Finding 2021-003 – Allowable Costs/Cost Principles – Material Weakness in Internal Control Over Compliance and Instance of Material Noncompliance. See finding 2021-002 for the included table. Criteria: 2021 Compliance Supplement and 2 CFR 200.403(h) stated that a non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance. In addition, the PRF terms and conditions noted that to be considered an allowable expense under PRF, the expense must be used to prevent, prepare for, and respond to COVID-19 and that those expenses were not reimbursed from other sources and other sources were not obligated to reimburse them. Condition/Context: The Organization decided that it was critical to keep Astria Toppenish Hospital (Toppenish) operating during the COVID-19 pandemic despite Toppenish experiencing losses. As a result, the Organization determined that all expenses of the Organization not explicitly unallowable per the related guidance and not reimbursed or obligated to be reimbursed by other sources qualified as allowable expenses that prevented, prepared for, and responded to COVID-19 during the period of availability that they were experiencing losses for Toppenish. Internal unaudited financial statements had losses in excess of the PRF funds used for expenses. Support was audited for expenses selected; however, because there were no financial statement audits performed from 2018 – 2020, we were unable to audit the Toppenish losses calculated by management. Repeat Findings from Prior Year(s): This is not a repeat finding. Cause/Effect: In addition to the challenges encountered while operating a health system during the COVID-19 pandemic, leading up to the audit period, the Organization was significantly impacted by bankruptcy and turnover of leadership. As a result, no financial statement audits were performed from 2018 – 2020. A financial statement audit was performed in 2021; however, the related Toppenish expenses were incurred prior to December 31, 2020. We were unable to obtain audit evidence supporting Toppenish’s losses for the year ended December 31, 2020. As a result of these matters, we were unable to determine whether the Organization complied with the allowable costs/cost principles requirements applicable to the major program. Questioned costs: Could not be determined. Recommendation: We recommend management implement policies and procedures to ensure that the Organization understands the terms and conditions of the Federal award and can meet the related compliance requirements. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. The Organization will review and modify policies and procedures over the program to ensure management implements policies and procedures to ensure there is understanding of the terms and conditions of Federal awards.
Internal Controls and Compliance over Allowable Costs/Cost Principles and Period of Performance Identification of Federal Program: Coronavirus Relief Fund – Assistance Listing No. 21.019 Criteria: 2 CFR Part 200 requires that the City and its Contractor, a non-federal entity 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). The provisions of the Coronavirus Relief Fund (CRF), as stipulated by the U.S. Treasury and subject to restrictions outlines in the guidance set forth in Section 601(d) of the Social Security Act, as added by Section 5001 of the “CARES” Act, restrict use of the funding for allowable costs and activities. Pursuant to Code of Federal Regulation (CFR) 200.403, except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under federal awards: (a) Be necessary and reasonable for the performance of the federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian Tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost-sharing or matching requirements of any other federally-financed program in either the current or a prior period. See also CFR 200.306(b). (g) Be adequately documented. See also CFR 200.300 – 200.309. (h) Cost must be incurred during the approved budget period. The federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to CFR 200.308(e)(3). Cause/Condition: During our testing of the Coronavirus Relief Fund program, we noted that the City, through its contracted employee services, failed to establish and adhere to an effective internal control structure that would facilitate its use of Coronavirus Relief Funding, comply with regulations and terms of the federal award and take prompt action when instances of noncompliance were identified. As a result, the City was not in compliance with certain provisions of the grant. Results of testing also indicated unallowable and questioned use of the grant funding. The results of testwork performed and correspondence with City management noted the following: • No backup or supporting documentation for the evaluation, criteria, and selection of the grantees to be disbursed CRF funding was available or maintained by City personnel. Online applications were submitted, but there was inadequate documentation and an absence of evidence of a functioning internal control structure for the disbursement of funding used for the City’s Small Business Relief Program. • Approximately $4.25 million use of the funding was disbursed to grantees as part of the City’s Small Business Relief Program. As there was no backup or supporting documentation for the evaluation, criteria, and selection of the grantees to be disbursed CRF funding and because there were individuals responsible for selecting grantees that were potentially involved in a fraudulent scheme, all amounts tested within our sample of eighty-one (81) were determined to be questioned costs, which amounted to $3,070,900. Based on our sample of eighty-one (81) grantees tested, $196,250 was confirmed by the grantees as amounts requested and/or directed by former City representatives to be remitted to outside entities for marketing services. Such services were potentially a part of a fraudulent scheme under direction by former City Officials and later prosecuted. Such questioned amounts would not tie into delivery or performance of allowable services. • During our testing of CRF expenditures, we sampled twenty-one (21) disbursements made for public health costs incurred as a response to the pandemic, which are an allowable use of funding. We noted one (1) payment made in