2022-007 Allowable Cost Documentation Federal Program: Research and Development Cluster (ALN 47.041, Award Period 9/1/19 – 8/31/22) Federal Agency: National Science Foundation Criteria: 2 CFR 200.403 requires that costs must be adequately documented. Condition: We selected 45 non-payroll expenses for testing. Of those 45, 30 were found to have insufficient documentation to determine if the cost were allowable or unallowable to the federal program. The 30 expenses found to have insufficient documentation were purchased on a credit card. Cause: The Organization did not maintain sufficient internal controls over credit card usage to ensure detailed receipts were available to support the expense charged to the federal program. Effect: The Organization was not compliance with 2 CFR 200.403 which requires that costs charged to federal programs are adequately documented. Identification as a repeat finding, if applicable: The finding is not a repeat finding of the prior year. Recommendation: We recommend the Organization implement internal controls that require detailed receipts to be submitted for all credit card charges. The charges listed on the receipts should be reviewed for allowability and approved by the appropriate personnel before charging to the federal program. Response: The Organization will implement a formal credit card policy which requires that detailed receipts be submitted for review and approval for all credit card charges. Questioned Costs: $9,987. This is the total known cost from the 30 transactions identified in our sample to have insufficient documentation.
2022-008 Allowable Cost Determination and Subaward Monitoring Federal Program: Research and Development Cluster (ALN 47.041, Award Period 9/1/19 – 8/31/22) Federal Agency: National Science Foundation Criteria: 2 CFR 200.403 requires that costs must have been incurred and recognized in accordance with generally accepted accounting principles (GAAP). Condition: We selected 45 non-payroll expenses for testing. Of those 45, 1 was a journal entry to accrue for a passthrough payment to a subaward recipient. Supporting documentation indicated that this journal entry was recorded based on a budgeted amount and not actual performance by the subaward recipient. Cause: The Organization lacked written policies and procedures to execute appropriate subaward monitoring responsibilities. Effect: The Organization was not compliance with 2 CFR 200.403 which requires that costs must be incurred and recognized in accordance with generally accepted accounting principles (GAAP). Identification as a repeat finding, if applicable: The finding is not a repeat finding of the prior year. Recommendation: We recommend the Organization establish policy and procedures to monitor the sub awardee. These policies and procedures should include a requirement that the sub awardee presents supporting documentation to the Organization to demonstrate actual cost and performance under the agreement prior to the Organization recording the expense to the grant. Response: The Organization will establish appropriate procedures for sub awardee monitoring. Questioned Costs: None. An adjustment was posted to remove the costs that were booked based on budget from current year expenditures.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Procurement and Suspension and Debarment Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Number and Title: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund Federal Award Number: S425D210012 (Year: 2021) Questioned Costs: $189,893 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $2,439,337 were expended and reported on the Dodge County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal Awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amounts of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity … (g) Be adequately documented…” Additionally, provisions included in the Uniform Guidance, Section 202.403 – Reasonable Costs state that “a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given costs, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The constraints or requirements imposed by such factors as: sound business practices; arm’s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award… (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. € Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award’s cost.” Furthermore, provisions included in the Uniform Guidance, Section 200.318 – General Procurement standards state that “the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations… for the acquisition of property or services required under a Federal award or subaward…” Moreover, to assist school districts in improving their financial management systems and associated compliance over federal programs, GaDOE published the Financial Management for Georgia Local Units of Administration (FMGLUA), manual. The FMGLUA manual requires that LEAs submit a budget as part of each federal program’s Consolidated Application process. The program budget reflects details regarding the manner in which each school district intends to expend the program funds. The Consolidated Application, including the budget, for each program must be reviewed and approved by GaDOE personnel before the LEA is authorized to expend program funds. Amendments to the budget are to be submitted to and approved by GaDOE when a school district intends to spend funds in a manner not initially reported. Lastly, LEA personnel must also provide for specific assurances related to the ESSER program within the Consolidated Application system. These assurances are reflected in the Uniform Guidance, Section 200.415 – Required Certifications, and include provisions that require LEAs “to assure that expenditures are proper and in accordance with the terms and conditions of the Federal award and approved project budgets…” Condition: Auditors performed a review of expenditure activity associated with the ESSER program to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were identified: • Testing revealed that expenditures totaling $173,893 were not appropriately approved by GaDOE through the Consolidated Application system. Further, the expenditures were not submitted for approval on an amended budget as of the end of audit fieldwork. • Testing revealed that a payment was made to the janitorial company utilized by the School District to provide “retention” bonuses to janitorial contractors who were not employees of the School District. These individuals were assigned to work within the School District by the private janitorial company. Per review of the contract in place during the fiscal year under review, it was noted that these bonuses represented amounts in excess of the agreed upon price. Furthermore, the School District does not have the authority or ability to retain these individuals as they were not employees of the School District and contract provisions requiring the individuals to remain employed by the janitorial company and in the service of the School District for a stated period of time was not reflected within the associated contract. Therefore, expenditures totaling $16,000 were not considered to be reasonable and necessary for the performance of the ESSER program and deemed unallowable. Questioned Costs: Known questioned costs of $189,893 were identified for expenditures that were not incurred for a necessary and reasonable purpose and did not follow the School District’s and/or GaDOE’s policies and procedures. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: In discussing these deficiencies with management, they stated that they believed that any expenditures not previously approved on the Consolidated Application were still allowable provided that budget amendments were submitted and approved by the GaDOE prior to the end of the grant period. Additionally, they stated that they were not aware that contract amendments should be initiated prior to expending funds in excess of the stated contract rates. Effect: The School District is not in compliance with the Uniform Guidance, ED, or GaDOE guidance related to the ESSER program. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are appropriately approved by the GaDOE through the Consolidated Application process and to ensure that expenditures are in line with provisions reflected in the associated contract and or/contract amendments, prior to the expending of federal program funds. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District's and GaDOE’s policies and procedures. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Number and Title: 84.010 – Title I Grants to Local Educational Agencies Federal Award Numbers: SO10A200010 (Year: 2021), S010A210010-21A (Year: 2022) Questioned Costs: $23,398 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Title I Grants to Local Educational Agencies program. Background: The Title I Grants to Local Educational Agencies (Title I) program was authorized under the Elementary and Secondary Education Act of 1965 to help local educational agencies (LEAs) improve teaching and learning in high-poverty schools in particular for children failing or most at-risk of failing, to meet challenging State academic standards. LEAs may operate targeted assistance programs in which children who are failing or most at-risk of failing may be served or schoolwide programs in which all children in eligible schools may be served. Title I funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. Title I funds totaling $377,570 were expended and reported on the Talbot County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Furthermore, provisions included in the Uniform Guidance, Section 200.430 – Compensation-Personal Services prescribe standards for documentation of personnel expenses and state, in part, that “(a) … Costs for compensation are allowable to the extent that they satisfy… specific requirements…, and that the total compensation for individual employees: (1) is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i)…, [as follows:] (i) 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…” Condition: Three individually significant non-personal services expenditures were selected for testing to determine if appropriate internal controls were implemented, and applicable compliance requirements were met. For one individually significant expenditure in the amount of $19,848, adequate supporting documentation in the form of an invoice was not maintained. Additionally, a sample of two employees was randomly selected for testing using a non-statistical sampling approach. These employees were reviewed to determine if internal controls were properly functioning, and applicable compliance requirements were met. It was noted that timesheets were not maintained to evidence accuracy of amounts paid for $3,550 of additional pay. Questioned Costs: Upon testing individually significant expenditures, known questioned costs of $19,848 were identified for expenditures that were not supported by adequate documentation. These known questioned costs related to expenditures that were not tested as part of a sample and should not be projected to a population to determine likely questioned costs. Additionally, upon testing a sample of $99,999 in personal services expenditures, known questioned costs of $3,550 were identified for expenditures not supported by adequate documentation. Using the total personal services expenditures population of $200,603 (excluding benefits payments), we project the likely questioned costs to be approximately $7,121. Therefore, the known and likely questioned costs identified for all unallowable payments throughout the sample and individually significant items tested totaled $23,398 and $26,969, respectively. Cause: Per discussion with management, the School District believes that this is due to change in management in the financial department. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Effect: The School District is not in compliance with the Uniform Guidance or ED guidance related to the Title I program. Failure to ensure that documentation exists to support the allowability of payments from the Title I fund may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with improperly documented expenditures. Recommendation: The School District should review current internal control procedures related to Title I program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are supported by appropriate documentation. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District’s purchasing and employee compensation policies and procedures. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Number and Title: 84.010 – Title I Grants to Local Educational Agencies Federal Award Numbers: SO10A200010 (Year: 2021), S010A210010-21A (Year: 2022) Questioned Costs: $23,398 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Title I Grants to Local Educational Agencies program. Background: The Title I Grants to Local Educational Agencies (Title I) program was authorized under the Elementary and Secondary Education Act of 1965 to help local educational agencies (LEAs) improve teaching and learning in high-poverty schools in particular for children failing or most at-risk of failing, to meet challenging State academic standards. LEAs may operate targeted assistance programs in which children who are failing or most at-risk of failing may be served or schoolwide programs in which all children in eligible schools may be served. Title I funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. Title I funds totaling $377,570 were expended and reported on the Talbot County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Furthermore, provisions included in the Uniform Guidance, Section 200.430 – Compensation-Personal Services prescribe standards for documentation of personnel expenses and state, in part, that “(a) … Costs for compensation are allowable to the extent that they satisfy… specific requirements…, and that the total compensation for individual employees: (1) is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i)…, [as follows:] (i) 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…” Condition: Three individually significant non-personal services expenditures were selected for testing to determine if appropriate internal controls were implemented, and applicable compliance requirements were met. For one individually significant expenditure in the amount of $19,848, adequate supporting documentation in the form of an invoice was not maintained. Additionally, a sample of two employees was randomly selected for testing using a non-statistical sampling approach. These employees were reviewed to determine if internal controls were properly functioning, and applicable compliance requirements were met. It was noted that timesheets were not maintained to evidence accuracy of amounts paid for $3,550 of additional pay. Questioned Costs: Upon testing individually significant expenditures, known questioned costs of $19,848 were identified for expenditures that were not supported by adequate documentation. These known questioned costs related to expenditures that were not tested as part of a sample and should not be projected to a population to determine likely questioned costs. Additionally, upon testing a sample of $99,999 in personal services expenditures, known questioned costs of $3,550 were identified for expenditures not supported by adequate documentation. Using the total personal services expenditures population of $200,603 (excluding benefits payments), we project the likely questioned costs to be approximately $7,121. Therefore, the known and likely questioned costs identified for all unallowable payments throughout the sample and individually significant items tested totaled $23,398 and $26,969, respectively. Cause: Per discussion with management, the School District believes that this is due to change in management in the financial department. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Effect: The School District is not in compliance with the Uniform Guidance or ED guidance related to the Title I program. Failure to ensure that documentation exists to support the allowability of payments from the Title I fund may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with improperly documented expenditures. Recommendation: The School District should review current internal control procedures related to Title I program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are supported by appropriate documentation. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District’s purchasing and employee compensation policies and procedures. Views of Responsible Officials: We concur with this finding.
