Finding Number 2022-007 Prior Year Finding Number N/A Compliance Requirement: Period of Performance Program: U.S. Department of Education Special Education-Grants for Infants and Families ALN #: 84.181A Award #: 210299, 220134 Award Period: 07/01/2020 – 09/30/2021 07/01/2021 - 09/30/2022 Criteria – A non-federal entity may charge to the Federal award allowable costs incurred during the period of performance and any costs incurred before the Federal awarding agency or pass-through entity made the Federal award, only to the extent that they would have been allowable if incurred after the date of the Federal award and only with the written approval of the Federal awarding agency. A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). Condition – We sampled and selected 7 out of 21 expenditures and noted 3 expenditures were not properly reviewed. For compliance with period of performance requirements; the three transactions were incurred before the beginning of the period of performance for the respective grants. Questioned Costs – Not determinable. Context – This is a condition identified per review of the School System compliance with the specified requirements using a statistically valid sample. The known amount of the 3 transactions incurred outside the grant period amounted to $16,302. The total amount of the 7 samples selected was $52,039. The total amount of the 21 expenditures was $229,430. Effect – The School System is not in compliance with the stated provisions. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding. Cause – The School System does not appear to have adequate policies and procedures in place to ensure compliance with the required period of performance stipulations. Recommendation – We recommend that the School System strengthen its processes with respect to setting up and charging expenditures between various grant awards. We also recommend that DOE enhance its review process to properly determine the activities of each grant relative to the appropriate period of performance. Views of Responsible Officials – The School System concurs with the auditor’s findings and recommendations. The Infants and Toddlers Supervisor will conduct monthly reviews of outstanding purchase orders in Oracle, addressing issues promptly with the Business Operation Officer/Financial Analyst. The planned corrective actions are presented in the School System’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number 2022-007 Prior Year Finding Number N/A Compliance Requirement: Period of Performance Program: U.S. Department of Education Special Education-Grants for Infants and Families ALN #: 84.181A Award #: 210299, 220134 Award Period: 07/01/2020 – 09/30/2021 07/01/2021 - 09/30/2022 Criteria – A non-federal entity may charge to the Federal award allowable costs incurred during the period of performance and any costs incurred before the Federal awarding agency or pass-through entity made the Federal award, only to the extent that they would have been allowable if incurred after the date of the Federal award and only with the written approval of the Federal awarding agency. A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). Condition – We sampled and selected 7 out of 21 expenditures and noted 3 expenditures were not properly reviewed. For compliance with period of performance requirements; the three transactions were incurred before the beginning of the period of performance for the respective grants. Questioned Costs – Not determinable. Context – This is a condition identified per review of the School System compliance with the specified requirements using a statistically valid sample. The known amount of the 3 transactions incurred outside the grant period amounted to $16,302. The total amount of the 7 samples selected was $52,039. The total amount of the 21 expenditures was $229,430. Effect – The School System is not in compliance with the stated provisions. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding. Cause – The School System does not appear to have adequate policies and procedures in place to ensure compliance with the required period of performance stipulations. Recommendation – We recommend that the School System strengthen its processes with respect to setting up and charging expenditures between various grant awards. We also recommend that DOE enhance its review process to properly determine the activities of each grant relative to the appropriate period of performance. Views of Responsible Officials – The School System concurs with the auditor’s findings and recommendations. The Infants and Toddlers Supervisor will conduct monthly reviews of outstanding purchase orders in Oracle, addressing issues promptly with the Business Operation Officer/Financial Analyst. The planned corrective actions are presented in the School System’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
2022-007 – TITLE I – INADEQUATE SUPPORTING DOCUMENTATION– ALN 84.010 – SIGNIFICANT DEFICIENCY & OTHER NONCOMPLIANCE Condition We were unable to verify whether 6 of 60 expenditures totaling $7,591 were for costs allowed under the Title I grant. When projected against the total population of $1,628,283, the total projected error is $15,939. Effect Williston Basin Public School District No. 7 may have charged unallowable expenditures to the grant program. Cause Williston Basin Public School District No. 7 did not maintain support documentation for all expenditures charged to the Title I grant. In addition, there was no evidence of approval on these transactions. Criteria Uniform Guidance 2 CFR 200.303(a) states “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 be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework", issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Uniform Guidance 2 CFR 200.403(g) requires costs to be adequately documented. "Standards for Internal Control in the Federal Government" (Green Book) requires management to design, implement, and operate internal controls to achieve its objectives related to operations, reporting, and compliance. Management is to design appropriate types of control activities for the entity's internal control system. Control activities help management fulfill responsibilities and address identified risk responses in the internal control system. Questioned Costs $7,591 Repeat Finding No. Recommendation We recommend Williston Basin Public School District No. 7 maintain support to ensure all expenditures charged to the Title I grant were approved and were for costs allowed under the grant. Williston Basin Public School District No. 7’s Response See Corrective Action Plan.
Finding 2022-003Material weakness in internal controls over compliance for allowable activities and costs and material non-compliance inthe Coronavirus State and Local Fiscal Recovery Fund program.Federal Agencies: Department of Justice; Department of the TreasuryProgram Titles: Crime Victim Assistance; Coronavirus State and Local Fiscal Recovery FundAssistance Listing Numbers: 16.575; 21.027Award Numbers: 22-31219-018, 22-31310-140, 22-31219-019, F19-31219-553, 8152, DA-239Award Periods: VariousCriteriaCharges to federal awards must meet the requirements of Title 2 U.S. Code of Federal Regulations Part 200, UniformAdministrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart E - Cost Principles.Condition/Context for EvaluationDuring our audit we identified that a total of 19 of 142 transactions (79 non-payroll transactions and 63 for payrolltransactions) tested for allowable costs and activities did not meet the requirements of Title 2 U.S. Code of FederalRegulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal AwardsSubpart E - Cost Principles. Below is a disaggregation of the exceptions identified:- Thirteen of the non-payroll transactions tested did not have documentation available to support the allocationof the expense to the program in accordance with 2 CFR 200.405.- Three of the non-payroll transactions tested did not meet the reasonable and necessary criteria of 2 CFR200.403.- Two of the payroll transactions tested was charged to the federal award based upon allocations determinedbefore services were performed with no process to identify significant changes in the corresponding workactivity in accordance with 2 CFR 200.430(i).- Two of the transactions tested did not have adequate documentation to support the item of cost in accordancewith the criteria at 200.403(g).- One of the transactions tested the cost incurred represented a reimbursement for costs in excess of theallowable amount per the Organization?s policies and procedures and did not meet the criteria of 2 CFR 200.403.Our sample was not a statistical sample.Effect or Potential EffectThe Organization charged costs to the federal awards that were unallowable. Questioned CostsActual questioned costs identified during the audit totaled the amounts below by award:Assistance Pass-Through KnownListing Pass-Through Award QuestionedNumber Funder Number Costs21.027 State of Oregon Department of Administrative Services 8152 $ 1921027 King County Regional Homelessness Authority DA-239 $ 3,808CauseInternal controls were not operating effectively to ensure only allowable costs were charged to the federal awards.Repeat FindingNot applicable.RecommendationWe recommend that the Organization provide additional training to employees to ensure that controls operate effectivelyso that only allowable costs are authorized to be charged to federal awards and that record retention controls arestrengthened to ensure documentation and policies are retained to support the distribution of charges between projects.Views of Responsible Officials of AuditeeManagement agrees with the finding and has provided the accompanying corrective action plan.
Finding 2022-003Material weakness in internal controls over compliance for allowable activities and costs and material non-compliance inthe Coronavirus State and Local Fiscal Recovery Fund program.Federal Agencies: Department of Justice; Department of the TreasuryProgram Titles: Crime Victim Assistance; Coronavirus State and Local Fiscal Recovery FundAssistance Listing Numbers: 16.575; 21.027Award Numbers: 22-31219-018, 22-31310-140, 22-31219-019, F19-31219-553, 8152, DA-239Award Periods: VariousCriteriaCharges to federal awards must meet the requirements of Title 2 U.S. Code of Federal Regulations Part 200, UniformAdministrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart E - Cost Principles.Condition/Context for EvaluationDuring our audit we identified that a total of 19 of 142 transactions (79 non-payroll transactions and 63 for payrolltransactions) tested for allowable costs and activities did not meet the requirements of Title 2 U.S. Code of FederalRegulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal AwardsSubpart E - Cost Principles. Below is a disaggregation of the exceptions identified:- Thirteen of the non-payroll transactions tested did not have documentation available to support the allocationof the expense to the program in accordance with 2 CFR 200.405.- Three of the non-payroll transactions tested did not meet the reasonable and necessary criteria of 2 CFR200.403.- Two of the payroll transactions tested was charged to the federal award based upon allocations determinedbefore services were performed with no process to identify significant changes in the corresponding workactivity in accordance with 2 CFR 200.430(i).- Two of the transactions tested did not have adequate documentation to support the item of cost in accordancewith the criteria at 200.403(g).- One of the transactions tested the cost incurred represented a reimbursement for costs in excess of theallowable amount per the Organization?s policies and procedures and did not meet the criteria of 2 CFR 200.403.Our sample was not a statistical sample.Effect or Potential EffectThe Organization charged costs to the federal awards that were unallowable. Questioned CostsActual questioned costs identified during the audit totaled the amounts below by award:Assistance Pass-Through KnownListing Pass-Through Award QuestionedNumber Funder Number Costs21.027 State of Oregon Department of Administrative Services 8152 $ 1921027 King County Regional Homelessness Authority DA-239 $ 3,808CauseInternal controls were not operating effectively to ensure only allowable costs were charged to the federal awards.Repeat FindingNot applicable.RecommendationWe recommend that the Organization provide additional training to employees to ensure that controls operate effectivelyso that only allowable costs are authorized to be charged to federal awards and that record retention controls arestrengthened to ensure documentation and policies are retained to support the distribution of charges between projects.Views of Responsible Officials of AuditeeManagement agrees with the finding and has provided the accompanying corrective action plan.
Finding 2022-003Material weakness in internal controls over compliance for allowable activities and costs and material non-compliance inthe Coronavirus State and Local Fiscal Recovery Fund program.Federal Agencies: Department of Justice; Department of the TreasuryProgram Titles: Crime Victim Assistance; Coronavirus State and Local Fiscal Recovery FundAssistance Listing Numbers: 16.575; 21.027Award Numbers: 22-31219-018, 22-31310-140, 22-31219-019, F19-31219-553, 8152, DA-239Award Periods: VariousCriteriaCharges to federal awards must meet the requirements of Title 2 U.S. Code of Federal Regulations Part 200, UniformAdministrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart E - Cost Principles.Condition/Context for EvaluationDuring our audit we identified that a total of 19 of 142 transactions (79 non-payroll transactions and 63 for payrolltransactions) tested for allowable costs and activities did not meet the requirements of Title 2 U.S. Code of FederalRegulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal AwardsSubpart E - Cost Principles. Below is a disaggregation of the exceptions identified:- Thirteen of the non-payroll transactions tested did not have documentation available to support the allocationof the expense to the program in accordance with 2 CFR 200.405.- Three of the non-payroll transactions tested did not meet the reasonable and necessary criteria of 2 CFR200.403.- Two of the payroll transactions tested was charged to the federal award based upon allocations determinedbefore services were performed with no process to identify significant changes in the corresponding workactivity in accordance with 2 CFR 200.430(i).- Two of the transactions tested did not have adequate documentation to support the item of cost in accordancewith the criteria at 200.403(g).- One of the transactions tested the cost incurred represented a reimbursement for costs in excess of theallowable amount per the Organization?s policies and procedures and did not meet the criteria of 2 CFR 200.403.Our sample was not a statistical sample.Effect or Potential EffectThe Organization charged costs to the federal awards that were unallowable. Questioned CostsActual questioned costs identified during the audit totaled the amounts below by award:Assistance Pass-Through KnownListing Pass-Through Award QuestionedNumber Funder Number Costs21.027 State of Oregon Department of Administrative Services 8152 $ 1921027 King County Regional Homelessness Authority DA-239 $ 3,808CauseInternal controls were not operating effectively to ensure only allowable costs were charged to the federal awards.Repeat FindingNot applicable.RecommendationWe recommend that the Organization provide additional training to employees to ensure that controls operate effectivelyso that only allowable costs are authorized to be charged to federal awards and that record retention controls arestrengthened to ensure documentation and policies are retained to support the distribution of charges between projects.Views of Responsible Officials of AuditeeManagement agrees with the finding and has provided the accompanying corrective action plan.
Finding 2022-003Material weakness in internal controls over compliance for allowable activities and costs and material non-compliance inthe Coronavirus State and Local Fiscal Recovery Fund program.Federal Agencies: Department of Justice; Department of the TreasuryProgram Titles: Crime Victim Assistance; Coronavirus State and Local Fiscal Recovery FundAssistance Listing Numbers: 16.575; 21.027Award Numbers: 22-31219-018, 22-31310-140, 22-31219-019, F19-31219-553, 8152, DA-239Award Periods: VariousCriteriaCharges to federal awards must meet the requirements of Title 2 U.S. Code of Federal Regulations Part 200, UniformAdministrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart E - Cost Principles.Condition/Context for EvaluationDuring our audit we identified that a total of 19 of 142 transactions (79 non-payroll transactions and 63 for payrolltransactions) tested for allowable costs and activities did not meet the requirements of Title 2 U.S. Code of FederalRegulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal AwardsSubpart E - Cost Principles. Below is a disaggregation of the exceptions identified:- Thirteen of the non-payroll transactions tested did not have documentation available to support the allocationof the expense to the program in accordance with 2 CFR 200.405.- Three of the non-payroll transactions tested did not meet the reasonable and necessary criteria of 2 CFR200.403.- Two of the payroll transactions tested was charged to the federal award based upon allocations determinedbefore services were performed with no process to identify significant changes in the corresponding workactivity in accordance with 2 CFR 200.430(i).- Two of the transactions tested did not have adequate documentation to support the item of cost in accordancewith the criteria at 200.403(g).- One of the transactions tested the cost incurred represented a reimbursement for costs in excess of theallowable amount per the Organization?s policies and procedures and did not meet the criteria of 2 CFR 200.403.Our sample was not a statistical sample.Effect or Potential EffectThe Organization charged costs to the federal awards that were unallowable. Questioned CostsActual questioned costs identified during the audit totaled the amounts below by award:Assistance Pass-Through KnownListing Pass-Through Award QuestionedNumber Funder Number Costs21.027 State of Oregon Department of Administrative Services 8152 $ 1921027 King County Regional Homelessness Authority DA-239 $ 3,808CauseInternal controls were not operating effectively to ensure only allowable costs were charged to the federal awards.Repeat FindingNot applicable.RecommendationWe recommend that the Organization provide additional training to employees to ensure that controls operate effectivelyso that only allowable costs are authorized to be charged to federal awards and that record retention controls arestrengthened to ensure documentation and policies are retained to support the distribution of charges between projects.Views of Responsible Officials of AuditeeManagement agrees with the finding and has provided the accompanying corrective action plan.