the amount of $3,500 for which no copy or check or disbursement was able to be provided. In addition, we noted that the disbursement for $3,500 as well as an additional disbursement of $12,000 were both paid to a City vendor that employed two former contracted City staff. Both amounts totaling $15,500 were determined to be questioned costs. • During our testing of CRF expenditures, we sampled nine (9) payments made to contractors, organizations and special services procured with CRF funding. We noted one (1) payment made in the amount of $50,000 for which no copy or check or disbursement was able to be provided. In addition, such contractors, organizations, and special services procured with the funding were noted to have bypassed City procurement protocol and eight (8) of the payments, totaling $163,500, were for services outside of the initial period of performance of the grant. As a result, the total tested disbursements of $213,500 were determined to be questioned costs. Effects or Potential Effects: Noncompliance with CFR related to allowable costs and period of performance results in an increased risk that charges to the grant do not represent actual costs incurred. Internal control deficiencies surrounding the grant result in an increased risk that noncompliance may not be detected or corrected timely. Questioned Costs: Known questioned costs amounted to $3,299,900. Likely questioned costs amounted to $5,896,456. Recommendation: We recommend that incoming City management strengthen its internal control structure surrounding its designation, use and disbursement of grants as well as implement and adhere to policies and procedures for the retention and safeguarding of original source documents to properly substantiate charges made to grants. Auditee’s Response: DeKalb County was given $125 million directly from the federal government. Of that amount, and through an intergovernmental agreement dated August 10, 2020, $32.6 million was distributed to the County’s municipalities on a per capita basis. The City of Stonecrest received $6,227,098. The City was to administer and distribute the funds in accordance with the federal program requirements to combat the public health emergency and resulting economic impact related to the COVID-19 pandemic. The City was also charged with maintaining through and accurate records regarding expenditure of the funds. Following the execution of the agreement with DeKalb County, the City Council adopted a resolution on September 28, 2020 calling for the Stonecrest CARES Act Funding plan. The City Council assigned contractor staff to set up protocols to manage the program. The City Manager, who was not on staff at the time, or designee was authorized to employ an administrator for the Small Business Support Program, to develop an education component and to create a CARES Act Relief Fund Committee to vet and select a program administrator. The Stonecrest COVID CARES Act Relief Fund was created as the umbrella group that would have oversite over the programs. The Committee was later renamed the Aaron Matthew Allen COVID Small Business Relief/Stonecrest Cares Committee to honor a local resident. The Committee was organized by contractor staff and included two members of City Council, several Contractor staff and consultants who were later paid to assist with the program. The Committee met four times between November 4, 2020 and December 22, 2020, however, there is no evidence that the program management plan, as outlined in the September 28, 2020 resolution was executed in accordance with the resolution. Contractor staff reported to other Committee members on activities and events related to the use of CARES Act funds, and the other committee members had no functional roles in CARES Act fund program. The updates included the naming of consultants involved in the program, but did not disclose that consultant contracts had been executed by contractor staff using the emergency procurement section of the City’s Purchasing Policy. There appears to be no factual basis or authority for use of emergency procurement procedures or execution of contracts by the contractor staff. Significantly, on October 30, 2020, a contract was signed by a City contractor staff with a recently organized not-for-profit organization to prepare disbursements to organizations using CARES Act funds based on notifications by the City Contractor staff. There were duties related to records and accounting but no other performance requirements. Other contracts were executed by contractor City staff who had no authority to enter contracts on the City’s behalf. That process should have included the City Purchasing agent, also a contractor staff, City Attorney and City Council reviews and approvals. The City was successful in obtaining records from the program contractors primarily related to bank statements, program grant application documents, check copies, front and back, however no backup or supporting documentation for the evaluation, criteria, and selection of the grantees to be disbursed funds was available or maintained by the City. The contractor was in full control of the operation of the CARES Act program. The City contends that established internal control procedures were not followed by employees assigned by the private government services contractor retained to provide management and operations services in a manner sufficient to prevent, detect, and/or correct various issues related to the City’s CARES Program. The City concedes that City employed staff did not timely submit reports to DeKalb County pursuant to terms of the Intergovernmental Agreement.Like the response by Mayor and City Council with the purchasing card findings, the City Attorney was engaged to investigate the CARES Act program organization and operation. Pursuant to those findings, federal and local law enforcement agencies were notified, and criminal charges were prosecuted and convictions secured. Based on those prosecution, the City received restitutions that will be reimbursed to DeKalb County. In addition, the City has made a claim as part of the January 31, 2023, filed Complaint for damages and other relief to be indemnified by the contractor for any claims by DeKalb County, including questioned unallowable costs, for reimbursement of Cares Act funds.