FA 2022-002 Improve Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425W – American Rescue Plan Elementary and Secondary School Emergency Relief Fund – Homeless Children and Youth Federal Award Numbers: S425D210012 (Year: 2021), S425W210011 (Year: 2021) Questioned Costs: $58,415 Description: A review of expenditures charged to the Elementary and Secondary School Emergency Relief Fund program revealed that the School District’s internal control procedures were not operating to ensure that expenditures were appropriately documented to support allowability. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to the coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $611,712 were expended and reported on the Talbot County School District’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the Institution is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” Furthermore, provisions included in the Uniform Guidance, Section 200.430 – Compensation-Personal Services prescribe standards for documentation of personnel expenses and state, in part, that “(a) … Costs for compensation are allowable to the extent that they satisfy… specific requirements…, and that the total compensation for individual employees: (1) is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i)…, [as follows:] (i) 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…” III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Condition: A sample of seven non-personal services expenditures was randomly selected for testing using a non-statistical sampling approach. In addition, three individually significant items were selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented, and applicable compliance requirements were met. The following deficiencies were noted: • A purchase order was not maintained for two of the expenditures. • The check amount, invoice, and purchase requisition form for one expenditure did not agree. • One expenditure was not appropriately approved by GaDOE through the Consolidated Application process. In addition, a sample of 15 employees was randomly selected for testing using a non-statistical sampling approach. These employees were reviewed to determine if appropriate internal controls were implemented, and applicable compliance requirements were met. The following deficiencies were noted: • Timesheets or other supporting documentation could not be provided for payments made to 14 employees. • Timesheets provided for six employees did not agree to amounts paid for the corresponding time period. Furthermore, upon completing testing over personal services expenditures for the Title I Grants to Local Educational Agencies (Title I) program, auditor noted that two employees were paid $2,870 from the ESSER fund that could not be supported by timesheets or other documentation. Questioned Costs: Upon testing a sample of $23,522 in non-personal service expenditures, known questioned costs of $9,424 were identified for expenditures not supported by adequate documentation or not properly approved through the Consolidated Application process. Using the total non-personal services expenditures population of $55,926, we project the likely questioned costs to be approximately $22,407. Additionally, upon testing a sample of $118,771 in personal services expenditures, known questioned costs of $46,121 were identified. Using the total personal services expenditure population of $298,264, we project the likely questioned costs to be approximately $115,821. Furthermore, known questioned costs of $2,870 were identified for unsupported ESSER payments upon completing personal services testing associated with the Title I program. Therefore, the known and likely questioned costs identified for unallowable payments totaled $58,415 and $138,228. The following Assistance Listing Number was affected by known and likely questioned costs: 84.425D. Cause: Per discussion with management, the School District believes that this is due to change in management in the financial department. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance or ED guidance related to the ESSER program. Failure to ensure that documentation exists to support the allowability of payments from the ESSER fund may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are supported by appropriate documentation. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District’s purchasing and employee compensation policies and procedures. Views of Responsible Officials: We concur with this finding.
FA 2022-002 Improve Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425W – American Rescue Plan Elementary and Secondary School Emergency Relief Fund – Homeless Children and Youth Federal Award Numbers: S425D210012 (Year: 2021), S425W210011 (Year: 2021) Questioned Costs: $58,415 Description: A review of expenditures charged to the Elementary and Secondary School Emergency Relief Fund program revealed that the School District’s internal control procedures were not operating to ensure that expenditures were appropriately documented to support allowability. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to the coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $611,712 were expended and reported on the Talbot County School District’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the Institution is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” Furthermore, provisions included in the Uniform Guidance, Section 200.430 – Compensation-Personal Services prescribe standards for documentation of personnel expenses and state, in part, that “(a) … Costs for compensation are allowable to the extent that they satisfy… specific requirements…, and that the total compensation for individual employees: (1) is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i)…, [as follows:] (i) 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…” III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Condition: A sample of seven non-personal services expenditures was randomly selected for testing using a non-statistical sampling approach. In addition, three individually significant items were selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented, and applicable compliance requirements were met. The following deficiencies were noted: • A purchase order was not maintained for two of the expenditures. • The check amount, invoice, and purchase requisition form for one expenditure did not agree. • One expenditure was not appropriately approved by GaDOE through the Consolidated Application process. In addition, a sample of 15 employees was randomly selected for testing using a non-statistical sampling approach. These employees were reviewed to determine if appropriate internal controls were implemented, and applicable compliance requirements were met. The following deficiencies were noted: • Timesheets or other supporting documentation could not be provided for payments made to 14 employees. • Timesheets provided for six employees did not agree to amounts paid for the corresponding time period. Furthermore, upon completing testing over personal services expenditures for the Title I Grants to Local Educational Agencies (Title I) program, auditor noted that two employees were paid $2,870 from the ESSER fund that could not be supported by timesheets or other documentation. Questioned Costs: Upon testing a sample of $23,522 in non-personal service expenditures, known questioned costs of $9,424 were identified for expenditures not supported by adequate documentation or not properly approved through the Consolidated Application process. Using the total non-personal services expenditures population of $55,926, we project the likely questioned costs to be approximately $22,407. Additionally, upon testing a sample of $118,771 in personal services expenditures, known questioned costs of $46,121 were identified. Using the total personal services expenditure population of $298,264, we project the likely questioned costs to be approximately $115,821. Furthermore, known questioned costs of $2,870 were identified for unsupported ESSER payments upon completing personal services testing associated with the Title I program. Therefore, the known and likely questioned costs identified for unallowable payments totaled $58,415 and $138,228. The following Assistance Listing Number was affected by known and likely questioned costs: 84.425D. Cause: Per discussion with management, the School District believes that this is due to change in management in the financial department. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance or ED guidance related to the ESSER program. Failure to ensure that documentation exists to support the allowability of payments from the ESSER fund may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are supported by appropriate documentation. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District’s purchasing and employee compensation policies and procedures. Views of Responsible Officials: We concur with this finding.
2 CFR § 2900.4 gives regulatory effect to the Department of Labor for 2 CFR § 200 Subpart E which outlines allowable cost principles. 2 CFR § 200.403 provides, in part, that except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles and be adequately documented. Due to a lack of internal control over expenditures and documentation, testing of expenditures identified a payment charged twice to the WIOA Cluster accounting system. As such, the second entry for the payment had no invoice support and was not valid. The total amount tested that had no invoice support was $369,757 and was determined to be unallowable. Failure to maintain adequate support documentation for federal expenditures could result in costs being disallowed by the grantor. Policies and procedures over documentation of expenditures should be developed and implemented. Support should be maintained for all expenditures to ensure that each expenditure charged to the program is for an allowable activity/cost. The expenditure amount is in excess of $25,000 and therefore is considered questioned costs under 2 CFR § 200.516. In addition to this issue, we could not determine if the expenditures in total for this program were supported by the accounting system records since we could not reconcile between the accounting system and the federal schedule. See Finding 2022-004 above for this issue in detail.
2 CFR § 2900.4 gives regulatory effect to the Department of Labor for 2 CFR § 200 Subpart E which outlines allowable cost principles. 2 CFR § 200.403 provides, in part, that except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles and be adequately documented. Due to a lack of internal control over expenditures and documentation, testing of expenditures identified a payment charged twice to the WIOA Cluster accounting system. As such, the second entry for the payment had no invoice support and was not valid. The total amount tested that had no invoice support was $369,757 and was determined to be unallowable. Failure to maintain adequate support documentation for federal expenditures could result in costs being disallowed by the grantor. Policies and procedures over documentation of expenditures should be developed and implemented. Support should be maintained for all expenditures to ensure that each expenditure charged to the program is for an allowable activity/cost. The expenditure amount is in excess of $25,000 and therefore is considered questioned costs under 2 CFR § 200.516. In addition to this issue, we could not determine if the expenditures in total for this program were supported by the accounting system records since we could not reconcile between the accounting system and the federal schedule. See Finding 2022-004 above for this issue in detail.
2 CFR § 2900.4 gives regulatory effect to the Department of Labor for 2 CFR § 200 Subpart E which outlines allowable cost principles. 2 CFR § 200.403 provides, in part, that except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles and be adequately documented. Due to a lack of internal control over expenditures and documentation, testing of expenditures identified a payment charged twice to the WIOA Cluster accounting system. As such, the second entry for the payment had no invoice support and was not valid. The total amount tested that had no invoice support was $369,757 and was determined to be unallowable. Failure to maintain adequate support documentation for federal expenditures could result in costs being disallowed by the grantor. Policies and procedures over documentation of expenditures should be developed and implemented. Support should be maintained for all expenditures to ensure that each expenditure charged to the program is for an allowable activity/cost. The expenditure amount is in excess of $25,000 and therefore is considered questioned costs under 2 CFR § 200.516. In addition to this issue, we could not determine if the expenditures in total for this program were supported by the accounting system records since we could not reconcile between the accounting system and the federal schedule. See Finding 2022-004 above for this issue in detail.
2 CFR § 2900.4 gives regulatory effect to the Department of Labor for 2 CFR § 200 Subpart E which outlines allowable cost principles. 2 CFR § 200.403 provides, in part, that except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles and be adequately documented. Due to a lack of internal control over expenditures and documentation, testing of expenditures identified a payment charged twice to the WIOA Cluster accounting system. As such, the second entry for the payment had no invoice support and was not valid. The total amount tested that had no invoice support was $369,757 and was determined to be unallowable. Failure to maintain adequate support documentation for federal expenditures could result in costs being disallowed by the grantor. Policies and procedures over documentation of expenditures should be developed and implemented. Support should be maintained for all expenditures to ensure that each expenditure charged to the program is for an allowable activity/cost. The expenditure amount is in excess of $25,000 and therefore is considered questioned costs under 2 CFR § 200.516. In addition to this issue, we could not determine if the expenditures in total for this program were supported by the accounting system records since we could not reconcile between the accounting system and the federal schedule. See Finding 2022-004 above for this issue in detail.