Finding 2022-003Material weakness in internal controls over compliance for allowable activities and costs and material non-compliance inthe Coronavirus State and Local Fiscal Recovery Fund program.Federal Agencies: Department of Justice; Department of the TreasuryProgram Titles: Crime Victim Assistance; Coronavirus State and Local Fiscal Recovery FundAssistance Listing Numbers: 16.575; 21.027Award Numbers: 22-31219-018, 22-31310-140, 22-31219-019, F19-31219-553, 8152, DA-239Award Periods: VariousCriteriaCharges to federal awards must meet the requirements of Title 2 U.S. Code of Federal Regulations Part 200, UniformAdministrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart E - Cost Principles.Condition/Context for EvaluationDuring our audit we identified that a total of 19 of 142 transactions (79 non-payroll transactions and 63 for payrolltransactions) tested for allowable costs and activities did not meet the requirements of Title 2 U.S. Code of FederalRegulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal AwardsSubpart E - Cost Principles. Below is a disaggregation of the exceptions identified:- Thirteen of the non-payroll transactions tested did not have documentation available to support the allocationof the expense to the program in accordance with 2 CFR 200.405.- Three of the non-payroll transactions tested did not meet the reasonable and necessary criteria of 2 CFR200.403.- Two of the payroll transactions tested was charged to the federal award based upon allocations determinedbefore services were performed with no process to identify significant changes in the corresponding workactivity in accordance with 2 CFR 200.430(i).- Two of the transactions tested did not have adequate documentation to support the item of cost in accordancewith the criteria at 200.403(g).- One of the transactions tested the cost incurred represented a reimbursement for costs in excess of theallowable amount per the Organization?s policies and procedures and did not meet the criteria of 2 CFR 200.403.Our sample was not a statistical sample.Effect or Potential EffectThe Organization charged costs to the federal awards that were unallowable. Questioned CostsActual questioned costs identified during the audit totaled the amounts below by award:Assistance Pass-Through KnownListing Pass-Through Award QuestionedNumber Funder Number Costs21.027 State of Oregon Department of Administrative Services 8152 $ 1921027 King County Regional Homelessness Authority DA-239 $ 3,808CauseInternal controls were not operating effectively to ensure only allowable costs were charged to the federal awards.Repeat FindingNot applicable.RecommendationWe recommend that the Organization provide additional training to employees to ensure that controls operate effectivelyso that only allowable costs are authorized to be charged to federal awards and that record retention controls arestrengthened to ensure documentation and policies are retained to support the distribution of charges between projects.Views of Responsible Officials of AuditeeManagement agrees with the finding and has provided the accompanying corrective action plan.
Finding 2022-003Material weakness in internal controls over compliance for allowable activities and costs and material non-compliance inthe Coronavirus State and Local Fiscal Recovery Fund program.Federal Agencies: Department of Justice; Department of the TreasuryProgram Titles: Crime Victim Assistance; Coronavirus State and Local Fiscal Recovery FundAssistance Listing Numbers: 16.575; 21.027Award Numbers: 22-31219-018, 22-31310-140, 22-31219-019, F19-31219-553, 8152, DA-239Award Periods: VariousCriteriaCharges to federal awards must meet the requirements of Title 2 U.S. Code of Federal Regulations Part 200, UniformAdministrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart E - Cost Principles.Condition/Context for EvaluationDuring our audit we identified that a total of 19 of 142 transactions (79 non-payroll transactions and 63 for payrolltransactions) tested for allowable costs and activities did not meet the requirements of Title 2 U.S. Code of FederalRegulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal AwardsSubpart E - Cost Principles. Below is a disaggregation of the exceptions identified:- Thirteen of the non-payroll transactions tested did not have documentation available to support the allocationof the expense to the program in accordance with 2 CFR 200.405.- Three of the non-payroll transactions tested did not meet the reasonable and necessary criteria of 2 CFR200.403.- Two of the payroll transactions tested was charged to the federal award based upon allocations determinedbefore services were performed with no process to identify significant changes in the corresponding workactivity in accordance with 2 CFR 200.430(i).- Two of the transactions tested did not have adequate documentation to support the item of cost in accordancewith the criteria at 200.403(g).- One of the transactions tested the cost incurred represented a reimbursement for costs in excess of theallowable amount per the Organization?s policies and procedures and did not meet the criteria of 2 CFR 200.403.Our sample was not a statistical sample.Effect or Potential EffectThe Organization charged costs to the federal awards that were unallowable. Questioned CostsActual questioned costs identified during the audit totaled the amounts below by award:Assistance Pass-Through KnownListing Pass-Through Award QuestionedNumber Funder Number Costs21.027 State of Oregon Department of Administrative Services 8152 $ 1921027 King County Regional Homelessness Authority DA-239 $ 3,808CauseInternal controls were not operating effectively to ensure only allowable costs were charged to the federal awards.Repeat FindingNot applicable.RecommendationWe recommend that the Organization provide additional training to employees to ensure that controls operate effectivelyso that only allowable costs are authorized to be charged to federal awards and that record retention controls arestrengthened to ensure documentation and policies are retained to support the distribution of charges between projects.Views of Responsible Officials of AuditeeManagement agrees with the finding and has provided the accompanying corrective action plan.
2022-003 Department of Health and Human Services, Passed Through Substance Abuse andMental Health Services Administration,Section 223 Demonstration Programs to Improve Community Mental Health ServicesListing 93.829, H79SM085287, 8/31/2021 ? 8/30/2022Allowable Activities or Unallowed, Allowable Costs/Cost Principles and Cash ManagementMaterial Weakness in Internal Control over Compliance and Material NoncomplianceCriteria: Per Uniform Guidance (2 CFR Section 200.403) as it relates to federal grants:Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles;b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items;c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity;d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost;e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part;f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period;g) Be adequately documented;h) Cost must be incurred during the approved budget period. Per the grant policy manual for Department of Health and Human Services: Non-federal entities must minimize the time elapsing between any advance payment under this award and the disbursement of the funds for direct program costs.2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award.Condition: Hope could not readily provide the appropriate documentation for grant expenditures to support the drawdown from grant funding. Additionally, one of the items submitted for reimbursement under the grant, was not an allowable activity or cost in fiscal year 2022 as it was not in accordance with accounting treatment under GAAP.Hope did not adequately minimize the time between draw down of program funds and disbursement.Cause: The process used to ensure that grant expenditures are allowable and reconciled was not clearly communicated to appropriate parties. As a result, certain expenditures were inappropriately claimed in the wrong fiscal year. These expenditures were not made in a reasonable time in relation to receipt of program reimbursements.Effect: Hope is at risk for noncompliance with allowable activities and allowable costs, as well as cash management requirements.Questioned costs: $54,158 was claimed for reimbursement in the current year that did not relate to the fiscal year. Further, grant receipts of $54,158 were received in June 2022 but not disbursed until April 2023.Context: A nonstatistical sampling of 40 out of 702 total transactions were selected for testing, which accounted for $134,724 of $1,021,571 total program expenditures.Repeat FindingFrom Prior Year: NoRecommendation: Controls should be put in place to ensure that direct expenditures of program funds are reviewed and approved by program management and are consistent with the grant reimbursements for those expenditures. Such reconciliations can be done monthly, quarterly, or annually, at Hope?s discretion. Controls should also ensure that program expenditures are made prior to requesting reimbursement of funds and are allowable in accordance with the federal program requirements.Views ofResponsible Officials: We agree with the finding.
2022-003 Department of Health and Human Services, Passed Through Substance Abuse andMental Health Services Administration,Section 223 Demonstration Programs to Improve Community Mental Health ServicesListing 93.829, H79SM085287, 8/31/2021 ? 8/30/2022Allowable Activities or Unallowed, Allowable Costs/Cost Principles and Cash ManagementMaterial Weakness in Internal Control over Compliance and Material NoncomplianceCriteria: Per Uniform Guidance (2 CFR Section 200.403) as it relates to federal grants:Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles;b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items;c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity;d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost;e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part;f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period;g) Be adequately documented;h) Cost must be incurred during the approved budget period. Per the grant policy manual for Department of Health and Human Services: Non-federal entities must minimize the time elapsing between any advance payment under this award and the disbursement of the funds for direct program costs.2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award.Condition: Hope could not readily provide the appropriate documentation for grant expenditures to support the drawdown from grant funding. Additionally, one of the items submitted for reimbursement under the grant, was not an allowable activity or cost in fiscal year 2022 as it was not in accordance with accounting treatment under GAAP.Hope did not adequately minimize the time between draw down of program funds and disbursement.Cause: The process used to ensure that grant expenditures are allowable and reconciled was not clearly communicated to appropriate parties. As a result, certain expenditures were inappropriately claimed in the wrong fiscal year. These expenditures were not made in a reasonable time in relation to receipt of program reimbursements.Effect: Hope is at risk for noncompliance with allowable activities and allowable costs, as well as cash management requirements.Questioned costs: $54,158 was claimed for reimbursement in the current year that did not relate to the fiscal year. Further, grant receipts of $54,158 were received in June 2022 but not disbursed until April 2023.Context: A nonstatistical sampling of 40 out of 702 total transactions were selected for testing, which accounted for $134,724 of $1,021,571 total program expenditures.Repeat FindingFrom Prior Year: NoRecommendation: Controls should be put in place to ensure that direct expenditures of program funds are reviewed and approved by program management and are consistent with the grant reimbursements for those expenditures. Such reconciliations can be done monthly, quarterly, or annually, at Hope?s discretion. Controls should also ensure that program expenditures are made prior to requesting reimbursement of funds and are allowable in accordance with the federal program requirements.Views ofResponsible Officials: We agree with the finding.
2022-003 Department of Health and Human Services, Passed Through Substance Abuse andMental Health Services Administration,Section 223 Demonstration Programs to Improve Community Mental Health ServicesListing 93.829, H79SM085287, 8/31/2021 ? 8/30/2022Allowable Activities or Unallowed, Allowable Costs/Cost Principles and Cash ManagementMaterial Weakness in Internal Control over Compliance and Material NoncomplianceCriteria: Per Uniform Guidance (2 CFR Section 200.403) as it relates to federal grants:Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles;b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items;c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity;d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost;e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part;f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period;g) Be adequately documented;h) Cost must be incurred during the approved budget period. Per the grant policy manual for Department of Health and Human Services: Non-federal entities must minimize the time elapsing between any advance payment under this award and the disbursement of the funds for direct program costs.2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award.Condition: Hope could not readily provide the appropriate documentation for grant expenditures to support the drawdown from grant funding. Additionally, one of the items submitted for reimbursement under the grant, was not an allowable activity or cost in fiscal year 2022 as it was not in accordance with accounting treatment under GAAP.Hope did not adequately minimize the time between draw down of program funds and disbursement.Cause: The process used to ensure that grant expenditures are allowable and reconciled was not clearly communicated to appropriate parties. As a result, certain expenditures were inappropriately claimed in the wrong fiscal year. These expenditures were not made in a reasonable time in relation to receipt of program reimbursements.Effect: Hope is at risk for noncompliance with allowable activities and allowable costs, as well as cash management requirements.Questioned costs: $54,158 was claimed for reimbursement in the current year that did not relate to the fiscal year. Further, grant receipts of $54,158 were received in June 2022 but not disbursed until April 2023.Context: A nonstatistical sampling of 40 out of 702 total transactions were selected for testing, which accounted for $134,724 of $1,021,571 total program expenditures.Repeat FindingFrom Prior Year: NoRecommendation: Controls should be put in place to ensure that direct expenditures of program funds are reviewed and approved by program management and are consistent with the grant reimbursements for those expenditures. Such reconciliations can be done monthly, quarterly, or annually, at Hope?s discretion. Controls should also ensure that program expenditures are made prior to requesting reimbursement of funds and are allowable in accordance with the federal program requirements.Views ofResponsible Officials: We agree with the finding.