2021‐001 – Internal Controls over Activities Allowed and Allowable Costs – Significant Deficiency in Internal Controls over Compliance Federal Program Information: Funding Agency: U.S. Department of Health and Human Services Title: Provider Relief Fund CFDA Number: 93.498 Federal Award Identification number Award Year: 2020‐21 Condition: There were 2 samples that the Entity could not provide supporting documentation and 21 samples that the employee was not paid the approved pay rate. Criteria: Per 2 CFR section 200.303(a) the entity must ‐ Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non‐Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.403(g) – in order to be allowable under Federal awards, costs must be adequately documented and Per 2 CFR section 200.430(i) – Compensation – personal services – Standards for Documentation of Personnel Expenses, 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. Questioned costs: Employee paid a rate other than the approved pay rate. Total dollar amount of $874 was divided by the total payroll population tested to get a 7% error and then multiplied by the total payroll expenditures of the program to get a questioned costs of $6,848. Effect: The Entity paid employees time at a rate not approved. In addition the Entity did not retain supporting documentation. Cause: The Entity did not retain supporting documentation for expenditures paid with federal funding and did not have approved pay rate documentation to support the pay rate employee was paid. Auditors’ Recommendation: The Auditor recommends that the Entity implement controls for documenting and retaining information on expenditures charged to federal awards to follow the requirements over 2 CFR Section 200.430(g)(i) and in addition the Entity is properly paying employees at the approved pay rate. Views of Responsible Officials and Planned Corrective Action: See Corrective Action Plan.
2021‐001 – Internal Controls over Activities Allowed and Allowable Costs – Significant Deficiency in Internal Controls over Compliance Federal Program Information: Funding Agency: U.S. Department of Health and Human Services Title: Provider Relief Fund CFDA Number: 93.498 Federal Award Identification number Award Year: 2020‐21 Condition: There were 2 samples that the Entity could not provide supporting documentation and 21 samples that the employee was not paid the approved pay rate. Criteria: Per 2 CFR section 200.303(a) the entity must ‐ Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non‐Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.403(g) – in order to be allowable under Federal awards, costs must be adequately documented and Per 2 CFR section 200.430(i) – Compensation – personal services – Standards for Documentation of Personnel Expenses, 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. Questioned costs: Employee paid a rate other than the approved pay rate. Total dollar amount of $874 was divided by the total payroll population tested to get a 7% error and then multiplied by the total payroll expenditures of the program to get a questioned costs of $6,848. Effect: The Entity paid employees time at a rate not approved. In addition the Entity did not retain supporting documentation. Cause: The Entity did not retain supporting documentation for expenditures paid with federal funding and did not have approved pay rate documentation to support the pay rate employee was paid. Auditors’ Recommendation: The Auditor recommends that the Entity implement controls for documenting and retaining information on expenditures charged to federal awards to follow the requirements over 2 CFR Section 200.430(g)(i) and in addition the Entity is properly paying employees at the approved pay rate. Views of Responsible Officials and Planned Corrective Action: See Corrective Action Plan.