2 CFR § 2900.4 gives regulatory effect to the Department of Labor for 2 CFR § 200 Subpart E which outlines allowable cost principles. 2 CFR § 200.403 provides, in part, that except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles and be adequately documented. Due to a lack of internal control over expenditures and documentation, testing of expenditures identified a payment charged twice to the WIOA Cluster accounting system. As such, the second entry for the payment had no invoice support and was not valid. The total amount tested that had no invoice support was $369,757 and was determined to be unallowable. Failure to maintain adequate support documentation for federal expenditures could result in costs being disallowed by the grantor. Policies and procedures over documentation of expenditures should be developed and implemented. Support should be maintained for all expenditures to ensure that each expenditure charged to the program is for an allowable activity/cost. The expenditure amount is in excess of $25,000 and therefore is considered questioned costs under 2 CFR § 200.516. In addition to this issue, we could not determine if the expenditures in total for this program were supported by the accounting system records since we could not reconcile between the accounting system and the federal schedule. See Finding 2022-004 above for this issue in detail.
2 CFR § 2900.4 gives regulatory effect to the Department of Labor for 2 CFR § 200 Subpart E which outlines allowable cost principles. 2 CFR § 200.403 provides, in part, that except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles and be adequately documented. We further noted that 20 CFR § 671.140 states the following as allowable activities: (a) National emergency grants may provide adjustment assistance for eligible dislocated workers, described at WIA section 173(c)(2) or (d)(2). (b) Adjustment assistance includes the core, intensive, and training services authorized at WIA sections 134(d) and 173. The scope of services to be provided in a particular project are negotiated between the Department and the grantee, taking into account the needs of the target population covered by the grant. The scope of services may be changed through grant modifications, if necessary. (c) National emergency grants may provide for supportive services to help workers who require such assistance to participate in activities provided for in the grant. Needs-related payments, in support of other employment and training assistance, may be available for the purpose of enabling dislocated workers who are eligible for such payments to participate in programs of training services. Generally, the terms of a grant must be consistent with Local Board policies governing such financial assistance with formula funds (including the payment levels and duration of payments). However, the terms of the grant agreement may diverge from established Local Board policies, in the following instances: (1) If unemployed dislocated workers served by the project are not able to meet the 13 or 8 weeks enrollment in training requirement at WIA section 134(e)(3)(B) because of the lack of formula or emergency grant funds in the State or local area at the time of dislocation, such individuals may be eligible for needs-related payments if they are enrolled in training by the end of the 6th week following the date of the emergency grant award; (2) Trade-impacted workers who are not eligible for trade readjustment assistance under NAFTA-TAA may be eligible for needs-related payments under a national emergency grant if the worker is enrolled in training by the end of the 16th week following layoff; and (3) Under other circumstances as specified in the national emergency grant application guidelines. (d) A national emergency grant to respond to a declared emergency or natural disaster, as defined at § 671.110(e), may provide short-term disaster relief employment for: Individuals who are temporarily or permanently laid off as a consequence of the disaster; Dislocated workers; and Long-term unemployed individuals. (e) Temporary employment assistance is authorized on disaster projects that provide food, clothing, shelter and other humanitarian assistance for disaster victims; and on projects that perform demolition, cleaning, repair, renovation and reconstruction of damaged and destroyed structures, facilities and lands located within the disaster area. For such temporary jobs, each eligible worker is limited to no more than six months of employment for each single disaster. The amounts, duration and other limitations on wages will be negotiated for each grant. (f) Additional requirements that apply to national emergency grants, including natural disaster grants, are contained in the application instructions. Due to a lack of internal control over expenditures and documentation, testing of expenditures identified a payment charged to the NEG Federal Program twice in the accounting system. As such, the second entry for the payment had no invoice support and was not valid. The total amount tested that had no invoice support was $191,416 and was determined to be unallowable. Failure to maintain adequate support documentation for federal expenditures could result in costs being disallowed by the grantor. Policies and procedures over documentation of expenditures should be developed and implemented. Support should be maintained for all expenditures to ensure that each expenditure charged to the program is for an allowable activity/cost. The expenditure amount is in excess of $25,000 and therefore is considered questioned costs under 2 CFR § 200.516. In addition to this issue, we could not determine if the expenditures in total for this program were supported by the accounting system records since we could not reconcile between the accounting system and the federal schedule. See Finding 2022-004 above for this issue in detail.
2022-007 Allowable Cost Documentation Research and Development Cluster (ALN 47.041-Engineering, Award 1940055, Award Period 9/1/19 – 8/31/22) Federal Agency: National Science Foundation Criteria: 2 CFR 200.403 requires that costs must be adequately documented. Condition: We selected 45 non-payroll expenses for testing. Of those 45, 30 were found to have insufficient documentation to determine if the cost were allowable or unallowable to the federal program. The 30 expenses found to have insufficient documentation were purchased on a credit card. Cause: The Organization did not maintain sufficient internal controls over credit card usage to ensure detailed receipts were available to support the expense charged to the federal program. Effect: The Organization was not compliance with 2 CFR 200.403 which requires that costs charged to federal programs are adequately documented. Without a policy that requires detailed receipts to be submitted for credit card charges, there is a risk that unallowable costs are charged to the program. Identification as a repeat finding, if applicable: The finding is not a repeat finding of the prior year. Recommendation: We recommend the Organization implement internal controls that require detailed receipts to be submitted for all credit card charges. The charges listed on the receipts should be reviewed for allowability and approved by the appropriate personnel before charging to the federal program. Response: The Organization will implement a formal credit card policy which requires that detailed receipts be submitted for review and approval for all credit card charges. Questioned Costs: $9,987. This is the total known cost from the 30 transactions identified in our sample to have insufficient documentation.
2022-008 Allowable Cost Determination and Subaward Monitoring Research and Development Cluster (ALN 47.041-Engineering, Award 1940055, Award Period 9/1/19 – 8/31/22) Federal Agency: National Science Foundation Criteria: 2 CFR 200.403 requires that costs must have been incurred and recognized in accordance with generally accepted accounting principles (GAAP). Condition: We selected 45 non-payroll expenses for testing. Of those 45, 1 was a journal entry to accrue for a passthrough payment to a subaward recipient. Supporting documentation indicated that this journal entry was recorded based on a budgeted amount and not actual performance by the subaward recipient. Cause: The Organization lacked written policies and procedures to execute appropriate subaward monitoring responsibilities. Effect: The Organization was not in compliance with 2 CFR 200.403 which requires that costs must be incurred and recognized in accordance with generally accepted accounting principles (GAAP). Without a policy to monitor the sub awardee, there is a risk that Organization passes through funds without verifying that the sub awardee has performed under the grant. Identification as a repeat finding, if applicable: The finding is not a repeat finding of the prior year. Recommendation: We recommend the Organization establish policy and procedures to monitor the sub awardee. These policies and procedures should include a requirement that the sub awardee presents supporting documentation to the Organization to demonstrate actual cost and performance under the agreement prior to the Organization recording the expense to the grant. Response: The Organization will establish appropriate procedures for sub awardee monitoring. Questioned Costs: None. An adjustment was posted to remove the costs that were booked based on budget from current year expenditures.
Activities Allowed or Unallowed/Allowable Costs/Cost Principles Head Start ALN# 93.600 US Department of Health & Human Services Federal Grant/Contract Number: 10CH011215-02; 10CH011215-03; 10HE000901-01 Grant period – 2021 & 2022 Criteria – Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should follow guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.403 – Factors affecting allowability of costs – Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: paragraph (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles; paragraph (g) Be adequately documented. Per 2 CFR section 200.404 – Reasonable costs – A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. Per 2 CFR section 200.405 – Allocable costs –focuses on how costs are allocable, ensuring they are directly tied to the federal award or its benefits. Per 2 CFR 200.430(i), charges to Federal awards for salaries and wages must be based on records that are supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated and that are incorporated into the official records of the non-Federal entity. Condition – The following exceptions were noted during testing of 138 program disbursements, 93 payroll disbursements, and 100 journal entry transactions: • 20 invoices could not be located related to program disbursements • 6 invoices tested did not agree to the approved allocation of Head Start expenses • 1 timecard could not be located • multiple instances where an approved pay rate covering the appropriate time-period could not be obtained • 12 instances where supporting documentation for journal entries to adjust Head Start expenses could not be obtained. Cause – Turnover in staff and the passage of time since the period under audit has caused documentation to be misplaced. Effect – Inadequate or inconsistent documentation of expenses may result in erroneous or fraudulent transactions occurring, loss of funding, or disallowed costs. Questioned Costs – $151,608. Recommendation – Documentation should be prepared, reviewed, and retained to support the expense. Management’s Response – Management has reviewed and accepted the finding. See “Corrective Action Plan”.
Activities Allowed or Unallowed/Allowable Costs/Cost Principles Head Start ALN# 93.600 US Department of Health & Human Services Federal Grant/Contract Number: 10CH011215-02; 10CH011215-03; 10HE000901-01 Grant period – 2021 & 2022 Criteria – Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should follow guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.403 – Factors affecting allowability of costs – Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: paragraph (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles; paragraph (g) Be adequately documented. Per 2 CFR section 200.404 – Reasonable costs – A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. Per 2 CFR section 200.405 – Allocable costs –focuses on how costs are allocable, ensuring they are directly tied to the federal award or its benefits. Per 2 CFR 200.430(i), charges to Federal awards for salaries and wages must be based on records that are supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated and that are incorporated into the official records of the non-Federal entity. Condition – The following exceptions were noted during testing of 138 program disbursements, 93 payroll disbursements, and 100 journal entry transactions: • 20 invoices could not be located related to program disbursements • 6 invoices tested did not agree to the approved allocation of Head Start expenses • 1 timecard could not be located • multiple instances where an approved pay rate covering the appropriate time-period could not be obtained • 12 instances where supporting documentation for journal entries to adjust Head Start expenses could not be obtained. Cause – Turnover in staff and the passage of time since the period under audit has caused documentation to be misplaced. Effect – Inadequate or inconsistent documentation of expenses may result in erroneous or fraudulent transactions occurring, loss of funding, or disallowed costs. Questioned Costs – $151,608. Recommendation – Documentation should be prepared, reviewed, and retained to support the expense. Management’s Response – Management has reviewed and accepted the finding. See “Corrective Action Plan”.