FINDING 2022-003Subject: Child Nutrition Cluster - Allowable Costs/Cost PrinciplesFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, NationalSchool Lunch Program, COVID-19 - National School Lunch ProgramAssistance Listings Numbers: 10.553, 10.555Federal Award Numbers and Years (or Other Identifying Numbers): FY2021, FY2022Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Allowable Costs/Cost PrinciplesAudit Findings: Material Weakness, Other MattersCondition and ContextAn effective internal control system was not in place at the School Corporation to ensure compliancewith requirements related to the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.The School Corporation had not developed nor implemented internal controls over transactionspaid from the Child Nutrition Cluster funds to ensure that the payment was an allowable cost for the benefitof the food service program.Additionally, the School Corporation paid food service employees that worked more than 5.25 hoursa day on a biweekly basis with payments that continued into the summer. In order to do this, an employee'spay was annualized based on the expected number of days worked and then divided by 26. Each employeewas required to complete a timesheet every two weeks, which was approved by their supervisor, to supportthe time worked during the school year. Four of the fourteen paychecks selected for testing had errors.Two of the paychecks did not have the required timesheets, and two of the paychecks did not havetimesheets that reflected time worked to adequately support the amount paid to the employee.The lack of internal controls was a systemic issue for all disbursements throughout the audit period.The noncompliance was isolated to payroll disbursements for the school year ended June 30, 2021.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."2 CFR 200.403 states in part:"Except where otherwise authorized by statute, costs must meet the following general criteriain order to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and be allocablethereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federalaward as to types or amount of cost items. . . .(g) Be adequately documented. . . ."2 CFR 200.430(i) states in part:"Standards for Documentation of Personnel Expenses(1) Charges to Federal awards for salaries and wages must be based on records thataccurately reflect the work performed. These records must:(i) Be supported by a system of internal control which provides reasonableassurance that the charges are accurate, allowable, and properly allocated;(ii) Be incorporated into the official records of the non-Federal entity;(iii) Reasonably reflect the total activity for which the employee is compensated bythe non-Federal entity, not exceeding 100% of compensated activities . . .(vii) Support the distribution of the employee's salary or wages among specificactivities or cost objectives if the employee works on more than one Federal award; aFederal award and non-Federal award; an indirect cost activity and a direct costactivity; two or more indirect activities which are allocated using different allocationbases; or an unallowable activity and a direct or indirect cost activity. . . ."CauseManagement had not developed a system of internal controls that would have ensured compliancewith the Allowable Costs/Cost Principles compliance requirement.EffectThe failure to establish an effective internal control system enabled material noncompliance to goundetected. Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement could result in the loss of future federal funds to the School Corporation.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish internal controls to ensurecompliance and comply with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003Subject: Child Nutrition Cluster - Allowable Costs/Cost PrinciplesFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, NationalSchool Lunch Program, COVID-19 - National School Lunch ProgramAssistance Listings Numbers: 10.553, 10.555Federal Award Numbers and Years (or Other Identifying Numbers): FY2021, FY2022Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Allowable Costs/Cost PrinciplesAudit Findings: Material Weakness, Other MattersCondition and ContextAn effective internal control system was not in place at the School Corporation to ensure compliancewith requirements related to the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.The School Corporation had not developed nor implemented internal controls over transactionspaid from the Child Nutrition Cluster funds to ensure that the payment was an allowable cost for the benefitof the food service program.Additionally, the School Corporation paid food service employees that worked more than 5.25 hoursa day on a biweekly basis with payments that continued into the summer. In order to do this, an employee'spay was annualized based on the expected number of days worked and then divided by 26. Each employeewas required to complete a timesheet every two weeks, which was approved by their supervisor, to supportthe time worked during the school year. Four of the fourteen paychecks selected for testing had errors.Two of the paychecks did not have the required timesheets, and two of the paychecks did not havetimesheets that reflected time worked to adequately support the amount paid to the employee.The lack of internal controls was a systemic issue for all disbursements throughout the audit period.The noncompliance was isolated to payroll disbursements for the school year ended June 30, 2021.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."2 CFR 200.403 states in part:"Except where otherwise authorized by statute, costs must meet the following general criteriain order to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and be allocablethereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federalaward as to types or amount of cost items. . . .(g) Be adequately documented. . . ."2 CFR 200.430(i) states in part:"Standards for Documentation of Personnel Expenses(1) Charges to Federal awards for salaries and wages must be based on records thataccurately reflect the work performed. These records must:(i) Be supported by a system of internal control which provides reasonableassurance that the charges are accurate, allowable, and properly allocated;(ii) Be incorporated into the official records of the non-Federal entity;(iii) Reasonably reflect the total activity for which the employee is compensated bythe non-Federal entity, not exceeding 100% of compensated activities . . .(vii) Support the distribution of the employee's salary or wages among specificactivities or cost objectives if the employee works on more than one Federal award; aFederal award and non-Federal award; an indirect cost activity and a direct costactivity; two or more indirect activities which are allocated using different allocationbases; or an unallowable activity and a direct or indirect cost activity. . . ."CauseManagement had not developed a system of internal controls that would have ensured compliancewith the Allowable Costs/Cost Principles compliance requirement.EffectThe failure to establish an effective internal control system enabled material noncompliance to goundetected. Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement could result in the loss of future federal funds to the School Corporation.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish internal controls to ensurecompliance and comply with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003Subject: Child Nutrition Cluster - Allowable Costs/Cost PrinciplesFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, NationalSchool Lunch Program, COVID-19 - National School Lunch ProgramAssistance Listings Numbers: 10.553, 10.555Federal Award Numbers and Years (or Other Identifying Numbers): FY2021, FY2022Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Allowable Costs/Cost PrinciplesAudit Findings: Material Weakness, Other MattersCondition and ContextAn effective internal control system was not in place at the School Corporation to ensure compliancewith requirements related to the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.The School Corporation had not developed nor implemented internal controls over transactionspaid from the Child Nutrition Cluster funds to ensure that the payment was an allowable cost for the benefitof the food service program.Additionally, the School Corporation paid food service employees that worked more than 5.25 hoursa day on a biweekly basis with payments that continued into the summer. In order to do this, an employee'spay was annualized based on the expected number of days worked and then divided by 26. Each employeewas required to complete a timesheet every two weeks, which was approved by their supervisor, to supportthe time worked during the school year. Four of the fourteen paychecks selected for testing had errors.Two of the paychecks did not have the required timesheets, and two of the paychecks did not havetimesheets that reflected time worked to adequately support the amount paid to the employee.The lack of internal controls was a systemic issue for all disbursements throughout the audit period.The noncompliance was isolated to payroll disbursements for the school year ended June 30, 2021.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."2 CFR 200.403 states in part:"Except where otherwise authorized by statute, costs must meet the following general criteriain order to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and be allocablethereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federalaward as to types or amount of cost items. . . .(g) Be adequately documented. . . ."2 CFR 200.430(i) states in part:"Standards for Documentation of Personnel Expenses(1) Charges to Federal awards for salaries and wages must be based on records thataccurately reflect the work performed. These records must:(i) Be supported by a system of internal control which provides reasonableassurance that the charges are accurate, allowable, and properly allocated;(ii) Be incorporated into the official records of the non-Federal entity;(iii) Reasonably reflect the total activity for which the employee is compensated bythe non-Federal entity, not exceeding 100% of compensated activities . . .(vii) Support the distribution of the employee's salary or wages among specificactivities or cost objectives if the employee works on more than one Federal award; aFederal award and non-Federal award; an indirect cost activity and a direct costactivity; two or more indirect activities which are allocated using different allocationbases; or an unallowable activity and a direct or indirect cost activity. . . ."CauseManagement had not developed a system of internal controls that would have ensured compliancewith the Allowable Costs/Cost Principles compliance requirement.EffectThe failure to establish an effective internal control system enabled material noncompliance to goundetected. Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement could result in the loss of future federal funds to the School Corporation.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish internal controls to ensurecompliance and comply with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003Subject: Child Nutrition Cluster - Allowable Costs/Cost PrinciplesFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, NationalSchool Lunch Program, COVID-19 - National School Lunch ProgramAssistance Listings Numbers: 10.553, 10.555Federal Award Numbers and Years (or Other Identifying Numbers): FY2021, FY2022Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Allowable Costs/Cost PrinciplesAudit Findings: Material Weakness, Other MattersCondition and ContextAn effective internal control system was not in place at the School Corporation to ensure compliancewith requirements related to the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.The School Corporation had not developed nor implemented internal controls over transactionspaid from the Child Nutrition Cluster funds to ensure that the payment was an allowable cost for the benefitof the food service program.Additionally, the School Corporation paid food service employees that worked more than 5.25 hoursa day on a biweekly basis with payments that continued into the summer. In order to do this, an employee'spay was annualized based on the expected number of days worked and then divided by 26. Each employeewas required to complete a timesheet every two weeks, which was approved by their supervisor, to supportthe time worked during the school year. Four of the fourteen paychecks selected for testing had errors.Two of the paychecks did not have the required timesheets, and two of the paychecks did not havetimesheets that reflected time worked to adequately support the amount paid to the employee.The lack of internal controls was a systemic issue for all disbursements throughout the audit period.The noncompliance was isolated to payroll disbursements for the school year ended June 30, 2021.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."2 CFR 200.403 states in part:"Except where otherwise authorized by statute, costs must meet the following general criteriain order to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and be allocablethereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federalaward as to types or amount of cost items. . . .(g) Be adequately documented. . . ."2 CFR 200.430(i) states in part:"Standards for Documentation of Personnel Expenses(1) Charges to Federal awards for salaries and wages must be based on records thataccurately reflect the work performed. These records must:(i) Be supported by a system of internal control which provides reasonableassurance that the charges are accurate, allowable, and properly allocated;(ii) Be incorporated into the official records of the non-Federal entity;(iii) Reasonably reflect the total activity for which the employee is compensated bythe non-Federal entity, not exceeding 100% of compensated activities . . .(vii) Support the distribution of the employee's salary or wages among specificactivities or cost objectives if the employee works on more than one Federal award; aFederal award and non-Federal award; an indirect cost activity and a direct costactivity; two or more indirect activities which are allocated using different allocationbases; or an unallowable activity and a direct or indirect cost activity. . . ."CauseManagement had not developed a system of internal controls that would have ensured compliancewith the Allowable Costs/Cost Principles compliance requirement.EffectThe failure to establish an effective internal control system enabled material noncompliance to goundetected. Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement could result in the loss of future federal funds to the School Corporation.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish internal controls to ensurecompliance and comply with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003Subject: Child Nutrition Cluster - Allowable Costs/Cost PrinciplesFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, NationalSchool Lunch Program, COVID-19 - National School Lunch ProgramAssistance Listings Numbers: 10.553, 10.555Federal Award Numbers and Years (or Other Identifying Numbers): FY2021, FY2022Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Allowable Costs/Cost PrinciplesAudit Findings: Material Weakness, Other MattersCondition and ContextAn effective internal control system was not in place at the School Corporation to ensure compliancewith requirements related to the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.The School Corporation had not developed nor implemented internal controls over transactionspaid from the Child Nutrition Cluster funds to ensure that the payment was an allowable cost for the benefitof the food service program.Additionally, the School Corporation paid food service employees that worked more than 5.25 hoursa day on a biweekly basis with payments that continued into the summer. In order to do this, an employee'spay was annualized based on the expected number of days worked and then divided by 26. Each employeewas required to complete a timesheet every two weeks, which was approved by their supervisor, to supportthe time worked during the school year. Four of the fourteen paychecks selected for testing had errors.Two of the paychecks did not have the required timesheets, and two of the paychecks did not havetimesheets that reflected time worked to adequately support the amount paid to the employee.The lack of internal controls was a systemic issue for all disbursements throughout the audit period.The noncompliance was isolated to payroll disbursements for the school year ended June 30, 2021.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."2 CFR 200.403 states in part:"Except where otherwise authorized by statute, costs must meet the following general criteriain order to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and be allocablethereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federalaward as to types or amount of cost items. . . .(g) Be adequately documented. . . ."2 CFR 200.430(i) states in part:"Standards for Documentation of Personnel Expenses(1) Charges to Federal awards for salaries and wages must be based on records thataccurately reflect the work performed. These records must:(i) Be supported by a system of internal control which provides reasonableassurance that the charges are accurate, allowable, and properly allocated;(ii) Be incorporated into the official records of the non-Federal entity;(iii) Reasonably reflect the total activity for which the employee is compensated bythe non-Federal entity, not exceeding 100% of compensated activities . . .(vii) Support the distribution of the employee's salary or wages among specificactivities or cost objectives if the employee works on more than one Federal award; aFederal award and non-Federal award; an indirect cost activity and a direct costactivity; two or more indirect activities which are allocated using different allocationbases; or an unallowable activity and a direct or indirect cost activity. . . ."CauseManagement had not developed a system of internal controls that would have ensured compliancewith the Allowable Costs/Cost Principles compliance requirement.EffectThe failure to establish an effective internal control system enabled material noncompliance to goundetected. Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement could result in the loss of future federal funds to the School Corporation.