Condition - The Municipality’s staff could not provide us with the officially prepared and certified reports that supported compliance with the filing or submission of reports and financial information, as required by federal award and regulatory agreements. Likewise, reconciliations were not provided between the information used to prepare the required and submitted reports with the formal information presented and accounted for in the official Municipality’s accounting system. According to an analysis prepared by the Municipality of the bank account assigned to manage the use of Coronavirus Relief Fund (CRF) PHE - Transfer Funds, and transactions through this bank account during the fiscal year ended June 30, 2021, $1,055,864 has been expended or transferred to the general fund to cover eligible expenses under the terms allowed by the CRF PHE - Transfer Funds. As a consequence of these conditions, compliance with reporting requirements established by the pass-through entity, and related internal controls, could not be verified. Criteria - According to the Transfer Agreements, the transferee shall submit reports as the transferor determines are needed to verify use of the funds and compliance with conditions that are imposed on the transfer, and such reports shall be in such form, with such content, as specified by the transferor in the transfer plan and future program instructions directed to all recipients. Transferor will transfer emergency assistance fund to transferee for necessary expenditures related to the COVID-19 emergency by making a transfer on the basis set out in this Agreement and in the Transfer Plan. The reports must be due on the 15th day of each month, the transferee will submit a use of funds transfer report for the prior month’s expenses. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403, states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. Cause - There is a lack of knowledge and training to the personnel assigned to the management and reports preparation, as required by this federal award. Additionally, the Municipality does not have an adequate monitoring and internal control regarding the activity, filing and custody of reports, as required by the federal awards and the pass-through entity, and in a way that documents and supports the compliance with reporting requirements. Effect - The program is exposed to not being in compliance with the Reporting Requirements as established in agreement. Also, the Municipality is exposed to the Grantor questioning the use of funds. Recommendation - We recommend that the staff or department in charge locate and document all required reports that were filed according to the requirements of the grant agreement, including the reconciliation thereof with the official Municipality’s accounting subsidiaries. Also, it is absolutely necessary for the Municipality to design, document, establish and provide the necessary and required training, including guidelines and procedures, to all personnel who work directly or indirectly with the management of these federal funds.
Condition - The Municipality’s staff could not provide us with the officially prepared and certified reports that supported compliance with the filing or submission of reports and financial information, as required by federal award and regulatory agreements. Likewise, reconciliations were not provided between the information used to prepare the required and submitted reports with the formal information presented and accounted for in the official Municipality’s accounting system. According to an analysis prepared by the Municipality of the bank account assigned to manage the use of Coronavirus Relief Fund (CRF) PHE – Testing and Contact Tracing, and transactions through this bank account during the fiscal year ended June 30, 2021, $344,461 has been expended or transferred to the general fund to cover eligible expenses under the terms allowed by the CRF PHA - Tracing and Contact Tracing. As a consequence of these conditions, compliance with reporting requirements established by the pass-through entity, and related internal controls, could not be verified. Criteria - According to the Transfer Agreements, the transferee shall submit reports as the transferor determines are needed to verify use of the funds and compliance with conditions that are imposed on the transfer, and such reports shall be in such form, with such content, as specified by the transferor in the transfer plan and future program instructions directed to all recipients. Transferor will transfer emergency assistance fund to transferee for necessary expenditures related to the COVID-19 emergency by making a transfer on the basis set out in this Agreement and in the Transfer Plan. The reports must be due on the 15th day of each month, the transferee will submit a use of funds transfer report for the prior month’s expenses. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403, states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. Cause - There is a lack of knowledge and training to the personnel assigned to the management and reports preparation, as required by this federal award. Additionally, the Municipality does not have an adequate monitoring and internal control regarding the activity, filing and custody of reports, as required by the federal awards and the pass-through entity, and in a way that documents and supports the compliance with reporting requirements. Effect - The program is exposed to not being in compliance with the Reporting Requirements as established in agreement. Also, the Municipality is exposed to the Grantor questioning the use of funds. Recommendation - We recommend that the staff or department in charge locate and document all required reports that were filed according to the requirements of the grant agreement, including the reconciliation thereof with the official Municipality’s accounting subsidiaries. Also, it is absolutely necessary for the Municipality to design, document, establish and provide the necessary and required training, including guidelines and procedures, to all personnel who work directly or indirectly with the management of these federal funds.
Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, 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 and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-federal activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.
Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, 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 and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-federal activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.
Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, 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 and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-federal activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.
Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, 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 and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-federal activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.
Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, 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 and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-federal activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.
Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, 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 and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-federal activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.