Activities Allowed or Unallowed/Allowable Costs/Cost Principles Head Start ALN# 93.600 US Department of Health & Human Services Federal Grant/Contract Number: 10CH011215-02; 10CH011215-03; 10HE000901-01 Grant period – 2021 & 2022 Criteria – Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should follow guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.403 – Factors affecting allowability of costs – Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: paragraph (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles; paragraph (g) Be adequately documented. Per 2 CFR section 200.404 – Reasonable costs – A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. Per 2 CFR section 200.405 – Allocable costs –focuses on how costs are allocable, ensuring they are directly tied to the federal award or its benefits. Per 2 CFR 200.430(i), charges to Federal awards for salaries and wages must be based on records that are supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated and that are incorporated into the official records of the non-Federal entity. Condition – The following exceptions were noted during testing of 138 program disbursements, 93 payroll disbursements, and 100 journal entry transactions: • 20 invoices could not be located related to program disbursements • 6 invoices tested did not agree to the approved allocation of Head Start expenses • 1 timecard could not be located • multiple instances where an approved pay rate covering the appropriate time-period could not be obtained • 12 instances where supporting documentation for journal entries to adjust Head Start expenses could not be obtained. Cause – Turnover in staff and the passage of time since the period under audit has caused documentation to be misplaced. Effect – Inadequate or inconsistent documentation of expenses may result in erroneous or fraudulent transactions occurring, loss of funding, or disallowed costs. Questioned Costs – $151,608. Recommendation – Documentation should be prepared, reviewed, and retained to support the expense. Management’s Response – Management has reviewed and accepted the finding. See “Corrective Action Plan”.
Activities Allowed or Unallowed/Allowable Costs/Cost Principles Head Start ALN# 93.600 US Department of Health & Human Services Federal Grant/Contract Number: 10CH011215-02; 10CH011215-03; 10HE000901-01 Grant period – 2021 & 2022 Criteria – Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should follow guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.403 – Factors affecting allowability of costs – Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: paragraph (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles; paragraph (g) Be adequately documented. Per 2 CFR section 200.404 – Reasonable costs – A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. Per 2 CFR section 200.405 – Allocable costs –focuses on how costs are allocable, ensuring they are directly tied to the federal award or its benefits. Per 2 CFR 200.430(i), charges to Federal awards for salaries and wages must be based on records that are supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated and that are incorporated into the official records of the non-Federal entity. Condition – The following exceptions were noted during testing of 138 program disbursements, 93 payroll disbursements, and 100 journal entry transactions: • 20 invoices could not be located related to program disbursements • 6 invoices tested did not agree to the approved allocation of Head Start expenses • 1 timecard could not be located • multiple instances where an approved pay rate covering the appropriate time-period could not be obtained • 12 instances where supporting documentation for journal entries to adjust Head Start expenses could not be obtained. Cause – Turnover in staff and the passage of time since the period under audit has caused documentation to be misplaced. Effect – Inadequate or inconsistent documentation of expenses may result in erroneous or fraudulent transactions occurring, loss of funding, or disallowed costs. Questioned Costs – $151,608. Recommendation – Documentation should be prepared, reviewed, and retained to support the expense. Management’s Response – Management has reviewed and accepted the finding. See “Corrective Action Plan”.
Activities Allowed or Unallowed/Allowable Costs/Cost Principles Head Start ALN# 93.600 US Department of Health & Human Services Federal Grant/Contract Number: 10CH011215-02; 10CH011215-03; 10HE000901-01 Grant period – 2021 & 2022 Criteria – Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should follow guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.403 – Factors affecting allowability of costs – Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: paragraph (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles; paragraph (g) Be adequately documented. Per 2 CFR section 200.404 – Reasonable costs – A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. Per 2 CFR section 200.405 – Allocable costs –focuses on how costs are allocable, ensuring they are directly tied to the federal award or its benefits. Per 2 CFR 200.430(i), charges to Federal awards for salaries and wages must be based on records that are supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated and that are incorporated into the official records of the non-Federal entity. Condition – The following exceptions were noted during testing of 138 program disbursements, 93 payroll disbursements, and 100 journal entry transactions: • 20 invoices could not be located related to program disbursements • 6 invoices tested did not agree to the approved allocation of Head Start expenses • 1 timecard could not be located • multiple instances where an approved pay rate covering the appropriate time-period could not be obtained • 12 instances where supporting documentation for journal entries to adjust Head Start expenses could not be obtained. Cause – Turnover in staff and the passage of time since the period under audit has caused documentation to be misplaced. Effect – Inadequate or inconsistent documentation of expenses may result in erroneous or fraudulent transactions occurring, loss of funding, or disallowed costs. Questioned Costs – $151,608. Recommendation – Documentation should be prepared, reviewed, and retained to support the expense. Management’s Response – Management has reviewed and accepted the finding. See “Corrective Action Plan”.
Activities Allowed or Unallowed/Allowable Costs/Cost Principles Head Start ALN# 93.600 US Department of Health & Human Services Federal Grant/Contract Number: 10CH011215-02; 10CH011215-03; 10HE000901-01 Grant period – 2021 & 2022 Criteria – Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should follow guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.403 – Factors affecting allowability of costs – Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: paragraph (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles; paragraph (g) Be adequately documented. Per 2 CFR section 200.404 – Reasonable costs – A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. Per 2 CFR section 200.405 – Allocable costs –focuses on how costs are allocable, ensuring they are directly tied to the federal award or its benefits. Per 2 CFR 200.430(i), charges to Federal awards for salaries and wages must be based on records that are supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated and that are incorporated into the official records of the non-Federal entity. Condition – The following exceptions were noted during testing of 138 program disbursements, 93 payroll disbursements, and 100 journal entry transactions: • 20 invoices could not be located related to program disbursements • 6 invoices tested did not agree to the approved allocation of Head Start expenses • 1 timecard could not be located • multiple instances where an approved pay rate covering the appropriate time-period could not be obtained • 12 instances where supporting documentation for journal entries to adjust Head Start expenses could not be obtained. Cause – Turnover in staff and the passage of time since the period under audit has caused documentation to be misplaced. Effect – Inadequate or inconsistent documentation of expenses may result in erroneous or fraudulent transactions occurring, loss of funding, or disallowed costs. Questioned Costs – $151,608. Recommendation – Documentation should be prepared, reviewed, and retained to support the expense. Management’s Response – Management has reviewed and accepted the finding. See “Corrective Action Plan”.
Block Grants for Prevention and Treatment of Substance Abuse ALN No. 93.959 U.S. Department of Health and Human Services Opioid STR ALN No. 93.788 U.S. Department of Health and Human Services Criteria or Specific Requirement – Activities Allowed and Unallowed and Cost Principles – 2 CFR Part 200, Subpart E, and Period of Performance – 2 CFR sections 200.308, 200.309, and 200.403(h) Condition – A sample of 80 expenditures were selected from each of the following populations: • ALN No. 93.959 – 1,839 items totaling $1,243,944 • ALN No. 93.788 – 1,502 items totaling $2,285,983 The samples were not, and are not intended to be, statistically valid. Of the 80 expenditures tested from each grant program, the following were determined to lack appropriate supporting documentation to support being charged to grant program: • ALN No. 93.959 - 51 items totaling $26,145, including projected errors over the total population totaling $348,063 • ALN No. 93.788 - 6 items totaling $18,183, including projected errors over the total population totaling $165,074 The Organization did not have adequate supporting documentation demonstrating actual time and effort reporting and lacked evidence of supporting invoices. Cause – The Organization charged budgeted percentages to the grant programs without a system in place to monitor and track that actual time and effort was consistent with budgeted percentages. In addition, the Organization charged expenditures to the grant programs without evidence of supporting invoices. Effect or potential effect – Costs charged to the grant programs could have varied from actual time and effort. In addition, costs charged to the grant could not be supported by actual invoices. Questioned costs – • ALN No. 93.959 - $26,145 • ALN No. 93.788 - $18,183 Context – The Organization did not have a reasonable methodology of allocating costs to these grant programs and did not maintain proper supporting invoices. Identification as a repeat finding, if applicable – Not a repeat finding Recommendation – Management should implement policies and procedures that strengthen internal control over compliance in relation to activities allowed and cost principles. The policy and procedure should be designed to ensure that a reasonable allocation methodology is implemented and followed or that time and effort is certified by the employee on a regular basis. In addition, management should implement a document retention policy consistent with 2 CFR 200.334.
Block Grants for Prevention and Treatment of Substance Abuse ALN No. 93.959 U.S. Department of Health and Human Services Opioid STR ALN No. 93.788 U.S. Department of Health and Human Services Criteria or Specific Requirement – Activities Allowed and Unallowed and Cost Principles – 2 CFR Part 200, Subpart E, and Period of Performance – 2 CFR sections 200.308, 200.309, and 200.403(h) Condition – A sample of 80 expenditures were selected from each of the following populations: • ALN No. 93.959 – 1,839 items totaling $1,243,944 • ALN No. 93.788 – 1,502 items totaling $2,285,983 The samples were not, and are not intended to be, statistically valid. Of the 80 expenditures tested from each grant program, the following were determined to lack appropriate supporting documentation to support being charged to grant program: • ALN No. 93.959 - 51 items totaling $26,145, including projected errors over the total population totaling $348,063 • ALN No. 93.788 - 6 items totaling $18,183, including projected errors over the total population totaling $165,074 The Organization did not have adequate supporting documentation demonstrating actual time and effort reporting and lacked evidence of supporting invoices. Cause – The Organization charged budgeted percentages to the grant programs without a system in place to monitor and track that actual time and effort was consistent with budgeted percentages. In addition, the Organization charged expenditures to the grant programs without evidence of supporting invoices. Effect or potential effect – Costs charged to the grant programs could have varied from actual time and effort. In addition, costs charged to the grant could not be supported by actual invoices. Questioned costs – • ALN No. 93.959 - $26,145 • ALN No. 93.788 - $18,183 Context – The Organization did not have a reasonable methodology of allocating costs to these grant programs and did not maintain proper supporting invoices. Identification as a repeat finding, if applicable – Not a repeat finding Recommendation – Management should implement policies and procedures that strengthen internal control over compliance in relation to activities allowed and cost principles. The policy and procedure should be designed to ensure that a reasonable allocation methodology is implemented and followed or that time and effort is certified by the employee on a regular basis. In addition, management should implement a document retention policy consistent with 2 CFR 200.334.