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish internal controls to ensurecompliance and comply with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003Subject: Child Nutrition Cluster - Allowable Costs/Cost PrinciplesFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, NationalSchool Lunch Program, COVID-19 - National School Lunch ProgramAssistance Listings Numbers: 10.553, 10.555Federal Award Numbers and Years (or Other Identifying Numbers): FY2021, FY2022Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Allowable Costs/Cost PrinciplesAudit Findings: Material Weakness, Other MattersCondition and ContextAn effective internal control system was not in place at the School Corporation to ensure compliancewith requirements related to the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.The School Corporation had not developed nor implemented internal controls over transactionspaid from the Child Nutrition Cluster funds to ensure that the payment was an allowable cost for the benefitof the food service program.Additionally, the School Corporation paid food service employees that worked more than 5.25 hoursa day on a biweekly basis with payments that continued into the summer. In order to do this, an employee'spay was annualized based on the expected number of days worked and then divided by 26. Each employeewas required to complete a timesheet every two weeks, which was approved by their supervisor, to supportthe time worked during the school year. Four of the fourteen paychecks selected for testing had errors.Two of the paychecks did not have the required timesheets, and two of the paychecks did not havetimesheets that reflected time worked to adequately support the amount paid to the employee.The lack of internal controls was a systemic issue for all disbursements throughout the audit period.The noncompliance was isolated to payroll disbursements for the school year ended June 30, 2021.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."2 CFR 200.403 states in part:"Except where otherwise authorized by statute, costs must meet the following general criteriain order to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and be allocablethereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federalaward as to types or amount of cost items. . . .(g) Be adequately documented. . . ."2 CFR 200.430(i) states in part:"Standards for Documentation of Personnel Expenses(1) Charges to Federal awards for salaries and wages must be based on records thataccurately reflect the work performed. These records must:(i) Be supported by a system of internal control which provides reasonableassurance that the charges are accurate, allowable, and properly allocated;(ii) Be incorporated into the official records of the non-Federal entity;(iii) Reasonably reflect the total activity for which the employee is compensated bythe non-Federal entity, not exceeding 100% of compensated activities . . .(vii) Support the distribution of the employee's salary or wages among specificactivities or cost objectives if the employee works on more than one Federal award; aFederal award and non-Federal award; an indirect cost activity and a direct costactivity; two or more indirect activities which are allocated using different allocationbases; or an unallowable activity and a direct or indirect cost activity. . . ."CauseManagement had not developed a system of internal controls that would have ensured compliancewith the Allowable Costs/Cost Principles compliance requirement.EffectThe failure to establish an effective internal control system enabled material noncompliance to goundetected. Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement could result in the loss of future federal funds to the School Corporation.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish internal controls to ensurecompliance and comply with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004Subject: Special Education Cluster (IDEA) - EarmarkingFederal Agency: Department of EducationFederal Program: Special Education Grants to StatesAssistance Listings Number: 84.027Federal Award Number and Year (or Other Identifying Number): 21611-009-PN01Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Matching, Level of Effort, EarmarkingAudit Findings: Material Weakness, Modified OpinionCondition and ContextThe School Corporation is a member of the Exceptional Children's Co-op (Cooperative). Duringfiscal year 2021-2022, the Cooperative operated the special education programs and spent the federalmoney on behalf of all its member schools. As the grant agreements were between the Indiana Departmentof Education (IDOE) and each member school, the School Corporation was responsible for ensuring andproviding oversight of the Cooperative. There was inadequate oversight performed by the SchoolCorporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliancerequirement.The School Corporation did not have internal controls in place to ensure that the Cooperativecomplied with the earmarking requirements. The Cooperative did not have adequate procedures in placeto ensure that the required level of expenditures for non-public school students with disabilities was met foreach member school. The Cooperative did not have effective internal controls to ensure non-public schoolexpenditures were appropriately identified and reported.The Non-Public Proportionate Share expenditures for the 21611-009-PN01 grant award could notbe verified for the individual member schools. Total grant expenditures were posted as expended. Thenon-public proportionate share expenditures were determined by applying a percentage to the non-publicschool budgeted expenditures. These were the amounts reported to the IDOE. As such, we were unableto identify if the minimum amount per the grant award was expended and properly reported to the IDOE asrequired.The lack of internal controls and noncompliance was isolated to the 21611-009-PN01 grant award.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."INDIANA STATE BOARD OF ACCOUNTS21SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATIONSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)2 CFR 200.403 states in part:"Except where otherwise authorized by statute, costs must meet the following general criteriain order to be allowable under Federal awards: . . .(g) Be adequately documented. . . ."2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjustspecific Federal award conditions as needed . . ."511 IAC 7-34-7(b) states:"The public agency, in providing special education and related services to students in nonpublicschools must expend at least an amount that is the same proportion of the public agency totalsubgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities,who are enrolled by their parents in nonpublic schools within its boundaries, is to the totalnumber of students with disabilities of the same age range."CauseThe School Corporation's management had not developed an effective system of internal controlsthat would have ensured compliance with the grant agreements and the earmarking requirements of theMatching, Level of Effort, Earmarking compliance requirement.EffectThe failure to establish an effective internal control system, as well as adequately document costsof federal awards, prevented the determination of the School Corporation's compliance with the earmarkingrequirements of the Matching, Level of Effort, Earmarking compliance requirement.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish an effective system ofinternal controls, as well as appropriately document and identify federal award expenditures to ensure compliancewith the Matching, Level of Effort, Earmarking compliance requirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004Subject: Special Education Cluster (IDEA) - EarmarkingFederal Agency: Department of EducationFederal Program: Special Education Grants to StatesAssistance Listings Number: 84.027Federal Award Number and Year (or Other Identifying Number): 21611-009-PN01Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Matching, Level of Effort, EarmarkingAudit Findings: Material Weakness, Modified OpinionCondition and ContextThe School Corporation is a member of the Exceptional Children's Co-op (Cooperative). Duringfiscal year 2021-2022, the Cooperative operated the special education programs and spent the federalmoney on behalf of all its member schools. As the grant agreements were between the Indiana Departmentof Education (IDOE) and each member school, the School Corporation was responsible for ensuring andproviding oversight of the Cooperative. There was inadequate oversight performed by the SchoolCorporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliancerequirement.The School Corporation did not have internal controls in place to ensure that the Cooperativecomplied with the earmarking requirements. The Cooperative did not have adequate procedures in placeto ensure that the required level of expenditures for non-public school students with disabilities was met foreach member school. The Cooperative did not have effective internal controls to ensure non-public schoolexpenditures were appropriately identified and reported.The Non-Public Proportionate Share expenditures for the 21611-009-PN01 grant award could notbe verified for the individual member schools. Total grant expenditures were posted as expended. Thenon-public proportionate share expenditures were determined by applying a percentage to the non-publicschool budgeted expenditures. These were the amounts reported to the IDOE. As such, we were unableto identify if the minimum amount per the grant award was expended and properly reported to the IDOE asrequired.The lack of internal controls and noncompliance was isolated to the 21611-009-PN01 grant award.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."INDIANA STATE BOARD OF ACCOUNTS21SOUTHWEST DUBOIS COUNTY SCHOOL CORPORATIONSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)2 CFR 200.403 states in part:"Except where otherwise authorized by statute, costs must meet the following general criteriain order to be allowable under Federal awards: . . .(g) Be adequately documented. . . ."2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjustspecific Federal award conditions as needed . . ."511 IAC 7-34-7(b) states:"The public agency, in providing special education and related services to students in nonpublicschools must expend at least an amount that is the same proportion of the public agency totalsubgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities,who are enrolled by their parents in nonpublic schools within its boundaries, is to the totalnumber of students with disabilities of the same age range."CauseThe School Corporation's management had not developed an effective system of internal controlsthat would have ensured compliance with the grant agreements and the earmarking requirements of theMatching, Level of Effort, Earmarking compliance requirement.EffectThe failure to establish an effective internal control system, as well as adequately document costsof federal awards, prevented the determination of the School Corporation's compliance with the earmarkingrequirements of the Matching, Level of Effort, Earmarking compliance requirement.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish an effective system ofinternal controls, as well as appropriately document and identify federal award expenditures to ensure compliancewith the Matching, Level of Effort, Earmarking compliance requirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003Subject: Child Nutrition Cluster - Allowable Costs/Cost PrinciplesFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National SchoolLunch Program, Summer Food Service Program for Children, COVID-19 - NationalSchool Lunch Program, COVID-19 - Summer Food Service Program for ChildrenAssistance Listings Numbers: 10.553, 10.555, 10.559Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Allowable Costs/Cost PrinciplesAudit Findings: Material Weakness, Other MattersCondition and ContextAn effective internal control system was in place at the School Corporation to ensure compliancewith requirements related to the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.The School Corporation was approved for an indirect cost rate for fiscal years 2018-2019 and2019-2020 in order to allocate indirect costs to the School Corporation's Cafeteria fund. However, theSchool Corporation did not charge these indirect costs within the appropriate time frame. Indirect costs for2018-2019 and 2019-2020 in the amount of $15,717 and $17,456, respectively, were not charged to theCafeteria fund until March 2021. Per USDA guidance, it is unallowable to bill the National School FoodService Account (NSFSA) for indirect costs that were paid from the general fund in prior years unless anagreement exists to show that the district had been "loaning" the NSFSA funds to cover the indirect costsin one or more prior years. The School Corporation did not have an inter-fund loan agreement in place.As such the amounts were considered questioned costs.The lack of internal controls and noncompliance were isolated to the indirect costs noted above.INDIANA STATE BOARD OF ACCOUNTS20BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."USDA Indirect Costs, Guidance for State Agencies & School Food Authorities states in part:" . . . It is unallowable to bill the NSFSA for indirect costs that were paid form the general fundin prior years unless an agreement exists to sow that the district had been 'loaning' the NSFSAfunds to cover the indirect costs in one or more prior years. . . . There is no Federal requirementthat prohibits an SFA from charging its internal fiscal policy regarding the recovery of indirectcosts by those organizational units within the SFA that actually incur costs. Absent adocumented 'inter-fund loan' as outlined above, however, an SFA may only change its policyto charge the NSFSA for indirect costs prospectively (that is going forward for the next schoolyear.)It is unallowable to bill the NSFSA for indirect costs that were previously paid from the generalfund unless an agreement exists to show that the district had been 'loaning' the NSFSA fundsto cover the indirect costs in one or more prior years. . . ."2 CFR 200.403 states in part:"Except where otherwise authorized by statute, costs must meet the following general criteriain order to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and beallocable thereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federalaward as to types or amount of cost items. . . .(g) Be adequately documented. . . ."CauseManagement had not established a system of internal controls that would have ensured compliancewith the grant agreement and the Allowable Costs/Cost Principles compliance requirement.INDIANA STATE BOARD OF ACCOUNTS21BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)EffectThe failure to establish an effective system of internal controls enabled noncompliance to go undetected.Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement could result in the loss of future federal funds to the School Corporation.Questioned CostsKnown questioned costs of $33,173 were identified as noted in the Condition and Context.RecommendationWe recommended that the School Corporation's management establish a system of internal controlsto ensure compliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003Subject: Child Nutrition Cluster - Allowable Costs/Cost PrinciplesFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National SchoolLunch Program, Summer Food Service Program for Children, COVID-19 - NationalSchool Lunch Program, COVID-19 - Summer Food Service Program for ChildrenAssistance Listings Numbers: 10.553, 10.555, 10.559Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Allowable Costs/Cost PrinciplesAudit Findings: Material Weakness, Other MattersCondition and ContextAn effective internal control system was in place at the School Corporation to ensure compliancewith requirements related to the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.The School Corporation was approved for an indirect cost rate for fiscal years 2018-2019 and2019-2020 in order to allocate indirect costs to the School Corporation's Cafeteria fund. However, theSchool Corporation did not charge these indirect costs within the appropriate time frame. Indirect costs for2018-2019 and 2019-2020 in the amount of $15,717 and $17,456, respectively, were not charged to theCafeteria fund until March 2021. Per USDA guidance, it is unallowable to bill the National School FoodService Account (NSFSA) for indirect costs that were paid from the general fund in prior years unless anagreement exists to show that the district had been "loaning" the NSFSA funds to cover the indirect costsin one or more prior years. The School Corporation did not have an inter-fund loan agreement in place.As such the amounts were considered questioned costs.The lack of internal controls and noncompliance were isolated to the indirect costs noted above.INDIANA STATE BOARD OF ACCOUNTS20BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."USDA Indirect Costs, Guidance for State Agencies & School Food Authorities states in part:" . . . It is unallowable to bill the NSFSA for indirect costs that were paid form the general fundin prior years unless an agreement exists to sow that the district had been 'loaning' the NSFSAfunds to cover the indirect costs in one or more prior years. . . . There is no Federal requirementthat prohibits an SFA from charging its internal fiscal policy regarding the recovery of indirectcosts by those organizational units within the SFA that actually incur costs. Absent adocumented 'inter-fund loan' as outlined above, however, an SFA may only change its policyto charge the NSFSA for indirect costs prospectively (that is going forward for the next schoolyear.)It is unallowable to bill the NSFSA for indirect costs that were previously paid from the generalfund unless an agreement exists to show that the district had been 'loaning' the NSFSA fundsto cover the indirect costs in one or more prior years. . . ."2 CFR 200.403 states in part:"Except where otherwise authorized by statute, costs must meet the following general criteriain order to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and beallocable thereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federalaward as to types or amount of cost items. . . .(g) Be adequately documented. . . ."CauseManagement had not established a system of internal controls that would have ensured compliancewith the grant agreement and the Allowable Costs/Cost Principles compliance requirement.INDIANA STATE BOARD OF ACCOUNTS21BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)EffectThe failure to establish an effective system of internal controls enabled noncompliance to go undetected.Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement could result in the loss of future federal funds to the School Corporation.Questioned CostsKnown questioned costs of $33,173 were identified as noted in the Condition and Context.RecommendationWe recommended that the School Corporation's management establish a system of internal controlsto ensure compliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003Subject: Child Nutrition Cluster - Allowable Costs/Cost PrinciplesFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National SchoolLunch Program, Summer Food Service Program for Children, COVID-19 - NationalSchool Lunch Program, COVID-19 - Summer Food Service Program for ChildrenAssistance Listings Numbers: 10.553, 10.555, 10.559Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Allowable Costs/Cost PrinciplesAudit Findings: Material Weakness, Other MattersCondition and ContextAn effective internal control system was in place at the School Corporation to ensure compliancewith requirements related to the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.The School Corporation was approved for an indirect cost rate for fiscal years 2018-2019 and2019-2020 in order to allocate indirect costs to the School Corporation's Cafeteria fund. However, theSchool Corporation did not charge these indirect costs within the appropriate time frame. Indirect costs for2018-2019 and 2019-2020 in the amount of $15,717 and $17,456, respectively, were not charged to theCafeteria fund until March 2021. Per USDA guidance, it is unallowable to bill the National School FoodService Account (NSFSA) for indirect costs that were paid from the general fund in prior years unless anagreement exists to show that the district had been "loaning" the NSFSA funds to cover the indirect costsin one or more prior years. The School Corporation did not have an inter-fund loan agreement in place.As such the amounts were considered questioned costs.The lack of internal controls and noncompliance were isolated to the indirect costs noted above.INDIANA STATE BOARD OF ACCOUNTS20BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."USDA Indirect Costs, Guidance for State Agencies & School Food Authorities states in part:" . . . It is unallowable to bill the NSFSA for indirect costs that were paid form the general fundin prior years unless an agreement exists to sow that the district had been 'loaning' the NSFSAfunds to cover the indirect costs in one or more prior years. . . . There is no Federal requirementthat prohibits an SFA from charging its internal fiscal policy regarding the recovery of indirectcosts by those organizational units within the SFA that actually incur costs. Absent adocumented 'inter-fund loan' as outlined above, however, an SFA may only change its policyto charge the NSFSA for indirect costs prospectively (that is going forward for the next schoolyear.)It is unallowable to bill the NSFSA for indirect costs that were previously paid from the generalfund unless an agreement exists to show that the district had been 'loaning' the NSFSA fundsto cover the indirect costs in one or more prior years. . . ."2 CFR 200.403 states in part:"Except where otherwise authorized by statute, costs must meet the following general criteriain order to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and beallocable thereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federalaward as to types or amount of cost items. . . .(g) Be adequately documented. . . ."CauseManagement had not established a system of internal controls that would have ensured compliancewith the grant agreement and the Allowable Costs/Cost Principles compliance requirement.INDIANA STATE BOARD OF ACCOUNTS21BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)EffectThe failure to establish an effective system of internal controls enabled noncompliance to go undetected.Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement could result in the loss of future federal funds to the School Corporation.Questioned CostsKnown questioned costs of $33,173 were identified as noted in the Condition and Context.RecommendationWe recommended that the School Corporation's management establish a system of internal controlsto ensure compliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003Subject: Child Nutrition Cluster - Allowable Costs/Cost PrinciplesFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National SchoolLunch Program, Summer Food Service Program for Children, COVID-19 - NationalSchool Lunch Program, COVID-19 - Summer Food Service Program for ChildrenAssistance Listings Numbers: 10.553, 10.555, 10.559Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Allowable Costs/Cost PrinciplesAudit Findings: Material Weakness, Other MattersCondition and ContextAn effective internal control system was in place at the School Corporation to ensure compliancewith requirements related to the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.The School Corporation was approved for an indirect cost rate for fiscal years 2018-2019 and2019-2020 in order to allocate indirect costs to the School Corporation's Cafeteria fund. However, theSchool Corporation did not charge these indirect costs within the appropriate time frame. Indirect costs for2018-2019 and 2019-2020 in the amount of $15,717 and $17,456, respectively, were not charged to theCafeteria fund until March 2021. Per USDA guidance, it is unallowable to bill the National School FoodService Account (NSFSA) for indirect costs that were paid from the general fund in prior years unless anagreement exists to show that the district had been "loaning" the NSFSA funds to cover the indirect costsin one or more prior years. The School Corporation did not have an inter-fund loan agreement in place.As such the amounts were considered questioned costs.The lack of internal controls and noncompliance were isolated to the indirect costs noted above.INDIANA STATE BOARD OF ACCOUNTS20BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."USDA Indirect Costs, Guidance for State Agencies & School Food Authorities states in part:" . . . It is unallowable to bill the NSFSA for indirect costs that were paid form the general fundin prior years unless an agreement exists to sow that the district had been 'loaning' the NSFSAfunds to cover the indirect costs in one or more prior years. . . . There is no Federal requirementthat prohibits an SFA from charging its internal fiscal policy regarding the recovery of indirectcosts by those organizational units within the SFA that actually incur costs. Absent adocumented 'inter-fund loan' as outlined above, however, an SFA may only change its policyto charge the NSFSA for indirect costs prospectively (that is going forward for the next schoolyear.)It is unallowable to bill the NSFSA for indirect costs that were previously paid from the generalfund unless an agreement exists to show that the district had been 'loaning' the NSFSA fundsto cover the indirect costs in one or more prior years. . . ."2 CFR 200.403 states in part:"Except where otherwise authorized by statute, costs must meet the following general criteriain order to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and beallocable thereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federalaward as to types or amount of cost items. . . .(g) Be adequately documented. . . ."CauseManagement had not established a system of internal controls that would have ensured compliancewith the grant agreement and the Allowable Costs/Cost Principles compliance requirement.INDIANA STATE BOARD OF ACCOUNTS21BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)EffectThe failure to establish an effective system of internal controls enabled noncompliance to go undetected.Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement could result in the loss of future federal funds to the School Corporation.Questioned CostsKnown questioned costs of $33,173 were identified as noted in the Condition and Context.RecommendationWe recommended that the School Corporation's management establish a system of internal controlsto ensure compliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003Subject: Child Nutrition Cluster - Allowable Costs/Cost PrinciplesFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National SchoolLunch Program, Summer Food Service Program for Children, COVID-19 - NationalSchool Lunch Program, COVID-19 - Summer Food Service Program for ChildrenAssistance Listings Numbers: 10.553, 10.555, 10.559Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Allowable Costs/Cost PrinciplesAudit Findings: Material Weakness, Other MattersCondition and ContextAn effective internal control system was in place at the School Corporation to ensure compliancewith requirements related to the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.The School Corporation was approved for an indirect cost rate for fiscal years 2018-2019 and2019-2020 in order to allocate indirect costs to the School Corporation's Cafeteria fund. However, theSchool Corporation did not charge these indirect costs within the appropriate time frame. Indirect costs for2018-2019 and 2019-2020 in the amount of $15,717 and $17,456, respectively, were not charged to theCafeteria fund until March 2021. Per USDA guidance, it is unallowable to bill the National School FoodService Account (NSFSA) for indirect costs that were paid from the general fund in prior years unless anagreement exists to show that the district had been "loaning" the NSFSA funds to cover the indirect costsin one or more prior years. The School Corporation did not have an inter-fund loan agreement in place.As such the amounts were considered questioned costs.The lack of internal controls and noncompliance were isolated to the indirect costs noted above.INDIANA STATE BOARD OF ACCOUNTS20BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."USDA Indirect Costs, Guidance for State Agencies & School Food Authorities states in part:" . . . It is unallowable to bill the NSFSA for indirect costs that were paid form the general fundin prior years unless an agreement exists to sow that the district had been 'loaning' the NSFSAfunds to cover the indirect costs in one or more prior years. . . . There is no Federal requirementthat prohibits an SFA from charging its internal fiscal policy regarding the recovery of indirectcosts by those organizational units within the SFA that actually incur costs. Absent adocumented 'inter-fund loan' as outlined above, however, an SFA may only change its policyto charge the NSFSA for indirect costs prospectively (that is going forward for the next schoolyear.)It is unallowable to bill the NSFSA for indirect costs that were previously paid from the generalfund unless an agreement exists to show that the district had been 'loaning' the NSFSA fundsto cover the indirect costs in one or more prior years. . . ."2 CFR 200.403 states in part:"Except where otherwise authorized by statute, costs must meet the following general criteriain order to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and beallocable thereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federalaward as to types or amount of cost items. . . .(g) Be adequately documented. . . ."CauseManagement had not established a system of internal controls that would have ensured compliancewith the grant agreement and the Allowable Costs/Cost Principles compliance requirement.INDIANA STATE BOARD OF ACCOUNTS21BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)EffectThe failure to establish an effective system of internal controls enabled noncompliance to go undetected.Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement could result in the loss of future federal funds to the School Corporation.Questioned CostsKnown questioned costs of $33,173 were identified as noted in the Condition and Context.RecommendationWe recommended that the School Corporation's management establish a system of internal controlsto ensure compliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003Subject: Child Nutrition Cluster - Allowable Costs/Cost PrinciplesFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National SchoolLunch Program, Summer Food Service Program for Children, COVID-19 - NationalSchool Lunch Program, COVID-19 - Summer Food Service Program for ChildrenAssistance Listings Numbers: 10.553, 10.555, 10.559Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Allowable Costs/Cost PrinciplesAudit Findings: Material Weakness, Other MattersCondition and ContextAn effective internal control system was in place at the School Corporation to ensure compliancewith requirements related to the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.The School Corporation was approved for an indirect cost rate for fiscal years 2018-2019 and2019-2020 in order to allocate indirect costs to the School Corporation's Cafeteria fund. However, theSchool Corporation did not charge these indirect costs within the appropriate time frame. Indirect costs for2018-2019 and 2019-2020 in the amount of $15,717 and $17,456, respectively, were not charged to theCafeteria fund until March 2021. Per USDA guidance, it is unallowable to bill the National School FoodService Account (NSFSA) for indirect costs that were paid from the general fund in prior years unless anagreement exists to show that the district had been "loaning" the NSFSA funds to cover the indirect costsin one or more prior years. The School Corporation did not have an inter-fund loan agreement in place.As such the amounts were considered questioned costs.The lack of internal controls and noncompliance were isolated to the indirect costs noted above.INDIANA STATE BOARD OF ACCOUNTS20BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."USDA Indirect Costs, Guidance for State Agencies & School Food Authorities states in part:" . . . It is unallowable to bill the NSFSA for indirect costs that were paid form the general fundin prior years unless an agreement exists to sow that the district had been 'loaning' the NSFSAfunds to cover the indirect costs in one or more prior years. . . . There is no Federal requirementthat prohibits an SFA from charging its internal fiscal policy regarding the recovery of indirectcosts by those organizational units within the SFA that actually incur costs. Absent adocumented 'inter-fund loan' as outlined above, however, an SFA may only change its policyto charge the NSFSA for indirect costs prospectively (that is going forward for the next schoolyear.)It is unallowable to bill the NSFSA for indirect costs that were previously paid from the generalfund unless an agreement exists to show that the district had been 'loaning' the NSFSA fundsto cover the indirect costs in one or more prior years. . . ."2 CFR 200.403 states in part:"Except where otherwise authorized by statute, costs must meet the following general criteriain order to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and beallocable thereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federalaward as to types or amount of cost items. . . .(g) Be adequately documented. . . ."CauseManagement had not established a system of internal controls that would have ensured compliancewith the grant agreement and the Allowable Costs/Cost Principles compliance requirement.INDIANA STATE BOARD OF ACCOUNTS21BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)EffectThe failure to establish an effective system of internal controls enabled noncompliance to go undetected.Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement could result in the loss of future federal funds to the School Corporation.Questioned CostsKnown questioned costs of $33,173 were identified as noted in the Condition and Context.RecommendationWe recommended that the School Corporation's management establish a system of internal controlsto ensure compliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003Subject: Child Nutrition Cluster - Allowable Costs/Cost PrinciplesFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National SchoolLunch Program, Summer Food Service Program for Children, COVID-19 - NationalSchool Lunch Program, COVID-19 - Summer Food Service Program for ChildrenAssistance Listings Numbers: 10.553, 10.555, 10.559Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Allowable Costs/Cost PrinciplesAudit Findings: Material Weakness, Other MattersCondition and ContextAn effective internal control system was in place at the School Corporation to ensure compliancewith requirements related to the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.The School Corporation was approved for an indirect cost rate for fiscal years 2018-2019 and2019-2020 in order to allocate indirect costs to the School Corporation's Cafeteria fund. However, theSchool Corporation did not charge these indirect costs within the appropriate time frame. Indirect costs for2018-2019 and 2019-2020 in the amount of $15,717 and $17,456, respectively, were not charged to theCafeteria fund until March 2021. Per USDA guidance, it is unallowable to bill the National School FoodService Account (NSFSA) for indirect costs that were paid from the general fund in prior years unless anagreement exists to show that the district had been "loaning" the NSFSA funds to cover the indirect costsin one or more prior years. The School Corporation did not have an inter-fund loan agreement in place.As such the amounts were considered questioned costs.The lack of internal controls and noncompliance were isolated to the indirect costs noted above.INDIANA STATE BOARD OF ACCOUNTS20BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."USDA Indirect Costs, Guidance for State Agencies & School Food Authorities states in part:" . . . It is unallowable to bill the NSFSA for indirect costs that were paid form the general fundin prior years unless an agreement exists to sow that the district had been 'loaning' the NSFSAfunds to cover the indirect costs in one or more prior years. . . . There is no Federal requirementthat prohibits an SFA from charging its internal fiscal policy regarding the recovery of indirectcosts by those organizational units within the SFA that actually incur costs. Absent adocumented 'inter-fund loan' as outlined above, however, an SFA may only change its policyto charge the NSFSA for indirect costs prospectively (that is going forward for the next schoolyear.)It is unallowable to bill the NSFSA for indirect costs that were previously paid from the generalfund unless an agreement exists to show that the district had been 'loaning' the NSFSA fundsto cover the indirect costs in one or more prior years. . . ."2 CFR 200.403 states in part:"Except where otherwise authorized by statute, costs must meet the following general criteriain order to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and beallocable thereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federalaward as to types or amount of cost items. . . .(g) Be adequately documented. . . ."CauseManagement had not established a system of internal controls that would have ensured compliancewith the grant agreement and the Allowable Costs/Cost Principles compliance requirement.INDIANA STATE BOARD OF ACCOUNTS21BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)EffectThe failure to establish an effective system of internal controls enabled noncompliance to go undetected.Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement could result in the loss of future federal funds to the School Corporation.Questioned CostsKnown questioned costs of $33,173 were identified as noted in the Condition and Context.RecommendationWe recommended that the School Corporation's management establish a system of internal controlsto ensure compliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003Subject: Child Nutrition Cluster - Allowable Costs/Cost PrinciplesFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National SchoolLunch Program, Summer Food Service Program for Children, COVID-19 - NationalSchool Lunch Program, COVID-19 - Summer Food Service Program for ChildrenAssistance Listings Numbers: 10.553, 10.555, 10.559Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Allowable Costs/Cost PrinciplesAudit Findings: Material Weakness, Other MattersCondition and ContextAn effective internal control system was in place at the School Corporation to ensure compliancewith requirements related to the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.The School Corporation was approved for an indirect cost rate for fiscal years 2018-2019 and2019-2020 in order to allocate indirect costs to the School Corporation's Cafeteria fund. However, theSchool Corporation did not charge these indirect costs within the appropriate time frame. Indirect costs for2018-2019 and 2019-2020 in the amount of $15,717 and $17,456, respectively, were not charged to theCafeteria fund until March 2021. Per USDA guidance, it is unallowable to bill the National School FoodService Account (NSFSA) for indirect costs that were paid from the general fund in prior years unless anagreement exists to show that the district had been "loaning" the NSFSA funds to cover the indirect costsin one or more prior years. The School Corporation did not have an inter-fund loan agreement in place.As such the amounts were considered questioned costs.The lack of internal controls and noncompliance were isolated to the indirect costs noted above.INDIANA STATE BOARD OF ACCOUNTS20BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."USDA Indirect Costs, Guidance for State Agencies & School Food Authorities states in part:" . . . It is unallowable to bill the NSFSA for indirect costs that were paid form the general fundin prior years unless an agreement exists to sow that the district had been 'loaning' the NSFSAfunds to cover the indirect costs in one or more prior years. . . . There is no Federal requirementthat prohibits an SFA from charging its internal fiscal policy regarding the recovery of indirectcosts by those organizational units within the SFA that actually incur costs. Absent adocumented 'inter-fund loan' as outlined above, however, an SFA may only change its policyto charge the NSFSA for indirect costs prospectively (that is going forward for the next schoolyear.)It is unallowable to bill the NSFSA for indirect costs that were previously paid from the generalfund unless an agreement exists to show that the district had been 'loaning' the NSFSA fundsto cover the indirect costs in one or more prior years. . . ."2 CFR 200.403 states in part:"Except where otherwise authorized by statute, costs must meet the following general criteriain order to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and beallocable thereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federalaward as to types or amount of cost items. . . .(g) Be adequately documented. . . ."CauseManagement had not established a system of internal controls that would have ensured compliancewith the grant agreement and the Allowable Costs/Cost Principles compliance requirement.INDIANA STATE BOARD OF ACCOUNTS21BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)EffectThe failure to establish an effective system of internal controls enabled noncompliance to go undetected.Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement could result in the loss of future federal funds to the School Corporation.Questioned CostsKnown questioned costs of $33,173 were identified as noted in the Condition and Context.RecommendationWe recommended that the School Corporation's management establish a system of internal controlsto ensure compliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003Subject: Child Nutrition Cluster - Allowable Costs/Cost PrinciplesFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National SchoolLunch Program, Summer Food Service Program for Children, COVID-19 - NationalSchool Lunch Program, COVID-19 - Summer Food Service Program for ChildrenAssistance Listings Numbers: 10.553, 10.555, 10.559Federal Award Numbers and Years (or Other Identifying Numbers): FY21, FY22Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Allowable Costs/Cost PrinciplesAudit Findings: Material Weakness, Other MattersCondition and ContextAn effective internal control system was in place at the School Corporation to ensure compliancewith requirements related to the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.The School Corporation was approved for an indirect cost rate for fiscal years 2018-2019 and2019-2020 in order to allocate indirect costs to the School Corporation's Cafeteria fund. However, theSchool Corporation did not charge these indirect costs within the appropriate time frame. Indirect costs for2018-2019 and 2019-2020 in the amount of $15,717 and $17,456, respectively, were not charged to theCafeteria fund until March 2021. Per USDA guidance, it is unallowable to bill the National School FoodService Account (NSFSA) for indirect costs that were paid from the general fund in prior years unless anagreement exists to show that the district had been "loaning" the NSFSA funds to cover the indirect costsin one or more prior years. The School Corporation did not have an inter-fund loan agreement in place.As such the amounts were considered questioned costs.The lack of internal controls and noncompliance were isolated to the indirect costs noted above.INDIANA STATE BOARD OF ACCOUNTS20BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."USDA Indirect Costs, Guidance for State Agencies & School Food Authorities states in part:" . . . It is unallowable to bill the NSFSA for indirect costs that were paid form the general fundin prior years unless an agreement exists to sow that the district had been 'loaning' the NSFSAfunds to cover the indirect costs in one or more prior years. . . . There is no Federal requirementthat prohibits an SFA from charging its internal fiscal policy regarding the recovery of indirectcosts by those organizational units within the SFA that actually incur costs. Absent adocumented 'inter-fund loan' as outlined above, however, an SFA may only change its policyto charge the NSFSA for indirect costs prospectively (that is going forward for the next schoolyear.)It is unallowable to bill the NSFSA for indirect costs that were previously paid from the generalfund unless an agreement exists to show that the district had been 'loaning' the NSFSA fundsto cover the indirect costs in one or more prior years. . . ."2 CFR 200.403 states in part:"Except where otherwise authorized by statute, costs must meet the following general criteriain order to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and beallocable thereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federalaward as to types or amount of cost items. . . .(g) Be adequately documented. . . ."CauseManagement had not established a system of internal controls that would have ensured compliancewith the grant agreement and the Allowable Costs/Cost Principles compliance requirement.INDIANA STATE BOARD OF ACCOUNTS21BLACKFORD COUNTY SCHOOLSSCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)EffectThe failure to establish an effective system of internal controls enabled noncompliance to go undetected.Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement could result in the loss of future federal funds to the School Corporation.Questioned CostsKnown questioned costs of $33,173 were identified as noted in the Condition and Context.RecommendationWe recommended that the School Corporation's management establish a system of internal controlsto ensure compliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2022-002 Significant DeficiencyAssistance Listing: 84.351 C.A.R.E.Condition:Cleveland Play House does not have adequate documentation to support all charges to the federalprogram.Of the 40 payroll charges tested, 26 did not have adequate documentation. In addition, it was notedthat for 2 of the 37 non-payroll charges tested supporting documentation was unable to be located.In addition, management provided an Excel spreadsheet to support the charges that were made to theprogram rather than reporting from their financial management system that is compliant with Section200.302.Criteria:2 CFR 200.403(g) states that for costs to be allowed under Federal awards, they must be adequatelydocumented.In addition, Section 200.302 requires that the financial management system must provide for anidentification, in its accounts, of all federal awards received and expended and the federal programsunder which they were received; an accurate, current, and complete disclosure of the financial resultsof each federal award or program; and a comparison of expenditures with budget amounts for eachfederal award.Cause:Due to significant organizational turnover, individuals were not completing timesheets to documentlevel of effort for federal programs. Although management was verbally communicating with theseindividuals during the year and tracking the time they spent on the program within a spreadsheet, thisis not considered adequate documentation. In addition, and also a result of the turnover, certaindocumentation to support non-payroll expenditures was unable to be located.Effect:Cleveland Play House did not have adequate documentation to support all costs charged to the federalprogram. In addition, an ineffective financial management system could lead to incorrectidentification of costs charged to a federal program and an inability to substantiate that double-chargingdid not occur.Repeat finding:This is not a repeat finding.Questioned costs:Non-payroll: $974Payroll: $20,720Recommendation:We recommend that Cleveland Play House develop a policy and procedure to ensure that all hourssubmitted for federal reimbursement are supported with timesheets that are approved by a supervisor.In addition, staff should be made aware of the policy and procedures to ensure retention ofdocumentation for non-payroll expenditures.Views of responsible officials:Management concurs with this recommendation. See also corrective action plan.
FINDING 2022-003Subject: Special Education Cluster (IDEA) - EarmarkingFederal Agency: Department of EducationFederal Program: Special Education Grants to StatesAssistance Listings Number: 84.027Federal Award Number and Year (or Other Identifying Numbers): 20611-115-PN01Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Matching, Level of Effort, EarmarkingAudit Findings: Material Weakness; Other MattersCondition and ContextAn effective internal control system was not in place at the School Corporation to ensure compliancewith requirements related to the grant agreement and the earmarking requirements of the Matching,Level of Effort, Earmarking, compliance requirement.The School Corporation did not have adequate procedures in place to ensure that the requiredlevel of expenditures for non-public students with disabilities was met for all grants that ended or were fullyexpended during the audit period. For one of three grants tested, the Non-Public Proportionate Shareexpenditures could not be verified. Additionally, a waiver was not requested.The lack of internal controls and noncompliance were isolated to the 20611-115-PN01 grant award.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."2 CFR 200.403 states in part:"Except where otherwise authorized by statute, costs must meet the following general criteriain order to be allowable under Federal awards: . . .(g) Be adequately documented. . . ."2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjustspecific Federal award conditions as needed . . ."511 IAC 7-34-7(b) states:"The public agency, in providing special education and related services to students in nonpublicschools must expend at least an amount that is the same proportion of the public agency totalsubgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities,who are enrolled by their parents in nonpublic schools within its boundaries, is to the totalnumber of students with disabilities of the same age range."CauseManagement had not developed an effective system of internal controls that would have ensuredcompliance with the grant agreement and the earmarking requirements of the Matching, Level of Effort,Earmarking compliance requirement.EffectThe failure to establish an effective internal control system enabled noncompliance to go undetected.Noncompliance with the grant agreement and the earmarking requirements of the Matching, Levelof Effort, Earmarking compliance requirement could result in the loss of future federal funds to the SchoolCorporation.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish a system of internalcontrols, as well as appropriately document and identify federal award expenditures to ensure compliancewith the Matching, Level of Effort, Earmarking compliance requirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Reference Number:2022-016Prior Year Finding:NoFederal Agency:U.S. Department of Health and Human ServicesState Agency:Department of HealthFederal Program:Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), COVID-19 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC)Assistance Listing Number:93.323Award Number and Year:6 NU62PS924524-01-04 (2018), 18NU62PS924524 (2019), 5 NU62PS924524-03-00 (2020), 6 NU62PS924524-03-02 (2020)Compliance Requirement:Allowable Costs/Cost PrinciplesType of Finding:Material Weakness in Internal Control Over Compliance, Material NoncomplianceCriteria or specific requirement:Compliance: Per 2 CFR 200.403, except where otherwise authorized by statute, costs must meet the following general criteria to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and be allocable under these principles.(b) Conform to any limitations or exclusions outlined in these principles or the Federal award regarding types or amount of cost items.(c) Be consistent with policies and procedures that apply uniformly to Federally financed and other activities of the non-Federal entity.(d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost.(e) Be determined following generally accepted accounting principles (GAAP), except for state and local governments and Indian tribes only, as otherwise provided for in this part.(f) Not be included as a cost or used to meet cost sharing or matching requirements of any other Federally financed program in either the current or a prior period. See also ?200.306 Cost sharing or matching paragraph (b).(g) Be adequately documented.Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with the 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).Condition:The Department of Health (Department) was unable to provide supporting documentation for disbursement transactions charged to the program.Context:The Department was unable to provide supporting documentation for 17 of 60 disbursement transactions selected for testing. Auditors were not able to verify whether the expenditures were allowable per program requirements nor that they had been properly reviewed and approved.Questioned costs:Questioned costs of $59,466 represent the total of unsupported disbursements charged to the program.Cause:The Department?s procedures and controls were not sufficient to ensure that expenditures charged to the program were allowable and properly documented in accordance with federal requirements.Effect:Unallowable and unapproved costs may have been charged to the program.Recommendation:We recommend that the Department review its current procedures and controls to ensure that all expenditures charged to the program are supported by documentation, are properly reviewed and approved, and that documentation is readily available for audit. The Department should not seek federal reimbursement unless it can substantiate that disbursements are allowable and properly approved.Views of responsible officials:Due to the COVID-19 pandemic and the resulting remote teleworking period that was in place at the Department of Health (DOH) during the FY 2022 audit period, some payment documents were approved remotely without physical documents in hand, and the payment documentation for the 17 of 60 ELC general disbursement transactions examined were either not delivered to the office to be filed yet or have been delivered but misfiled. DOH Central Accounts Payable will review and improve its current procedures and controls to ensure all physical payment documents are reviewed, approved, and filed correctly under the current hybrid remote working conditions in place now since the pandemic ceased.
Reference Number:2022-016Prior Year Finding:NoFederal Agency:U.S. Department of Health and Human ServicesState Agency:Department of HealthFederal Program:Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), COVID-19 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC)Assistance Listing Number:93.323Award Number and Year:6 NU62PS924524-01-04 (2018), 18NU62PS924524 (2019), 5 NU62PS924524-03-00 (2020), 6 NU62PS924524-03-02 (2020)Compliance Requirement:Allowable Costs/Cost PrinciplesType of Finding:Material Weakness in Internal Control Over Compliance, Material NoncomplianceCriteria or specific requirement:Compliance: Per 2 CFR 200.403, except where otherwise authorized by statute, costs must meet the following general criteria to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and be allocable under these principles.(b) Conform to any limitations or exclusions outlined in these principles or the Federal award regarding types or amount of cost items.(c) Be consistent with policies and procedures that apply uniformly to Federally financed and other activities of the non-Federal entity.(d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost.(e) Be determined following generally accepted accounting principles (GAAP), except for state and local governments and Indian tribes only, as otherwise provided for in this part.(f) Not be included as a cost or used to meet cost sharing or matching requirements of any other Federally financed program in either the current or a prior period. See also ?200.306 Cost sharing or matching paragraph (b).(g) Be adequately documented.Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with the 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).Condition:The Department of Health (Department) was unable to provide supporting documentation for disbursement transactions charged to the program.Context:The Department was unable to provide supporting documentation for 17 of 60 disbursement transactions selected for testing. Auditors were not able to verify whether the expenditures were allowable per program requirements nor that they had been properly reviewed and approved.Questioned costs:Questioned costs of $59,466 represent the total of unsupported disbursements charged to the program.Cause:The Department?s procedures and controls were not sufficient to ensure that expenditures charged to the program were allowable and properly documented in accordance with federal requirements.Effect:Unallowable and unapproved costs may have been charged to the program.Recommendation:We recommend that the Department review its current procedures and controls to ensure that all expenditures charged to the program are supported by documentation, are properly reviewed and approved, and that documentation is readily available for audit. The Department should not seek federal reimbursement unless it can substantiate that disbursements are allowable and properly approved.Views of responsible officials:Due to the COVID-19 pandemic and the resulting remote teleworking period that was in place at the Department of Health (DOH) during the FY 2022 audit period, some payment documents were approved remotely without physical documents in hand, and the payment documentation for the 17 of 60 ELC general disbursement transactions examined were either not delivered to the office to be filed yet or have been delivered but misfiled. DOH Central Accounts Payable will review and improve its current procedures and controls to ensure all physical payment documents are reviewed, approved, and filed correctly under the current hybrid remote working conditions in place now since the pandemic ceased.