Finding 2021-009 – Lack of Internal Controls and Noncompliance Over Major Federal Program - Activities Allowed or Unallowed; Allowed Costs/Cost Principles – Coronavirus Relief Fund PASS-THROUGH GRANTOR: Oklahoma Office of Management and Enterprise Services FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: $804,695 Condition: A test of 100% of payroll expenditures reflected program disbursements totaling $804,695 that were not expended in accordance with the Activities Allowed or Unallowed; Allowable Costs/Cost Principles due to ineligible costs. • The County was reimbursed $726,310 for General Government payroll expenditures for the offices of the County Commissioners, County Clerk, County Treasurer, County Assessor, and the County Court Clerk, for the period March 15, 2020, through October 30, 2020, which was determined to be an unallowed cost to mitigate or prevent the spread of COVID-19 in accordance with grant requirements. • The County was reimbursed $78,385 for 911 Trust Authority payroll expenditures, for the period August 15, 2020, through October 30, 2020, which was determined to be an unallowed cost of non-county employees to mitigate or prevent the spread of COVID-19 in accordance with grant requirements. Cause of Condition: Policies and procedures have not been designed and implemented to ensure that the County has proper internal controls over federal grant expenditures and that the expenditures were for an allowable cost. Effect of Condition: This condition resulted in noncompliance with grant requirements. This could hinder the County from receiving future federal funding and could result in the repayment of grants funds to the grantor agency. Recommendation: OSAI recommends the County design and implement policies and procedures to ensure compliance with applicable grant requirements. Management Response: Chairman of the Board of County Commissioners: The Board of County Commissioners will work to ensure federal disbursements comply with federal grant requirements. The County relied on the Oklahoma Office of Management and Enterprise Services to ensure that the County reimbursement request was for eligible expenditures. Criteria: Title 42 United States Code § 801 – Coronavirus relief fund Section 601(d) requires the States, Tribal governments, or units of local government use the funds received to cover only those costs that (1) are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19); (2) were not accounted for in the budget most recently approved as of March 27, 2020, for the State or government; and (3) were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020. Additionally, CFR § 200.300(a) Internal Controls reads as follows: The Non-Federal entity must: (a) 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. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2 CFR § 200.403 - Factors affecting allowability costs states in part, Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented.
Finding 2021-011 Expenditure Documentation - Activities Allowed and Unallowed, Allowable Costs/Cost Principles – Noncompliance and Material Weakness in Internal Control Over Compliance Agency Department of the Treasury ALN 21.019 Program COVID-19 - Coronavirus Relief Fund Award Year FY 2021 Pass-Through Agency State of Alaska Department of Commerce, Community, and Economic Development Pass-Through Entity Identifying Number 20-CRF-024 Criteria 2 CFR 200.403(g) states that for costs to be allowable under federal awards, they must be adequately documented and there must be sufficient documentation. Condition During our testing of nonpayroll disbursements, we noted the following exception: Three of the 62 disbursements sampled did not have adequate supporting documentation. Cause Policies and procedures were not appropriately adhered to in certain instances to ensure that supporting documentation was maintained correctly to evidence that costs were allowable and that an appropriate level of review and approval was completed prior to charging costs to a federal program. Effect or potential effect We were unable to confirm the allowability and existence of three disbursements charged to the program. Questioned costs None over the questioned costs reporting threshold. Context We tested a sample of 62 nonpayroll transactions totaling to $947,814 from a population of 470 transactions totaling to $2,768,962. We noted three exceptions as noted in the condition. This is a condition identified per review of the City’s compliance with the specified requirements not using a statistically valid sample. The known amount of the three exceptions is $1,608. Identification as a repeat finding Not a repeat finding. Recommendation Management should review policy and ensure documentation supporting each expenditure will be retained. Views of responsible officials Management concurs with the finding. Management will implement policies and procedures to ensure supporting documentation over expenditures are retained.
Finding 2021-013 Gift Cards - Activities Allowed or Unallowed; Allowable Costs/Cost Principles – Noncompliance and Material Weakness in Internal Controls Over Compliance Agency Department of the Treasury ALN 21.019 Program COVID-19 – Coronavirus Relief Fund Award Year FY 2021 Pass-Through Agency State of Alaska Department of Commerce, Community, and Economic Development Pass-Through Entity Identifying Number 20-CRF-024 Criteria 2 CFR 200.403(g) states that for costs to be allowable under Federal awards, they must be adequately documented and there must be sufficient documentation. 2 CFR 200.303 requires that non-federal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal statutes, regulations, and terms and conditions of the federal award. Condition During our testing of gift cards purchased by the City for distribution to individuals as an incentive for receiving the COVID-19 vaccine, we noted that the City did not maintain evidence of reconciling the gift card purchases to the gift cards distributed. Cause Policies and procedures were not appropriately adhered to in certain instances to ensure that reconciliation is done for gift card distributions. Effect or potential effect We were unable to confirm that all gift cards purchased using program funds were distributed only to eligible individuals per the City’s COVID-19 vaccination incentive program. Gift cards may have been distributed to individuals not meeting the City’s requirements for eligibility. Questioned costs None. Context The City used program funds to purchase $76,013 in gift cards for use as an incentive to encourage individuals to receive the COVID-19 vaccine. The City was not able to provide documentation that reconciled the gift cards purchases against distributions of gift cards. Identification as a repeat finding Not a repeat finding. Recommendation We recommend the City ensure its policies and procedure are followed on a consistent basis. Views of responsible officials Management concurs with the finding. Management will review current policies and will ensure that policies and procedures are adhered to ensure that proper reconciliations are done.