Coronavirus State and Local Fiscal Recovery Funds, the following noncompliance with the Activities Allowed or Unallowed and Allowable Costs/Cost Principles were noted: • The County failed to properly document the expenditure for one (1) of the two (2) federal expenditures totaling $500,000. They did not execute a contract or award documents, and the invoice was not itemized. This expenditure had a questioned cost of $500,000. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: This condition resulted in noncompliance with federal grant requirements and could result in a loss of federal funds. Recommendation: OSAI recommends the County gain an understanding of the requirements for this program and implement internal controls to ensure compliance with these requirements. Management Response: Board of County Commissioners: The Board of County Commissioners is responsible for the overall fiscal concerns of the county. See OKLA. STAT. Title 19, § 345. The Board of County Commissioners, with the cooperation and participation of all elected officials, reviews, develops and implements policies and procedures to create a strong internal control environment. The Board of County Commissioners will work with all elected officials, the third-party administrator, and federal, state and local partners to develop policies, procedures, and internal controls designed to accurately track grants, including the application process, verification, oversight, and reporting of grant requirements. These policies and procedures will be designed to identify requirements for recipients and sub-recipients of grants, ensure accurate equipment and real property management, procurement, recipient and subrecipient monitoring and reporting. Further, policies will ensure a proper understanding of all grant requirements and compliance of the same. To assist in this process, the Board of County Commissioners engaged a third-party administrator to oversee the grant process, including application, eligibility, review, requirements, contracting, recipient tracking and oversight, and documentation and reporting. The Board of County Commissioners will work with the third-party administrator to ensure proper grant administration. Criteria: 2 CFR § 200.403 - Factors affecting allowability costs states in relevant part, Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (f) not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. (g) Be adequately documented.
Federal Agency: Department of Education Federal Program: Special Education Cluster Pass-Through Agency: Massachusetts State Department of Elementary and Secondary Education Pass-Through Number(s): Various – See Schedule of Expenditures of Federal Awards Assistance Listing Numbers: 84.027, 84.173 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Qualified Opinion) Compliance Requirement: Allowable Costs/Cost Principles Criteria or specific requirement: 2 CFR, Part 200, 200.303 requires an auditee to establish and maintain effective internal controls over federal awards to ensure compliance with federal statutes, regulations and terms and conditions of the federal award. 2 CFR Part 200.403 (g) states that costs must be adequately documented to be allowable under federal awards. Condition: We identified that the District’s internal controls were not designed to ensure proper documentation of the time charged to the grant is maintained. Questioned Costs: $85,252. These identified costs along with the projection of additionally likely questioned costs over the unsampled population resulted in likely questioned costs exceeding program materiality. Context: 20 of the 40 transactions tested, no documentation of time and effort was provided. In addition, 15 of 40 transactions, the documentation of time and effort lacked appropriate approval. Cause: Procedures were not in place to ensure the proper documentation of the time and effort for related payroll charged to the was grant were maintained. Effect: The salaries charged are subject to disallowance and are considered questioned costs. Recommendation: We recommend management review their policies and procedures in place to ensure salaries charged to the grants are appropriate and necessary supporting documentation of time and effort is maintained. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: Department of Education Federal Program: Special Education Cluster Pass-Through Agency: Massachusetts State Department of Elementary and Secondary Education Pass-Through Number(s): Various – See Schedule of Expenditures of Federal Awards Assistance Listing Numbers: 84.027, 84.173 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Qualified Opinion) Compliance Requirement: Allowable Costs/Cost Principles Criteria or specific requirement: 2 CFR, Part 200, 200.303 requires an auditee to establish and maintain effective internal controls over federal awards to ensure compliance with federal statutes, regulations and terms and conditions of the federal award. 2 CFR Part 200.403 (g) states that costs must be adequately documented to be allowable under federal awards. Condition: We identified that the District’s internal controls were not designed to ensure proper documentation of the time charged to the grant is maintained. Questioned Costs: $85,252. These identified costs along with the projection of additionally likely questioned costs over the unsampled population resulted in likely questioned costs exceeding program materiality. Context: 20 of the 40 transactions tested, no documentation of time and effort was provided. In addition, 15 of 40 transactions, the documentation of time and effort lacked appropriate approval. Cause: Procedures were not in place to ensure the proper documentation of the time and effort for related payroll charged to the was grant were maintained. Effect: The salaries charged are subject to disallowance and are considered questioned costs. Recommendation: We recommend management review their policies and procedures in place to ensure salaries charged to the grants are appropriate and necessary supporting documentation of time and effort is maintained. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: Department of Education Federal Program: Special Education Cluster Pass-Through Agency: Massachusetts State Department of Elementary and Secondary Education Pass-Through Number(s): Various – See Schedule of Expenditures of Federal Awards Assistance Listing Numbers: 84.027, 84.173 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Qualified Opinion) Compliance Requirement: Allowable Costs/Cost Principles Criteria or specific requirement: 2 CFR, Part 200, 200.303 requires an auditee to establish and maintain effective internal controls over federal awards to ensure compliance with federal statutes, regulations and terms and conditions of the federal award. 2 CFR Part 200.403 (g) states that costs must be adequately documented to be allowable under federal awards. Condition: We identified that the District’s internal controls were not designed to ensure proper documentation of the time charged to the grant is maintained. Questioned Costs: $85,252. These identified costs along with the projection of additionally likely questioned costs over the unsampled population resulted in likely questioned costs exceeding program materiality. Context: 20 of the 40 transactions tested, no documentation of time and effort was provided. In addition, 15 of 40 transactions, the documentation of time and effort lacked appropriate approval. Cause: Procedures were not in place to ensure the proper documentation of the time and effort for related payroll charged to the was grant were maintained. Effect: The salaries charged are subject to disallowance and are considered questioned costs. Recommendation: We recommend management review their policies and procedures in place to ensure salaries charged to the grants are appropriate and necessary supporting documentation of time and effort is maintained. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: Department of Education Federal Program: Special Education Cluster Pass-Through Agency: Massachusetts State Department of Elementary and Secondary Education Pass-Through Number(s): Various – See Schedule of Expenditures of Federal Awards Assistance Listing Numbers: 84.027, 84.173 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Qualified Opinion) Compliance Requirement: Allowable Costs/Cost Principles Criteria or specific requirement: 2 CFR, Part 200, 200.303 requires an auditee to establish and maintain effective internal controls over federal awards to ensure compliance with federal statutes, regulations and terms and conditions of the federal award. 2 CFR Part 200.403 (g) states that costs must be adequately documented to be allowable under federal awards. Condition: We identified that the District’s internal controls were not designed to ensure proper documentation of the time charged to the grant is maintained. Questioned Costs: $85,252. These identified costs along with the projection of additionally likely questioned costs over the unsampled population resulted in likely questioned costs exceeding program materiality. Context: 20 of the 40 transactions tested, no documentation of time and effort was provided. In addition, 15 of 40 transactions, the documentation of time and effort lacked appropriate approval. Cause: Procedures were not in place to ensure the proper documentation of the time and effort for related payroll charged to the was grant were maintained. Effect: The salaries charged are subject to disallowance and are considered questioned costs. Recommendation: We recommend management review their policies and procedures in place to ensure salaries charged to the grants are appropriate and necessary supporting documentation of time and effort is maintained. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: Department of Education Federal Program: Special Education Cluster Pass-Through Agency: Massachusetts State Department of Elementary and Secondary Education Pass-Through Number(s): Various – See Schedule of Expenditures of Federal Awards Assistance Listing Numbers: 84.027, 84.173 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Qualified Opinion) Compliance Requirement: Allowable Costs/Cost Principles Criteria or specific requirement: 2 CFR, Part 200, 200.303 requires an auditee to establish and maintain effective internal controls over federal awards to ensure compliance with federal statutes, regulations and terms and conditions of the federal award. 2 CFR Part 200.403 (g) states that costs must be adequately documented to be allowable under federal awards. Condition: We identified that the District’s internal controls were not designed to ensure proper documentation of the time charged to the grant is maintained. Questioned Costs: $85,252. These identified costs along with the projection of additionally likely questioned costs over the unsampled population resulted in likely questioned costs exceeding program materiality. Context: 20 of the 40 transactions tested, no documentation of time and effort was provided. In addition, 15 of 40 transactions, the documentation of time and effort lacked appropriate approval. Cause: Procedures were not in place to ensure the proper documentation of the time and effort for related payroll charged to the was grant were maintained. Effect: The salaries charged are subject to disallowance and are considered questioned costs. Recommendation: We recommend management review their policies and procedures in place to ensure salaries charged to the grants are appropriate and necessary supporting documentation of time and effort is maintained. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: Department of Education Federal Program: Special Education Cluster Pass-Through Agency: Massachusetts State Department of Elementary and Secondary Education Pass-Through Number(s): Various – See Schedule of Expenditures of Federal Awards Assistance Listing Numbers: 84.027, 84.173 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Qualified Opinion) Compliance Requirement: Allowable Costs/Cost Principles Criteria or specific requirement: 2 CFR, Part 200, 200.303 requires an auditee to establish and maintain effective internal controls over federal awards to ensure compliance with federal statutes, regulations and terms and conditions of the federal award. 2 CFR Part 200.403 (g) states that costs must be adequately documented to be allowable under federal awards. Condition: We identified that the District’s internal controls were not designed to ensure proper documentation of the time charged to the grant is maintained. Questioned Costs: $85,252. These identified costs along with the projection of additionally likely questioned costs over the unsampled population resulted in likely questioned costs exceeding program materiality. Context: 20 of the 40 transactions tested, no documentation of time and effort was provided. In addition, 15 of 40 transactions, the documentation of time and effort lacked appropriate approval. Cause: Procedures were not in place to ensure the proper documentation of the time and effort for related payroll charged to the was grant were maintained. Effect: The salaries charged are subject to disallowance and are considered questioned costs. Recommendation: We recommend management review their policies and procedures in place to ensure salaries charged to the grants are appropriate and necessary supporting documentation of time and effort is maintained. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: Department of Education Federal Program: Special Education Cluster Pass-Through Agency: Massachusetts State Department of Elementary and Secondary Education Pass-Through Number(s): Various – See Schedule of Expenditures of Federal Awards Assistance Listing Numbers: 84.027, 84.173 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Qualified Opinion) Compliance Requirement: Allowable Costs/Cost Principles Criteria or specific requirement: 2 CFR, Part 200, 200.303 requires an auditee to establish and maintain effective internal controls over federal awards to ensure compliance with federal statutes, regulations and terms and conditions of the federal award. 