Reference Number:2022-021Prior Year Finding:NoFederal Agency:Department of Health and Human ServicesState Agency:Department of Children and FamiliesFederal Program:Social Services Block GrantAssistance Listing Number:93.667Award Number and Year:G-2200NJSOSR (10/1/2021 ? 3/30/2023)Compliance Requirement:Period of PerformanceType of FindingSignificant Deficiency in Internal Control Over Compliance, Other MattersCriteria or specific requirement:Compliance ? A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Social Services Block Grant funds must be expended by the state in the fiscal year allotted or in the succeeding fiscal year.Control ? Per 2 CFR Section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).Condition:The Department of Children and Families (Department) charged costs to the program that were incurred outside of the grant award?s period of performance.Context:Four of forty expenditure transactions selected for testing, totaling $842, were incurred prior to the award start date of October 1, 2021.Questioned costs:$842, the total of expenditures charged to the program that were incurred outside of the grant award?s period of performance.Cause:Accounting staff identified and charged program costs to the incorrect grant. The Department?s review process did not detect the errors nor take timely corrective action.Effect:The Department was not compliant with the grant?s period of performance which could result in the grantor?s disallowance of the costs.Recommendation:We recommend that the Department review and enhance its procedures and controls to ensure that expenditures charged to the program are incurred within the grant?s period of performance.Views of responsible officials:The Department of Children and Families (DCF) will review and enhance its procedures and controls to ensure that expenditures charged to the program are incurred within each grant award?s specified period of performance.Further, as the federal SSBG grant award cited has a period of performance that remains open through September 2023, DCF has adjusted the four transactions that were posted incorrectly to another available funding source and ensured that all transactions presently recorded are now in compliance and within the specified period of performance.
Reference Number:2022-024Prior Year Finding:NoFederal Agency:Social Security AdministrationState Agency:Department of Labor and Workforce DevelopmentFederal Program:Disability Insurance/SSI ClusterAssistance Listing Number:96.001Award Number and Year:04-2204NJD100 (10/1/2021 ? 3/30/2023), 04-2104NJD100 (10/1/2020 ? 3/30/2022), 04-2004NJD100 (10/1/2019 ? 3/30/2021)Compliance Requirement:Period of PerformanceType of FindingSignificant Deficiency in Internal Control Over Compliance, Other MattersCriteria or specific requirement:Compliance ? A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods.Control ? Per 2 CFR Section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).Condition:The Department of Labor and Workforce Development (Department) charged costs to the program that were incurred outside of the grant award?s period of performance.Context:Two of six expenditure transactions selected for testing, totaling $435, were incurred prior to the award start date of October 1, 2021.Questioned costs:$435, the total of expenditures charged to the program that were incurred outside of the grant?s period of performance.Cause:Accounting staff identified and charged program costs to the incorrect grant. The Program?s review process did not detect the errors nor take timely corrective action.Effect:The Department was not compliant with the grant?s period of performance which could result in the grantor?s disallowance of the costs.Recommendation:We recommend that the Department review its procedures to ensure that expenditures charged to the program are incurred within the grant?s period of performance.Views of responsible officials:The New Jersey Department of Labor and Workforce Development (DLWD) has a policy in place for processing tuition reimbursements that are performed by the Department?s Accounts Payable unit. The policy was reviewed by the Office of Finance & Accounting (F&A) and internal control procedures were enhanced to ensure that fiscal cutoff measures were appropriately addressed. Tuition reimbursement procedures include having the requests forwarded to the responsible Supervising Analyst in the Appropriations/Accounting unit for final review and approval to ensure the proper fiscal period is charged. The correcting transactions were completed during the Single Audit timeframe to remediate the findings by charging and reimbursing the proper fiscal year accounts. The DLWD will continue its efforts to ensure compliance and that all charges applied to Federal awards are within the specified period of performance going forward.
Finding 2022-001- Activities Allowed or Unallowed, Allowable Costs- Significant Deficiency Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listing No.: 21.027 Federal Agency: Department of the Treasury ? Pass-through from the State of California Award No.: WWID 4SSO10370 & CA 1910156 Award Year: Fiscal year 2021-2022 Category of Finding: Activities Allowed or Unallowed, Allowable Costs Criteria or Specific Requirement: Allowable Costs - 2 CFR Part 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: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. See also ? 200.306(b). (g) Be adequately documented. See also ?? 200.300 through 200.309 of this part. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to ? 200.308(e)(3). Per California Water and Wastewater Arrearage Payment Program Guidelines amended on January 19, 2022, providers that accrued residential and commercial customer arrearages during the COVID-19 pandemic bill relief period (March 4, 2020 through June 15, 2021) are eligible for the water and wastewater arrearages funding. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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: The City did not have an effective system of internal control in place to ensure the correct COVID-19 pandemic relief period was applied to identify eligible customers to have their bills paid with federal grant funds. Context: Crowe selected a total of 60 payment transactions, consisting of 30 water bills and 30 wastewater bills that were included in the arrearage program. We noted that one of the water bills selected for testing had a service date from June 28, 2021 in the amount $77.88. Upon further discussion with City management we noted the City applied the incorrect pandemic relief period to the program. Instead of a date of June 15, 2021, the City was using June 30, 2021 as the cutoff date. Management subsequently reviewed the entire population of the bills and quantified that there were 93 water bills with aggregate amount of $20,199 and 81 wastewater bills with aggregate amount of $15,331 ineligible for the funding. Cause: The City applied the incorrect pandemic relief period to the program. Instead of a date of June 15, 2021, the City was using June 30, 2021 as the cutoff date. Effect or Potential Effect: There were 93 water bills with totaled amount of $20,199 and 81 wastewater bills with totaled amount of $15,331 ineligible for the funding. Questioned Costs: $35,530 Identification of a repeat finding: Not a repeat finding. Recommendation: We recommend that the City implement internal controls to review the eligibility period for water and wastewater arrearages funding to identify the correct eligible applicants prior to disbursement. Views of Responsible Officials: Payments applied to the 93 water bills and 81 wastewater bills will be reversed on the customer?s accounts. A notice will be issued to customers via mail and email (where possible) of the discrepancy. The funds will be returned to the State pursuant to their outlined procedures. Moving forward, the City will ensure that there is a multi-layered approval process to review the eligibility period of any State funding to identify the correct eligible applicants prior to disbursement. For future funding related to water and/or waster bills, the list of eligible applicants will be compiled by an analyst within the department and will be reviewed by the Revenue Services Manager and Assistant Finance Director prior to disbursement.
Finding 2022-006 Assistance Listing Number: 19.510 Program Title: U.S. Refugee Admissions Program Agency: U.S. Department of State Pass-Through Entity: United States Conference of Catholic Bishops Federal Award Identification Number: SPRMCO21CA3001, SPRMCO22CA0023 and SPRMCO21CA3291 Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance Criteria: In accordance with Title 2 CFR Part 200.302, costs must be supported by source documentation. In accordance with Title 2 CFR Part 200.403, costs must be adequately documented to be allowable costs under the federal program. The Cooperative Agreement with the U.S. Department of State requires recipients to maintain a case file for each client that includes client acknowledgement of receipt of direct assistance. Condition: We tested fifty-two non-payroll expenditures charged to the federal program. Of the fifty-two expenditures, six expenditures did not have any supporting documentation that could be located. We tested forty non-payroll expenditures charged to the program to ensure the Client Acknowledgement of Receipt of Direct Assistance Form was obtained. Of the forty expenditures, two forms were missing. Therefore, an additional twenty-five expenditures charged to the program were selected, and one additional form was missing from the expanded sample. Cause: Catholic Charities was unable to locate supporting documentation for non-payroll expenditures charged to the federal program. Effect: Six non-payroll expenditures did not have any supporting documentation as required by Title 2 CFR Part 200.302 and Title I CFR Part 200.403. Three non-payroll expenditures did not have the Client Acknowledgement of Receipt of Direct Assistance Form. Questioned Costs: $2,541 Context: Total non-payroll expenditures charged to the federal program was $559,001. Repeat Finding: Not applicable. Recommendation: We recommend Catholic Charities maintain supporting documentation for all expenditures charged to the federal program. We also recommend Catholic Charities ensure the signed Client Acknowledgement of Receipt of Direct Assistance Form is maintained. Views of the Responsible Officials: Catholic Charities of Central and Northern Missouri agrees with this finding and while some of the problems which arose were related to a burst water pipe over an extended holiday that destroyed many of the records, All invoices and documentation related to expenditure of federal funds are now scanned and attached to the accounting entry recording the payable. With regards to the Client Acknowledgement of Receipt of Direct Assistance Forms, much of that issue was related to cultural issues where male refugees would not let their spouses sign any such documentation. We have taken steps to ensure that the documentation is signed at the time assistance is given and continue to work with the refugees as to the importance of having the proper paperwork on file.
Condition: The Municipality failed to identify, within their records, a list of transactions, nor could provide supporting documentation for the disbursement of $373,670 of program funds. Several inconsistencies between the disbursement and supporting documentation were observed for disbursements totaling $8,579. A total of $373,670 of program funds were transferred to other accounts of the Municipality. The Municipality did not provide us with supporting documentation for transactions totaling $373,670, therefore, we could not ascertain that these transactions complied with program regulations. Context: The Municipality received $758,218 of program funds during the fiscal year ended on June 30, 2022. A total of $1,526,593 was included in the schedule of expenditures of federal awards (SEFA) as program expenses. The Municipality did not provide sufficient and appropriate documentation for $373,670 of program expenses. This represents 24% of the expenses reported in the SEFA. The following situations were observed for disbursements totaling $8,579: Context, continued: Situation Number of transactions with situation Disbursement was made before the receipt of the related invoice 1 Duplicity of payments for the same invoice 2 Disbursement was made without the receipt of the related invoice nor the signoff of all required personnel. 1 Program regulation states that local governments are required to use payments from the Fund to cover: 1) Necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (Covid-19), 2) Costs that were not accounted in the governments’ most recently approved budget as of March 27, 2020, and 3) Costs that were incurred during the period that begins on March 1, 2020; and ends on December 31, 2021. Program Closure Report reminds the Municipality that as per 2 C.F.R. 200 and applicable federal regulations to the CRF Program, documentation that serves as evidence of any eligible expenditure reported under the CRF Program should be preserved and maintained for at least five years. We could not ascertain that these disbursements complied with program regulations. The Coronavirus Relief Fund is authorized by the Cares Act, Pub. L. No. 116-136, Division A, Title V (2020) (codified as 42 USC 81 et seq.) as amended by the Consolidated Appropriations Act, 201, Pub. L. No. 116-260 Division N, Title X, Section 1001. Criteria: Uniform Guidance states in 2 CFR 200.403 that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. As per 2 CFR 200.302 the other non-Federal entity’s financial management system must provide for the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statues, regulations, and the terms and conditions of the Federal Award. Cause: The Municipality failed to provide documentation that served as evidence of eligible expenses for the CRF program for expenses totaling $373,670. The Municipality applied inconsistent internal control and program procedures to disbursement transactions totaling $8,579. Effect: Remedies for noncompliance are described in 2 CFR 200.339. Grantor may impose additional conditions as described in 2 CRF 200.208 or take one or more of the actions listed on 2 CRF 200.339 as appropriate in the circumstances. Auditor’s recommendation: The Municipality must strengthen internal controls and procedures to assure that disbursement of program funds is properly documented and allowed under program regulations. The Municipality must ensure that all documentation that serves as evidence for eligible expenses be preserved and maintained for at least five years. Views of Responsible officials and corrective actions: Evidence of AAFAF Funds closeout report was provided, there is no issue. Auditor Comments: The Coronavirus Relief Fund (CRF) Transfer Agreement – Assistance Program to Municipalities establishes the following on its grant agreement: 2.3 Recordkeeping: Transferee will maintain its books and records in a manner that will provide Transferor with sufficient detail to review Transferee’s receipts and expenditures relating to the Transfer. Transferee will make such records available for review by Transferor or its agent or designee upon reasonable notice during the Transfer Period and for five (5) years after the termination or expiration of this Agreement. 5.2 Compliance Audit Requirements E.: As applicable, Transferees required to have an audit must ensure the audits are performed in accordance with Generally Accepted Auditing Standards (GAAS) and Government Auditing Standards. The Assistance Program to Municipalities Program Closure Report that management refers to states the following: “Receipt of this notification means that your municipality does not need to provide further notifications or Use of Funds reports since the Program has been closed for your municipality. Your municipality is advised that all documentation that serves as evidence of any eligible expenditure reported under the CRF Program should be preserved and maintained for at least five (5) years, as indicated by federal regulation 2 C.F.R. 200 and applicable federal regulations to the CRF Program. Additionally, please be advised that your municipality will continue to be subject to revisions or audits by local, state or federal agencies pertaining to the use of funds in accordance with federal regulations applicable to the CRF program or the federal regulations regarding Federal Awards, 2 C.F.R. 200. Therefore, your municipality should expect and be prepared for a formal audit by the Government of Puerto Rico or by any pertinent federal agency”. Appendix XI to Part 200 – Compliance Supplement identifies Allowable Costs/Cost Principle as a compliance requirement. Except where otherwise authorized by statue, cost must meet the following general criteria in order to be allowable under federal awards: (1) Be necessary and reasonable for the performance of the federal award and be allocable thereto under the principles in 2 CFR Part 200, Subpart E., and (2) be adequately documented, among other things. The Assistance Program to Municipalities Program Closure Report does not constitute a list of transactions nor adequate supporting documentation of the transactions totaling $373,670. It also does not explain the inconsistencies in supporting documentation observed for disbursements totaling $8,579. Audit Status: Unresolved