Condition - The Municipality’s staff could not provide us with the officially prepared and certified reports that supported compliance with the filing or submission of reports and financial information, as required by federal award and regulatory agreements. Likewise, reconciliations were not provided between the information used to prepare the required and submitted reports with the formal information presented and accounted for in the official Municipality’s accounting system. According to an analysis of the related transactions prepared by the Municipality’s consultants for financial statements and Schedule of Expenditures of Federal Awards purposes for the fiscal year ended June 30, 2021, $1,082,613 has been expended or transferred to the general fund to cover eligible expenses under the terms allowed by the CDL grant. As a consequence of these conditions, compliance with reporting requirements established by the grantor entity, and related internal controls, could not be verified. Criteria - Code of Federal Regulations, 44 CFR Section 206, establishes, among other requirements, that the borrower must maintain complete and accurate accounts and other records for the program in accordance with the CDL requirements and regulations. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403, states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. Cause - The Municipality has not properly established a formal recording system to identify and itemize the transactions that must be reported as eligible expenditures under the expense / cost category allowed by the provisions of the CDL. Also, there is a lack of knowledge and training to the personnel assigned to the management and reports preparation, as required by this federal award. Additionally, the Municipality does not have an adequate monitoring and internal control regarding the activity, filing and custody of reports, as required by the federal awards and the pass-through entity, and in a way that documents and supports the compliance with reporting requirements. Effect - The Municipality is exposed to the Grantor questioning the use of funds and affecting aspects and amounts associated with the qualification for the Loan Cancellation, if eligible at the end of the term to request this cancellation. Recommendation - We recommended management to prepare the necessary analyses, according to the requirements of the CDL, to identify and detail the expenditures that have been charged against the CDL funds. Also, it is absolutely necessary for the Municipality to design, document, establish and provide the necessary and required training, including guidelines and procedures, to all personnel who work directly or indirectly with the management of these federal funds.
Condition - The Municipality’s staff could not provide us with the officially prepared and certified reports that supported compliance with the filing or submission of reports and financial information, as required by federal award and regulatory agreements. Likewise, reconciliations were not provided between the information used to prepare the required and submitted reports with the formal information presented and accounted for in the official Municipality’s accounting system. According to an analysis of the related transactions prepared by the Municipality’s consultants for financial statements and Schedule of Expenditures of Federal Awards purposes for the fiscal year ended June 30, 2021, $907,650 has been expended under the terms allowed by the Disaster Grants. As a consequence of these conditions, compliance with reporting requirements established by the grantor entity, and related internal controls, could not be verified. Criteria - Code of Federal Regulations, 44 CFR Section 206, establishes, among other requirements, that the borrower must maintain complete and accurate accounts and other records for the program in accordance with the Disaster Grants requirements and regulations. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403, states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. Cause - The Municipality has not properly established a formal recording system to identify and itemize the transactions that must be reported as eligible expenditures under the expense / cost category allowed by the provisions of the Disaster Grant. Also, there is a lack of knowledge and training to the personnel assigned to the management and reports preparation, as required by this federal award. Additionally, the Municipality does not have an adequate monitoring and internal control regarding the activity, filing and custody of reports, as required by the federal awards and the pass-through entity, and in a way that documents and supports the compliance with reporting requirements. Effect - The program is exposed to not being in compliance with the Reporting Requirements as established in agreement. Also, the Municipality is exposed to the Grantor questioning the use of funds. Recommendation - We recommended management to prepare the necessary analyses, according to the requirements of the Grant, to identify and detail the expenditures that have been charged against the grant allowable expenditures. Also, it is absolutely necessary for the Municipality to design, document, establish and provide the necessary and required training, including guidelines and procedures, to all personnel who work directly or indirectly with the management of these federal funds.
