 determined from the journal entry details supporting the SEFA (or general ledger) was lower by $480,743 as compared to the total amount of payroll expense per labor cost summary (or subsidiary ledger). It was further noted that $404,198 out of this amount pertains to costs initially charged under the program but were reclassified to the Education Stabilization Fund (ESF) federal program through a general ledger entry only. No questioned costs are raised as the payroll costs that caused the variance were identified in detail. 2. For 3 (or 8%) of 40 transactions tested aggregating $61,202 out of $3,196,892 in total payroll expenditures, employee timecards were not provided. No questioned costs are raised as summary timesheets were provided. See Schedule of Findings and Questioned Costs for chart/table. Cause: PSS did not perform a reconciliation of the general ledger and subsidiary ledger for payroll costs. In addition, PSS failed to ensure that costs charged to the grant are adequately supported. Effect: PSS is in noncompliance with applicable allowable costs/cost principles requirements. Recommendation: PSS should implement a regular reconciliation of its labor cost summary report with the general ledger journal entries and ensure that any discrepancies are resolved or validly supported. Further, PSS should strengthen recordkeeping procedures so that documents are readily available to substantiate costs charged to the grant. Views of responsible officials: The PSS Corrective Action Plan provides a detailed rationale for disagreement with the finding. Auditor response: Condition 1 – The finding does acknowledge that PSS reclassified the amount under ESF funds. Given the knowledge of the journal entry limitation, PSS failed to show evidence of effort to regularly reconcile the labor cost summary report with the general ledger. The condition remains. Condition 2 – Based on our understanding of PSS’ internal controls, timecards are required to be provided every pay period to support the payment of salaries and wages. The condition remains.