Condition: The Municipality failed to identify, within their records, a list of transactions, nor could provide supporting documentation for the disbursement of $1,468,197 of program funds. Documentation for the disbursement of $17,565 of program funds was not identified by the Municipality nor provided for our review. A total of $1,468,197 of program funds were transferred to other accounts of the Municipality. The Municipality did not provide us with supporting documentation for transactions totaling $1,468,197, therefore, we could not ascertain that these transactions complied with program regulations. Context: The Municipality received $6,013,479 of program funds during the fiscal year ended on June 30, 2022. A total of $ 4,810,454 was included in the schedule of expenditures of federal awards (SEFA) as program expenses. The Municipality did not provide sufficient and appropriate documentation for $1,485,762 of program expenses. This represents 31% of the expenses reported in the SEFA. The Municipality indicated that Revenue Replacement was their only project expenditure category in their annual March 2022 SLFRF Compliance Report. Revenue loss in and of itself is not an eligible use. Instead, recipients calculate lost revenue based on the formula provided in the Interim Final Rule and Final Rule to determine the limit for funds that can be used for the provision of government services. Entities are expected to use the direct payments to meet pandemic response needs and rebuild a strong, more equitable economy as the country recovers. Interim and final regulations state that recipients may not use funds to pay interest or principal on outstanding debt, as these expenses would not address the needs of pandemic response or its negative economic impacts. Such expenses would also not be considered provision of government services, as these financing expenses do not directly provide services or aid to citizens. The Coronavirus State and Local Fiscal Recovery Funds program is authorized by sections 602 and 603 of the Social Security Act as added by section 9901 of the American Rescue Plan Act of 2021, Pub. L. No. 117-2 (Mar. 11, 2021). Recipients may use payments from the Fund to among other things, replace lost public sector revenue to provide government services. Criteria: Uniform Guidance states in 2 CFR 200.403 that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. As per 2 CFR 200.302 the other non-Federal entity’s financial management system must provide for the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statues, regulations, and the terms: and conditions of the Federal Award. Further, Coronavirus Local Fiscal Recovery Fund Award terms and conditions state the following regarding the maintenance of and Access to Records 1. Recipient shall maintain records and financial documents sufficient to evidence compliance with section 603© of the Act, Treasury’s regulations implementing that section, and guidance issued by Treasury regarding the foregoing. 2. The Treasury Office of Inspector General and the Government Accountability Office, or their authorized representatives, shall have the right of access to records (electronic and otherwise) of Recipient in order to conduct audits or other investigations. 3. Records shall be maintained by the Recipient for a period of five (5) years after all funds have been expended or returned to the Treasury, whichever is later. Cause: The Municipality failed to provide documentation that served as evidence of eligible expenses for the program for expenses totaling $1,485,762. The Municipality applied inconsistent internal control and program procedures to disbursement transactions totaling $17,565. Effect: Coronavirus Local Fiscal Recovery Fund Award terms and conditions state the following regarding Remedial Actions: In the event of recipient’s noncompliance with section 603 of the Act, other applicable laws, Treasury’s implementing regulations, guidance , or any reporting or other program requirements, Treasury may impose additional conditions on the receipt of a subsequent tranche of future award funds, If any, or take other available remedies as set forth in 2 CFR 200.339 In the case of a violation of section 603 (c ) of the Act regarding the use of funds, previous payments shall be subject to recoupment as provided in section 603 ( C )of the Act. Auditor’s recommendation: The Municipality must strengthen internal controls and procedures to assure that disbursement of program funds is properly documented and allowed under program regulations. The Municipality must ensure that all documentation that serves as evidence for eligible expenses be preserved and maintained for at least five years. Views of Responsible officials and corrective actions: The accounting staff will continue searching for supporting documentation related to the disbursements amounting $17,565. The Coronavirus State & Local Fiscal Recovery Funds (CSLFR) Department of Treasury Final Rule of January 2022., offers a standard allowance for revenue loss of $10 million, allowing recipients to select between a standard amount of revenue loss or complete a full revenue loss calculation. Recipients that select the standard allowance may use that amount, in many cases their full award, for government services. The Municipality’s management selected the standard allowance, since the amount awarded of CSLFR funds were less than $10 million ad determined that the use of these funds was for governmental services, which are services traditionally provided by recipient governments. The Municipality determined that the payroll expenditures of several departments of the Municipality’s General Fund will be charged to the CSLFR fund as government services. The transfer of $1,468,197 of CSLFR to other Municipality’s bank accounts was to cover the payrolls related to governmental services accounted in the Municipality’s General Fund during the fiscal year 2021-2022. Due to an involuntary omission, these transfers were not recorded as expenditures in the CSLFR fund in the accounting system of the Municipality. To correct this accounting error the Municipality’s management gave instructions to the accounting staff to start reclassifying in the accounting system as soon as possible, these transfers to payroll expenditures accounts in the CSLFR fund. Municipality’s management believes that this finding should be related to an issue of reporting because the Municipality complied with the requirements of activities allowed or unallowed and allowable costs, since the Municipality disbursed CSLFR funds related to governmental services in accordance with the Department of Treasury Final Rule of January 2022. No actions are required related to this finding. Auditor Comments: The U.S Department of The Treasury Coronavirus Local Fiscal Recovery Fund Award Terms and Conditions establishes the following: Recipient shall maintain records and financial documents sufficient to evidence compliance with section 603 ( c ) of the Act, Treasury’s regulations implementing that section, and guidance issued by Treasury regarding the foregoing. Records shall be maintained by Recipient for a period of five (5) years after all funds have been expended or returned to Treasury, whichever is later. 2 CFR 200.302 states the other non-Federal entity’s financial management system must provide for the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statues, regulations, and the terms and conditions of the Federal Award. Appendix XI to Part 200 – Compliance Supplement identifies Allowable Costs/Cost Principle as a compliance requirement. Except where otherwise authorized by statue, cost must meet the following general criteria in order to be allowable under federal awards: (1) Be necessary and reasonable for the performance of the federal award and be allocable thereto under the principles in 2 CFR Part 200, Subpart E., and (2) be adequately documented, among other things. Although Government Services is an allowable expense category for the CSLFR program, and the Municipality’s management represent to us that the transfers to other accounts within the Municipality correspond to payroll expenditures, the Municipality did not provide us with a list of transactions, nor provided supporting documentation relating to these payroll transactions for the amount of $1,468,197. Program regulations states that records shall be maintained by the Recipient for a period of 5 years after all funds have been expended and federal regulation states that in order to be allowable, costs need to be properly documented. Audit Status: Unresolved
Condition: The Municipality could not provide supporting documentation for the disbursement of $173,454 of program funds. These disbursements were accounted for as increase in the due from other funds account. We could not ascertain that the disbursements of $173,454 complied with program regulations. Context: The Municipality received $123,938 of program funds during the fiscal year ended on June 30, 2022. A total of $173,454 of program funds were disbursed without sufficient and appropriate documentation. These funds were disbursed as electronic transfers to other municipal accounts and were accounted for as increases in the due from other funds account. The Municipality repaid during the current year the amount of $447,816 related to last year’s disbursements to the due from other funds account. As of June 30, 2022 the balance of the due from other funds account is $555,110. Program regulation states that costs must be directly tied to the performance of eligible work; adequately documented; reduced by all applicable credits, such as insurance proceeds and salvage values; authorized and not prohibited under Federal or State government laws or regulation; consistent with the applicant’s internal policies, regulations, and procedures that apply uniformly to both Federal awards and other activities of the applicant; and necessary and reasonable to accomplish the work properly and efficiently. We could not ascertain that these disbursements complied with program regulations. The Public Assistance Program is authorized under the Robert T. Stafford Disaster Relief and Emergency assistance Act, as Amended (Stafford Act). Assistance is provided so that communities can quickly respond to and recover from major disasters or emergencies declared by the President. The Municipality has approved grants for the Hurricane Irma and Maria disasters declared on September 2017 (disasters 3384EMPR, 4336 DRPR and 4339 DRPR). The program approves funding for debris removal, emergency protective measures, and the restoration of disaster-damaged, publicly owned facilities. It also encourages protection of damaged facilities from future incidents by providing assistance for hazard mitigation measures. Criteria: Uniform Guidance states in 2 CFR 200.403 that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. As per 2 CFR 200.302 the other non-Federal entity’s financial management system must provide for the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statues, regulations, and the terms and conditions of the Federal Award. As per 44 CFR section 206.201 and 206.203, the public assistance program provides grant funding for emergency protective measures and debris removal (Emergency Work) and for permanent restoration of damaged facilities, including cost-effective hazard mitigation to protect facilities from future damage (Permanent Work). Cause: The Municipality applied inconsistent program procedures to the three disbursement transactions totaling $173,454. Effect: Remedies for noncompliance are described in 2 CFR 200.339. Grantor may impose additional conditions as described in 2 CRF 200.208 or take one or more of the actions listed on 2 CRF 200.339 as appropriate in the circumstances. Program regulations provide for recovery of assistance and penalty provisions on 44 CFR Part 206. Auditor’s recommendation: The Municipality must strengthen internal controls and procedures to assure that disbursement of program funds are properly documented, can be directly tied to the performance of eligible work, and is allowed under program regulations. Views of Responsible officials and corrective actions: The Municipality Administration is committed to identify the control of deficiency that allowed for the deficiency to happen. Additionally, the administration is committed to implementing the correct control structure to prevent the situation from happening in the future. The Municipality Management will continue the search of supporting documentation of the highlighted transactions. New proposed control structure to be evaluated by Municipality for adequacy. Audit Status: In process of completion.
Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Federal Award Identification Assistance Listing Program Title: Formula Grants for Rural Areas Assistance Listing Program Number: 20.509 Federal Award ID Number and Year: Various Federal Agency: U.S. Department of Transportation Pass-Through Entity: Nebraska Department of Transportation Criteria The Organization must establish and maintain effective internal control over the Federal award that provides reasonable assurance that they are managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal Award (2 CFR 200.303). Costs must be adequately documented. (2 CFR 200.403(g)). Costs must be paid for prior to the date of the reimbursement request. (2 CFR 200.305(b)(3)). Condition The Organization lacked adequate documentation to support: - That certain expenditures followed an approval process before being paid. - That certain expenditures were for allowable activities and in accordance with allowable cost principles. The Organization requested reimbursement for expenses that had not yet been paid. Repeat Finding No. Cause Procedures within the Organization were inadequate to ensure that expenditures follow a review and approval process prior to being paid, that costs were in accordance with Federal requirements and that only costs which had been paid for were requested for reimbursement. Effect or Potential Effect Increased potential for errors or misuse of funds. Questioned Costs Known $35,806 Statistical Sample No. Context During the fiscal year, the Organization requested a monthly reimbursement from the pass-through entity. Auditor selected three of these monthly reimbursement requests (September 2021, May 2022, and June 2022) for testing, reviewing all non-payroll-related expenses, resulting in testing approximately 90 different line items composing many more individual transactions. Within this sample, auditor noted: - Multiple instances where no documentation existed to support a system of internal control whereby expenditures were approved by a competent individual prior to their being paid. - Multiple instances where documentation provided did not include sufficient detail to determine if products and/or services provided meet the definition of allowable activity, resulting in questioned costs of $2,921. - One expenditure for which reimbursement was requested in May 2022 and again in June 2022 amounting to $1,283 (questioned cost amount included in previous point). - For June 2022, an inability to crosswalk between the Organization’s internal fuel summary report and the related vendor statements, resulting in questioned costs of $32,885. Additionally, we noted both character and line transposition errors between the fuel summary report and the reimbursement request. Similarly, auditor was unable to obtain evidence that fuel expenditures were paid prior to the Organization requesting reimbursement. - Multiple instances of expenditure misclassification in violation of the invoicing and documentation guidelines issued by the pass-through entity, resulting in no additional questioned costs. Recommendation We recommend the Organization establish a system of internal control consisting of policies and procedures whereby all expenditures are properly explained with supporting documentation and are reviewed and approved prior to payment. Additionally, that only those expenditures which have been paid for are requested for reimbursement. Views of Responsible Officials See Corrective Action Plan, below.
Identification of the Federal Program: 93.498 COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Program Criteria: In accordance with 2 CFR Section 200.303, non-Federal entities must establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Additionally, in accordance with 2 CFR Section 200.403, costs must meet certain general criteria in order to be allowable under Federal awards. That criterion includes, but is not limited to, adequate documentation and be necessary and reasonable for the performance of the Federal award. Condition: During our audit of nonpayroll expenditures charged to the PRF Program, we noted that a total amount of $28,018 of professional service expenses was included twice in the total federal expenditures reported within the PRF Program. As such, the PRF Program’s total nonpayroll expenditures was overstated by $28,018 while the lost revenue claimed was understated by the same amount, wherein the net impact is zero. Cause: The Authority did not perform a thorough review of expenses charged to the program. Effect: The amounts reported to the Health Resources & Services Administration (HRSA) Provider Relief Fund Portal did not reflect the correct amounts within the nonpayroll expenditures and lost revenue for the PRF Program. However, the total amount claimed under PRF program was still correct. Questioned Costs: None. Context: The Authority inadvertently included professional service expenses of $28,018 twice within the nonpayroll expenditures rather than including the same amount under lost revenue. Repeat Finding: No. Recommendation: We recommend the Authority strengthen its policies, procedures and internal controls over the review of expenditures charged to the federal program. View of Responsible Officials: The Authority’s management agrees with the federal award finding identified in the audit. Management’s response to this finding is described in the accompanying management’s corrective action plan.
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.