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office and Management and Enterprise Services FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund FEDERAL AWARD NUMBER: Oklahoma CARES PPE; SA-2242 FEDERAL AWARD YEAR: 2020 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance QUESTIONED COSTS: $868,053 Condition: The County submitted and received reimbursement for $1,269,227 in expenditures related to the COVID-19 Pandemic. After performing testwork on 100% of the County’s expenditures, $868,053 was not expended in accordance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Period of Performance due to ineligible costs. • The County was reimbursed $783,766 for payroll expenditures for the OCCJA for the period of March 2020, through August 2020. The reimbursement of these funds was determined to be unallowable, as these costs were not expenditures of the County. • The County was reimbursed $71,376 for General Government payroll expenditures for multiple county employees. The reimbursement of these funds was determined to be unallowable as these were not expenditures to mitigate or prevent the spread of COVID-19 as required by the grant agreement. • The County was reimbursed $12,500 in payroll expenditures for the County’s Emergency Management Department. The reimbursement of these funds was determined to be unallowable, as these costs were previously reimbursed or will be reimbursed by another federal program. • The County was reimbursed for $411 in costs that the County could not provide documentation to support the expenditures. • The County relied on the Oklahoma Office of Management and Enterprise Services to ensure that the County reimbursement request was for eligible expenditures. Cause of Condition: Policies and procedures have not been designed and implemented to ensure that the County has proper internal controls over federal grant expenditures and that the expenditures were for an allowable cost. Effect of Condition: These conditions resulted in noncompliance with federal grant requirements. The County runs the risk of misappropriation of funds which could hinder the County from receiving future federal funding. Further, these conditions could result in the repayment of funds. Recommendation: OSAI recommends the County gain an understanding of requirements for this program and design and implement policies and procedures to ensure compliance with all applicable grant requirements. Management Response: District 1 County Commissioner: My tenure as an Okmulgee County Commissioner began, October 3, 2022. My understanding is Okmulgee County relied on the State of Oklahoma Office of Management and Enterprise Services (OMES) as the overseer of eligible expenditures. OMES approved the expenditures for reimbursement. District 2 County Commissioner: I did not take office until January of 2021, months after the County had submitted expenditures for reimbursement from the Coronavirus Relief Fund and my understanding of the submission process is that the County sent all reimbursement documentation to OMES, who were responsible for vetting the submissions. All submission made by Okmulgee County to OMES were approved and reimbursed by OMES. District 3 County Commissioner: I took office January 3, 2023, I will work with other officials to design and implement policies and procedures to ensure compliance with all applicable grant requirements. Criteria: Title 42 United States Code § 801 – Coronavirus relief fund Section 801(d) requires the States, Tribal governments, or units of local government use the funds received to cover only those costs that (1) are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19); (2) were not accounted for in the budget most recently approved as of March 27, 2020, for the State or government; and (3) were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020. Additionally, 2 CFR § 200.303(a) Internal Controls reads as follows: 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). 2 CFR § 200.403 - Factors affecting allowability costs states in relevant part, Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented.
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office and Management and Enterprise Services FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund FEDERAL AWARD NUMBER: Oklahoma CARES PPE; SA-2242 FEDERAL AWARD YEAR: 2020 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance QUESTIONED COSTS: $868,053 Condition: The County submitted and received reimbursement for $1,269,227 in expenditures related to the COVID-19 Pandemic. After performing testwork on 100% of the County’s expenditures, $868,053 was not expended in accordance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Period of Performance due to ineligible costs. • The County was reimbursed $783,766 for payroll expenditures for the OCCJA for the period of March 2020, through August 2020. The reimbursement of these funds was determined to be unallowable, as these costs were not expenditures of the County. • The County was reimbursed $71,376 for General Government payroll expenditures for multiple county employees. The reimbursement of these funds was determined to be unallowable as these were not expenditures to mitigate or prevent the spread of COVID-19 as required by the grant agreement. • The County was reimbursed $12,500 in payroll expenditures for the County’s Emergency Management Department. The reimbursement of these funds was determined to be unallowable, as these costs were previously reimbursed or will be reimbursed by another federal program. • The County was reimbursed for $411 in costs that the County could not provide documentation to support the expenditures. • The County relied on the Oklahoma Office of Management and Enterprise Services to ensure that the County reimbursement request was for eligible expenditures. Cause of Condition: Policies and procedures have not been designed and implemented to ensure that the County has proper internal controls over federal grant expenditures and that the expenditures were for an allowable cost. Effect of Condition: These conditions resulted in noncompliance with federal grant requirements. The County runs the risk of misappropriation of funds which could hinder the County from receiving future federal funding. Further, these conditions could result in the repayment of funds. Recommendation: OSAI recommends the County gain an understanding of requirements for this program and design and implement policies and procedures to ensure compliance with all applicable grant requirements. Management Response: District 1 County Commissioner: My tenure as an Okmulgee County Commissioner began, October 3, 2022. My understanding is Okmulgee County relied on the State of Oklahoma Office of Management and Enterprise Services (OMES) as the overseer of eligible expenditures. OMES approved the expenditures for reimbursement. District 2 County Commissioner: I did not take office until January of 2021, months after the County had submitted expenditures for reimbursement from the Coronavirus Relief Fund and my understanding of the submission process is that the County sent all reimbursement documentation to OMES, who were responsible for vetting the submissions. All submission made by Okmulgee County to OMES were approved and reimbursed by OMES. District 3 County Commissioner: I took office January 3, 2023, I will work with other officials to design and implement policies and procedures to ensure compliance with all applicable grant requirements. Criteria: Title 42 United States Code § 801 – Coronavirus relief fund Section 801(d) requires the States, Tribal governments, or units of local government use the funds received to cover only those costs that (1) are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19); (2) were not accounted for in the budget most recently approved as of March 27, 2020, for the State or government; and (3) were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020. Additionally, 2 CFR § 200.303(a) Internal Controls reads as follows: 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). 2 CFR § 200.403 - Factors affecting allowability costs states in relevant part, Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented.