2 CFR Part 200.403 (g) states that costs must be adequately documented to be allowable under federal awards. Condition: We identified that the District’s internal controls were not designed to ensure proper documentation of the time charged to the grant is maintained. Questioned Costs: $85,252. These identified costs along with the projection of additionally likely questioned costs over the unsampled population resulted in likely questioned costs exceeding program materiality. Context: 20 of the 40 transactions tested, no documentation of time and effort was provided. In addition, 15 of 40 transactions, the documentation of time and effort lacked appropriate approval. Cause: Procedures were not in place to ensure the proper documentation of the time and effort for related payroll charged to the was grant were maintained. Effect: The salaries charged are subject to disallowance and are considered questioned costs. Recommendation: We recommend management review their policies and procedures in place to ensure salaries charged to the grants are appropriate and necessary supporting documentation of time and effort is maintained. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: Department of Education Federal Program: Special Education Cluster Pass-Through Agency: Massachusetts State Department of Elementary and Secondary Education Pass-Through Number(s): Various – See Schedule of Expenditures of Federal Awards Assistance Listing Numbers: 84.027, 84.173 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Qualified Opinion) Compliance Requirement: Allowable Costs/Cost Principles Criteria or specific requirement: 2 CFR, Part 200, 200.303 requires an auditee to establish and maintain effective internal controls over federal awards to ensure compliance with federal statutes, regulations and terms and conditions of the federal award. 2 CFR Part 200.403 (g) states that costs must be adequately documented to be allowable under federal awards. Condition: We identified that the District’s internal controls were not designed to ensure proper documentation of the time charged to the grant is maintained. Questioned Costs: $85,252. These identified costs along with the projection of additionally likely questioned costs over the unsampled population resulted in likely questioned costs exceeding program materiality. Context: 20 of the 40 transactions tested, no documentation of time and effort was provided. In addition, 15 of 40 transactions, the documentation of time and effort lacked appropriate approval. Cause: Procedures were not in place to ensure the proper documentation of the time and effort for related payroll charged to the was grant were maintained. Effect: The salaries charged are subject to disallowance and are considered questioned costs. Recommendation: We recommend management review their policies and procedures in place to ensure salaries charged to the grants are appropriate and necessary supporting documentation of time and effort is maintained. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: Department of Education Federal Program: Special Education Cluster Pass-Through Agency: Massachusetts State Department of Elementary and Secondary Education Pass-Through Number(s): Various – See Schedule of Expenditures of Federal Awards Assistance Listing Numbers: 84.027, 84.173 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Qualified Opinion) Compliance Requirement: Allowable Costs/Cost Principles Criteria or specific requirement: 2 CFR, Part 200, 200.303 requires an auditee to establish and maintain effective internal controls over federal awards to ensure compliance with federal statutes, regulations and terms and conditions of the federal award. 2 CFR Part 200.403 (g) states that costs must be adequately documented to be allowable under federal awards. Condition: We identified that the District’s internal controls were not designed to ensure proper documentation of the time charged to the grant is maintained. Questioned Costs: $85,252. These identified costs along with the projection of additionally likely questioned costs over the unsampled population resulted in likely questioned costs exceeding program materiality. Context: 20 of the 40 transactions tested, no documentation of time and effort was provided. In addition, 15 of 40 transactions, the documentation of time and effort lacked appropriate approval. Cause: Procedures were not in place to ensure the proper documentation of the time and effort for related payroll charged to the was grant were maintained. Effect: The salaries charged are subject to disallowance and are considered questioned costs. Recommendation: We recommend management review their policies and procedures in place to ensure salaries charged to the grants are appropriate and necessary supporting documentation of time and effort is maintained. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: Department of Education Federal Program: Special Education Cluster Pass-Through Agency: Massachusetts State Department of Elementary and Secondary Education Pass-Through Number(s): Various – See Schedule of Expenditures of Federal Awards Assistance Listing Numbers: 84.027, 84.173 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Qualified Opinion) Compliance Requirement: Allowable Costs/Cost Principles Criteria or specific requirement: 2 CFR, Part 200, 200.303 requires an auditee to establish and maintain effective internal controls over federal awards to ensure compliance with federal statutes, regulations and terms and conditions of the federal award. 2 CFR Part 200.403 (g) states that costs must be adequately documented to be allowable under federal awards. Condition: We identified that the District’s internal controls were not designed to ensure proper documentation of the time charged to the grant is maintained. Questioned Costs: $85,252. These identified costs along with the projection of additionally likely questioned costs over the unsampled population resulted in likely questioned costs exceeding program materiality. Context: 20 of the 40 transactions tested, no documentation of time and effort was provided. In addition, 15 of 40 transactions, the documentation of time and effort lacked appropriate approval. Cause: Procedures were not in place to ensure the proper documentation of the time and effort for related payroll charged to the was grant were maintained. Effect: The salaries charged are subject to disallowance and are considered questioned costs. Recommendation: We recommend management review their policies and procedures in place to ensure salaries charged to the grants are appropriate and necessary supporting documentation of time and effort is maintained. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: Department of Education Federal Program: Special Education Cluster Pass-Through Agency: Massachusetts State Department of Elementary and Secondary Education Pass-Through Number(s): Various – See Schedule of Expenditures of Federal Awards Assistance Listing Numbers: 84.027, 84.173 Type of Finding: • Significant Deficiency in Internal Control Over Compliance Compliance Requirement: Allowable Costs/Cost Principles Criteria or specific requirement: 2 CFR, Part 200, 200.303 requires an auditee to establish and maintain effective internal controls over federal awards to ensure compliance with federal statutes, regulations and terms and conditions of the federal award. 2 CFR Part 200.403 (g) states that costs must be adequately documented to be allowable under federal awards. Condition: The District charged costs to the program which were not properly approved. Questioned Costs: None. Context: For 2 of 40 transactions selected for testing, the District was unable to provide documentation of supervisory review and approval prior to issuance of payment. Cause: The District’s procedures were not sufficient to ensure that payments were reviewed and approved prior to issuance of payment. Effect: Unallowable costs could be charged to the program if disbursements are not reviewed by a supervisor who is knowledgeable of program regulations regarding allowable costs. Recommendation: We recommend the District reviews and enhances its procedures and controls regarding payment processing to ensure that, prior to charging costs to the program, they are reviewed by a supervisor who is knowledgeable of the regulations regarding allowable program costs and that documentation of the review is maintained. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: Department of Education Federal Program: Special Education Cluster Pass-Through Agency: Massachusetts State Department of Elementary and Secondary Education Pass-Through Number(s): Various – See Schedule of Expenditures of Federal Awards Assistance Listing Numbers: 84.027, 84.173 Type of Finding: • Significant Deficiency in Internal Control Over Compliance Compliance Requirement: Allowable Costs/Cost Principles Criteria or specific requirement: 2 CFR, Part 200, 200.303 requires an auditee to establish and maintain effective internal controls over federal awards to ensure compliance with federal statutes, regulations and terms and conditions of the federal award. 2 CFR Part 200.403 (g) states that costs must be adequately documented to be allowable under federal awards. Condition: The District charged costs to the program which were not properly approved. Questioned Costs: None. Context: For 2 of 40 transactions selected for testing, the District was unable to provide documentation of supervisory review and approval prior to issuance of payment. Cause: The District’s procedures were not sufficient to ensure that payments were reviewed and approved prior to issuance of payment. Effect: Unallowable costs could be charged to the program if disbursements are not reviewed by a supervisor who is knowledgeable of program regulations regarding allowable costs. Recommendation: We recommend the District reviews and enhances its procedures and controls regarding payment processing to ensure that, prior to charging costs to the program, they are reviewed by a supervisor who is knowledgeable of the regulations regarding allowable program costs and that documentation of the review is maintained. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: Department of Education Federal Program: Special Education Cluster Pass-Through Agency: Massachusetts State Department of Elementary and Secondary Education Pass-Through Number(s): Various – See Schedule of Expenditures of Federal Awards Assistance Listing Numbers: 84.027, 84.173 Type of Finding: • Significant Deficiency in Internal Control Over Compliance Compliance Requirement: Allowable Costs/Cost Principles Criteria or specific requirement: 2 CFR, Part 200, 200.303 requires an auditee to establish and maintain effective internal controls over federal awards to ensure compliance with federal statutes, regulations and terms and conditions of the federal award. 2 CFR Part 200.403 (g) states that costs must be adequately documented to be allowable under federal awards. Condition: The District charged costs to the program which were not properly approved. Questioned Costs: None. Context: For 2 of 40 transactions selected for testing, the District was unable to provide documentation of supervisory review and approval prior to issuance of payment. Cause: The District’s procedures were not sufficient to ensure that payments were reviewed and approved prior to issuance of payment. Effect: Unallowable costs could be charged to the program if disbursements are not reviewed by a supervisor who is knowledgeable of program regulations regarding allowable costs. Recommendation: We recommend the District reviews and enhances its procedures and controls regarding payment processing to ensure that, prior to charging costs to the program, they are reviewed by a supervisor who is knowledgeable of the regulations regarding allowable program costs and that documentation of the review is maintained. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: Department of Education Federal Program: Special Education Cluster Pass-Through Agency: Massachusetts State Department of Elementary and Secondary Education Pass-Through Number(s): Various – See Schedule of Expenditures of Federal Awards Assistance Listing Numbers: 84.027, 84.173 Type of Finding: • Significant Deficiency in Internal Control Over Compliance Compliance Requirement: Allowable Costs/Cost Principles Criteria or specific requirement: 2 CFR, Part 200, 200.303 requires an auditee to establish and maintain effective internal controls over federal awards to ensure compliance with federal statutes, regulations and terms and conditions of the federal award. 2 CFR Part 200.403 (g) states that costs must be adequately documented to be allowable under federal awards. Condition: The District charged costs to the program which were not properly approved. Questioned Costs: None. Context: For 2 of 40 transactions selected for testing, the District was unable to provide documentation of supervisory review and approval prior to issuance of payment. Cause: The District’s procedures were not sufficient to ensure that payments were reviewed and approved prior to issuance of payment. Effect: Unallowable costs could be charged to the program if disbursements are not reviewed by a supervisor who is knowledgeable of program regulations regarding allowable costs. Recommendation: We recommend the District reviews and enhances its procedures and controls regarding payment processing to ensure that, prior to charging costs to the program, they are reviewed by a supervisor who is knowledgeable of the regulations regarding allowable program costs and that documentation of the review is maintained. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: Department of Education Federal Program: Special Education Cluster Pass-Through Agency: Massachusetts State Department of Elementary and Secondary Education Pass-Through Number(s): Various – See Schedule of Expenditures of Federal Awards Assistance Listing Numbers: 84.027, 84.173 Type of Finding: • Significant Deficiency in Internal Control Over Compliance Compliance Requirement: Allowable Costs/Cost Principles Criteria or specific requirement: 2 CFR, Part 200, 200.303 requires an auditee to establish and maintain effective internal controls over federal awards to ensure compliance with federal statutes, regulations and terms and conditions of the federal award. 2 CFR Part 200.403 (g) states that costs must be adequately documented to be allowable under federal awards. Condition: The District charged costs to the program which were not properly approved. Questioned Costs: None. Context: For 2 of 40 transactions selected for testing, the District was unable to provide documentation of supervisory review and approval prior to issuance of payment. Cause: The District’s procedures were not sufficient to ensure that payments were reviewed and approved prior to issuance of payment. Effect: Unallowable costs could be charged to the program if disbursements are not reviewed by a supervisor who is knowledgeable of program regulations regarding allowable costs. Recommendation: We recommend the District reviews and enhances its procedures and controls regarding payment processing to ensure that, prior to charging costs to the program, they are reviewed by a supervisor who is knowledgeable of the regulations regarding allowable program costs and that documentation of the review is maintained. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: Department of Education Federal Program: Special Education Cluster Pass-Through Agency: Massachusetts State Department of Elementary and Secondary Education Pass-Through Number(s): Various – See Schedule of Expenditures of Federal Awards Assistance Listing Numbers: 84.027, 84.173 Type of Finding: • Significant Deficiency in Internal Control Over Compliance Compliance Requirement: Allowable Costs/Cost Principles Criteria or specific requirement: 2 CFR, Part 200, 200.303 requires an auditee to establish and maintain effective internal controls over federal awards to ensure compliance with federal statutes, regulations and terms and conditions of the federal award. 2 CFR Part 200.403 (g) states that costs must be adequately documented to be allowable under federal awards. Condition: The District charged costs to the program which were not properly approved. Questioned Costs: None. Context: For 2 of 40 transactions selected for testing, the District was unable to provide documentation of supervisory review and approval prior to issuance of payment. Cause: The District’s procedures were not sufficient to ensure that payments were reviewed and approved prior to issuance of payment. Effect: Unallowable costs could be charged to the program if disbursements are not reviewed by a supervisor who is knowledgeable of program regulations regarding allowable costs. Recommendation: We recommend the District reviews and enhances its procedures and controls regarding payment processing to ensure that, prior to charging costs to the program, they are reviewed by a supervisor who is knowledgeable of the regulations regarding allowable program costs and that documentation of the review is maintained. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: Department of Education Federal Program: Special Education Cluster Pass-Through Agency: Massachusetts State Department of Elementary and Secondary Education Pass-Through Number(s): Various – See Schedule of Expenditures of Federal Awards Assistance Listing Numbers: 84.027, 84.173 Type of Finding: • Significant Deficiency in Internal Control Over Compliance Compliance Requirement: Allowable Costs/Cost Principles Criteria or specific requirement: 2 CFR, Part 200, 200.303 requires an auditee to establish and maintain effective internal controls over federal awards to ensure compliance with federal statutes, regulations and terms and conditions of the federal award. 2 CFR Part 200.403 (g) states that costs must be adequately documented to be allowable under federal awards. Condition: The District charged costs to the program which were not properly approved. Questioned Costs: None. Context: For 2 of 40 transactions selected for testing, the District was unable to provide documentation of supervisory review and approval prior to issuance of payment. Cause: The District’s procedures were not sufficient to ensure that payments were reviewed and approved prior to issuance of payment. Effect: Unallowable costs could be charged to the program if disbursements are not reviewed by a supervisor who is knowledgeable of program regulations regarding allowable costs. Recommendation: We recommend the District reviews and enhances its procedures and controls regarding payment processing to ensure that, prior to charging costs to the program, they are reviewed by a supervisor who is knowledgeable of the regulations regarding allowable program costs and that documentation of the review is maintained. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: Department of Education Federal Program: Special Education Cluster Pass-Through Agency: Massachusetts State Department of Elementary and Secondary Education Pass-Through Number(s): Various – See Schedule of Expenditures of Federal Awards Assistance Listing Numbers: 84.027, 84.173 Type of Finding: • Significant Deficiency in Internal Control Over Compliance Compliance Requirement: Allowable Costs/Cost Principles Criteria or specific requirement: 2 CFR, Part 200, 200.303 requires an auditee to establish and maintain effective internal controls over federal awards to ensure compliance with federal statutes, regulations and terms and conditions of the federal award. 2 CFR Part 200.403 (g) states that costs must be adequately documented to be allowable under federal awards. Condition: The District charged costs to the program which were not properly approved. Questioned Costs: None. Context: For 2 of 40 transactions selected for testing, the District was unable to provide documentation of supervisory review and approval prior to issuance of payment. Cause: The District’s procedures were not sufficient to ensure that payments were reviewed and approved prior to issuance of payment. Effect: Unallowable costs could be charged to the program if disbursements are not reviewed by a supervisor who is knowledgeable of program regulations regarding allowable costs. Recommendation: We recommend the District reviews and enhances its procedures and controls regarding payment processing to ensure that, prior to charging costs to the program, they are reviewed by a supervisor who is knowledgeable of the regulations regarding allowable program costs and that documentation of the review is maintained. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: Department of Education Federal Program: Special Education Cluster Pass-Through Agency: Massachusetts State Department of Elementary and Secondary Education Pass-Through Number(s): Various – See Schedule of Expenditures of Federal Awards Assistance Listing Numbers: 84.027, 84.173 Type of Finding: • Significant Deficiency in Internal Control Over Compliance Compliance Requirement: Allowable Costs/Cost Principles Criteria or specific requirement: 2 CFR, Part 200, 200.303 requires an auditee to establish and maintain effective internal controls over federal awards to ensure compliance with federal statutes, regulations and terms and conditions of the federal award. 2 CFR Part 200.403 (g) states that costs must be adequately documented to be allowable under federal awards. Condition: The District charged costs to the program which were not properly approved. Questioned Costs: None. Context: For 2 of 40 transactions selected for testing, the District was unable to provide documentation of supervisory review and approval prior to issuance of payment. Cause: The District’s procedures were not sufficient to ensure that payments were reviewed and approved prior to issuance of payment. Effect: Unallowable costs could be charged to the program if disbursements are not reviewed by a supervisor who is knowledgeable of program regulations regarding allowable costs. Recommendation: We recommend the District reviews and enhances its procedures and controls regarding payment processing to ensure that, prior to charging costs to the program, they are reviewed by a supervisor who is knowledgeable of the regulations regarding allowable program costs and that documentation of the review is maintained. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: Department of Education Federal Program: Special Education Cluster Pass-Through Agency: Massachusetts State Department of Elementary and Secondary Education Pass-Through Number(s): Various – See Schedule of Expenditures of Federal Awards Assistance Listing Numbers: 84.027, 84.173 Type of Finding: • Significant Deficiency in Internal Control Over Compliance Compliance Requirement: Allowable Costs/Cost Principles Criteria or specific requirement: 2 CFR, Part 200, 200.303 requires an auditee to establish and maintain effective internal controls over federal awards to ensure compliance with federal statutes, regulations and terms and conditions of the federal award. 2 CFR Part 200.403 (g) states that costs must be adequately documented to be allowable under federal awards. Condition: The District charged costs to the program which were not properly approved. Questioned Costs: None. Context: For 2 of 40 transactions selected for testing, the District was unable to provide documentation of supervisory review and approval prior to issuance of payment. Cause: The District’s procedures were not sufficient to ensure that payments were reviewed and approved prior to issuance of payment. Effect: Unallowable costs could be charged to the program if disbursements are not reviewed by a supervisor who is knowledgeable of program regulations regarding allowable costs. Recommendation: We recommend the District reviews and enhances its procedures and controls regarding payment processing to ensure that, prior to charging costs to the program, they are reviewed by a supervisor who is knowledgeable of the regulations regarding allowable program costs and that documentation of the review is maintained. Views of responsible officials: There is no disagreement with the audit finding.
CRITERIA Campus management is responsible for establishing and maintaining internal controls over disbursements that are adequate to ensure that all financial activities are properly processed and reported. Additionally, the Campus is required, except where otherwise authorized by statute, to ensure costs meet the general criteria outlined in 2 CFR 200.403 in order to be allowable under federal awards, including the costs be necessary and reasonable for the performance of the federal award and be allocable thereto under these principles. The Single Audit Reporting Package must have a report date nine months after fiscal year-end. CONDITION The Campus did not follow its Board adopted policies for federal regulations regarding disbursements to ensure all financial activities were properly processed, recorded in the appropriate fiscal year, and supported. The Campus did not provide all of the audit information for fiscal year 2021-22 in a timely manner to allow sufficient time for the audit to be completed by the deadline. CAUSE The Campus has not implemented controls over disbursement transactions. In addition, documentation was not always maintained. EFFECT The Campus was not in compliance with Board adopted policies for federal regulations and guidelines. CONTEXT The following items were noted during our review of disbursement transactions: For four of 40 disbursements reviewed, supporting documentation was not maintained. The Campus did not maintain credit card statements for all credit cards. The Campus did not maintain a complete list of credit card users to ensure possession was monitored. For six of 40 disbursements reviewed, dual signatures were not obtained when issuing the check.
CRITERIA Campus management is responsible for establishing and maintaining internal controls over disbursements that are adequate to ensure that all financial activities are properly processed and reported. Additionally, the Campus is required, except where otherwise authorized by statute, to ensure costs meet the general criteria outlined in 2 CFR 200.403 in order to be allowable under federal awards, including the costs be necessary and reasonable for the performance of the federal award and be allocable thereto under these principles. The Single Audit Reporting Package must have a report date nine months after fiscal year-end. CONDITION The Campus did not follow its Board adopted policies for federal regulations regarding disbursements to ensure all financial activities were properly processed, recorded in the appropriate fiscal year, and supported. The Campus did not provide all of the audit information for fiscal year 2021-22 in a timely manner to allow sufficient time for the audit to be completed by the deadline. CAUSE The Campus has not implemented controls over disbursement transactions. In addition, documentation was not always maintained. EFFECT The Campus was not in compliance with Board adopted policies for federal regulations and guidelines. CONTEXT The following items were noted during our review of disbursement transactions: For four of 40 disbursements reviewed, supporting documentation was not maintained. The Campus did not maintain credit card statements for all credit cards. The Campus did not maintain a complete list of credit card users to ensure possession was monitored. For six of 40 disbursements reviewed, dual signatures were not obtained when issuing the check.
Information on Federal Program(s) - Department of Health and Human Services, Assistance Listing Number 93.498 COVID-19 - Provider Relief Fund and American Rescue Plan Rural Distribution, Schedule of Expenditures of Federal Awards Reporting Periods 2 and 3, Agency Fiscal Year-Ended June 30, 2022. Criteria – The Code of Federal Regulations Section 200.403(g) states that for costs to be allowable under Federal awards, they must be adequately documented. Pursuant to 2 CFR section 200.303(a), the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition – During our testing of direct expenditures, we noted the following exceptions: • Two of the sixty expenditures sampled did not have necessary approvals. The original invoices with approvals could not be found, however we were able to determine that the invoices were properly recorded to the general ledger. • Two of the sixty expenditures sampled did not have adequate supporting documentation. • Two of the sixty expenditures had supporting documentation that was coded to cost centers and/or accounts that were inconsistent with what was recorded in the general ledger. However, the actual postings to the general ledger were recorded to the correct cost centers and/or accounts. Cause - Policies and procedures were not appropriately adhered to in certain instances to ensure that supporting documentation was maintained correctly to evidence that costs were allowable and that an appropriate level of review and approval was completed prior to charging costs to a federal program. Effect or Potential Effect - We were unable to confirm the allowability, validity, or completeness of the two expenses lacking supporting documentation that were claimed as federal expenditures. Questioned Costs – Likely questioned costs were projected to be less than $25,000 based on the sampling procedures that were performed. Context – We tested a sample of forty direct expense transactions using a statistically valid sample and found four exceptions relating to the absence of supporting documentation and/or necessary approvals. At that point, a significant deficiency was raised and we revised our risk assessment over compliance and determined it to be high risk. We then selected an additional twenty direct expense transactions using a statistically valid sample and found two additional exceptions relating to improper adherence to certain activity level controls, however, no additional compliance deviations were identified. Views of Responsible Officials – The nature of the COVID emergency, and local shutdown orders, as well as the timing of the funding made available to prevent the viruses spread, challenged long established and effective internal control procedures. In response the Agency, under the direction of the Controller, created emergency overrides to existing protocols to be administered within the accounting department that in the cases above were not documented as they would have been under non-emergency circumstances. In order to mitigate the possible impact of these emergency overrides a detailed review for reasonableness of all items funded with the funds appropriated was performed by the Controller prior to the completion of the audit. Internal control procedures for use in future emergency situations will be developed that will address the deficiencies or challenges identified above. Recommendation - We recommend that the Agency ensure its policies and procedures are followed on a consistent basis and for emergency situations, have alternative policies and procedures that can be implemented without delay.
Finding 2022-004 Lack of Internal Controls over Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: Office of Naval Research Federal Program: Office of Naval Research Technology and Innovation Development in Alaska ALN Number: 12.300 Award Number: N00014-19-1-2030 Award Years: 2022 Type of Finding: Material Weakness over compliance and noncompliance Criteria: 2 CFR Part 200.403.g states that costs must be adequately documented in order to be allowable under Federal awards. Condition and Context: There was not an adequate system in place to track the payroll costs charged to this program. The client was unable to provide support for the salary expenses charged to this program, or support for which employees were eligible to be paid from this award, making it impossible to test transactions for allowable costs. Cause: Lack of internal control over allowable payroll transactions charged to the major program. Repeat Finding: This is not a repeat finding. Effect: The lack of supporting documentation allows for the potential for misstatement of expenditures due to employees being incorrectly charged to funding sources for which their payroll is an unallowable cost. Questioned Costs: The total amount of salary and fringe expenditures charged to the program was $749,570. Recommendation: We recommend that Launch Alaska begins to maintain documentation for employees eligible to charge to various programs, as well as maintaining documentation for tracking the payroll costs charged to each program. Management Response: Management concurs with this finding. See Corrective Action Plan.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Federal Communications Commission AL Number and Title: COVID-19 – 32.009 – Emergency Connectivity Fund Federal Award Number: ECF202105452 (Year: 2022) Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D210012 (Year: 2021) Questioned Costs: $63,399 Description: A review of expenditures charged to the Emergency Connectivity Fund and Elementary and Secondary School Emergency Relief Fund programs revealed that the School District’s internal control procedures were not operating appropriately to ensure that expenditures were allowable. Background Information: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. Additionally, Congress established the Emergency Connectivity Fund (ECF) through the American Rescue Plan Act and appropriated $7.2 billion for the purchase of eligible equipment, advanced telecommunications, and information services for use by students, school staff, and library patrons at locations that include locations other than at a school or library. The ECF program provides funding to meet the remote learning needs of students, school staff, and library patrons who would otherwise lack access to connected devices and broadband connections sufficient to engage in remote learning during the COVID-19 emergency period. ECF funds totaling $491,994.00 and ESSER funds totaling $3,963,756.96 were expended and reported on the Jeff Davis County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (f) Not be included as a cost or used to meet the cost sharing or matching requirements of any other federally-financed program in either the current or a prior period, (g) Be adequately documented…” Furthermore, provisions included in Title 47 CFR Section 54.1712 – Duplicate Support state that “Entities participating in the Emergency Connectivity Fund may not seek Emergency Connectivity Fund support or reimbursement for eligible equipment or services that have been purchased with or reimbursed in full from other Federal pandemic-relief funding, targeted state funding, other external sources of targeted funding or targeted gifts, or eligible for discounts from the schools and libraries universal service support mechanism or other universal service support mechanisms.” Condition: All expenditures related to the ECF program were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. It was noted that expenditures for electronic devices totaling $63,399 were approved through the budget process and recorded under the ESSER program. Upon further review, it was noted that reimbursement was requested and received through the ECF program during fiscal year 2022 and the ESSER program after year-end. Additionally, a refund of such funding had not been processed for either of the programs until the issue was pointed out by auditors. Therefore, duplicate federal funding was received for the same expenditure. Questioned Costs: Known questioned costs of $63,399 were identified for expenditures that were reimbursed through both the ECF and ESSER programs. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: In discussing these deficiencies with management, they stated that these expenditures were initially charged to the ESSER program on the general ledger. However, the director over the ECF program was unaware of this and submitted and received reimbursement through the ECF program, as well. Once this occurred, the duplicate expenditures were not removed from the ESSER program, and ESSER funding was requested in the subsequent period. Effect: The School District is not in compliance with the Uniform Guidance, the U.S. Federal Communications Commission guidance related to the ECF program, and the U.S. Department of Education guidance related to the ESSER program. Failure to ensure that appropriate controls exist to support the allowability of payments from federal programs may expose the School District to unnecessary financial strains and shortages as the grantor and/or pass-through entity may require the School District to return funds associated with the unallowable expenditures. Recommendation: The School District should review current internal control procedures related to federal program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that duplicate reimbursements are not sought from multiple federal programs for the same expenditure. Additionally, as discussed with management, the School District has initiated a refund in the amount of $63,399 to the ESSER program. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Federal Communications Commission AL Number and Title: COVID-19 – 32.009 – Emergency Connectivity Fund Federal Award Number: ECF202105452 (Year: 2022) Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D210012 (Year: 2021) Questioned Costs: $63,399 Description: A review of expenditures charged to the Emergency Connectivity Fund and Elementary and Secondary School Emergency Relief Fund programs revealed that the School District’s internal control procedures were not operating appropriately to ensure that expenditures were allowable. Background Information: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. Additionally, Congress established the Emergency Connectivity Fund (ECF) through the American Rescue Plan Act and appropriated $7.2 billion for the purchase of eligible equipment, advanced telecommunications, and information services for use by students, school staff, and library patrons at locations that include locations other than at a school or library. The ECF program provides funding to meet the remote learning needs of students, school staff, and library patrons who would otherwise lack access to connected devices and broadband connections sufficient to engage in remote learning during the COVID-19 emergency period. ECF funds totaling $491,994.00 and ESSER funds totaling $3,963,756.96 were expended and reported on the Jeff Davis County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (f) Not be included as a cost or used to meet the cost sharing or matching requirements of any other federally-financed program in either the current or a prior period, (g) Be adequately documented…” Furthermore, provisions included in Title 47 CFR Section 54.1712 – Duplicate Support state that “Entities participating in the Emergency Connectivity Fund may not seek Emergency Connectivity Fund support or reimbursement for eligible equipment or services that have been purchased with or reimbursed in full from other Federal pandemic-relief funding, targeted state funding, other external sources of targeted funding or targeted gifts, or eligible for discounts from the schools and libraries universal service support mechanism or other universal service support mechanisms.” Condition: All expenditures related to the ECF program were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. It was noted that expenditures for electronic devices totaling $63,399 were approved through the budget process and recorded under the ESSER program. Upon further review, it was noted that reimbursement was requested and received through the ECF program during fiscal year 2022 and the ESSER program after year-end. Additionally, a refund of such funding had not been processed for either of the programs until the issue was pointed out by auditors. Therefore, duplicate federal funding was received for the same expenditure. Questioned Costs: Known questioned costs of $63,399 were identified for expenditures that were reimbursed through both the ECF and ESSER programs. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: In discussing these deficiencies with management, they stated that these expenditures were initially charged to the ESSER program on the general ledger. However, the director over the ECF program was unaware of this and submitted and received reimbursement through the ECF program, as well. Once this occurred, the duplicate expenditures were not removed from the ESSER program, and ESSER funding was requested in the subsequent period. Effect: The School District is not in compliance with the Uniform Guidance, the U.S. Federal Communications Commission guidance related to the ECF program, and the U.S. Department of Education guidance related to the ESSER program. Failure to ensure that appropriate controls exist to support the allowability of payments from federal programs may expose the School District to unnecessary financial strains and shortages as the grantor and/or pass-through entity may require the School District to return funds associated with the unallowable expenditures. Recommendation: The School District should review current internal control procedures related to federal program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that duplicate reimbursements are not sought from multiple federal programs for the same expenditure. Additionally, as discussed with management, the School District has initiated a refund in the amount of $63,399 to the ESSER program. Views of Responsible Officials: We concur with this finding.