2021-002 – Earmarking, Reporting (Performance Progress Reporting) Material Weakness in Internal Controls Over Compliance and Instance of Noncompliance (Scope Limitation) Assistance Listing Number: 16.589 Federal Agency/Pass-through Entity - Program Name: Department of Justice - Rural Domestic Violence, Dating Violence, Sexual Assault, Stalking Assistance Program Award Number: 2020-WR-AX-0041 Award Year(s): 2020-2023 Criteria or specific requirement: The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-Federal entities receiving Federal awards (i.e. auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Grant Agreement Requirements - Earmarking Section 50 of the grant agreement requires that no more than 30% of project activities and grant funds will be dedicated to awareness and prevention activities. Grant Agreement Requirements – Performance Progress Reporting Section 35 of the grant agreement requires submission of semi-annual performance progress reports that describe activities conducted during the reporting period, including program effectiveness measures. 2 CFR Section 200.403(g) states that for costs to be allowed under Federal awards, they must be adequately documented and there must be sufficient documentation. Lastly, according to 2 CFR 200.1, Period of Performance is defined as the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Condition: The Coalition does not have controls in place to track actual expenditures related to the earmarking requirements in Section 50 of the grant award. The Coalition does have controls related to the review and approval of performance progress reports; however, it was noted that this control was not operating effectively to ensure proper document retention to support earmarking amounts reported. Questioned Costs: Questioned costs are not determinable. Context: We tested one semi-annual performance progress report required by Section 35 of the grant agreement. We noted that the Coalition reported 5% of grant expenditures for awareness and prevention activities, related to the earmarking requirement of Section 50. The Coalition could not provide supporting documentation for the percentage reported. While the percentage reported by the Coalition did not exceed the 30% earmarking threshold, we were unable to obtain sufficient appropriate evidence to support compliance with program earmarking. Cause: The Coalition did not maintain the supporting documentation for the percentage earmarking reported on semi-annual performance progress report due to change in personnel. Effect or potential effect: Without proper record retention, the Coalition is unable to support the amounts reported for earmarking percentages on their semi-annual performance progress report, causing potential noncompliance. Repeat Finding: Yes, 2020-003 Recommendation: We recommend that the Coalition develop policies and procedures for tracking actual expenditures related to earmarking requirements and maintain all supporting documentation for the calculation of the earmarking percentages that are reported in the semi-annual performance progress reports. Views of responsible officials: The Coalition's staff has developed policies and procedures for tracking actual expenditures related to these requirements, and maintaining all supporting documentation for the calculation of the earmarking percentages that are reported in the semi-annual progress reports. The Coalition has developed an internal control process for reviewing and approving calculations required by Section 50 of the grant agreement and has strengthened its reporting management review controls to ensure that the review is effective to ensure the completeness and accuracy of reports, and that all elements are appropriately supported, prior to submission the federal agency.
Finding 2021-006 Allowable Costs/Cost Principles – Internal Control and Compliance over Allowable Costs/Cost Principles Identification of the Federal Program: Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants/Entitlement Grants Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: County of San Bernardino Community Development and Housing Federal Award Identification Number: ADEL-18-1-03K-0134 ADEL-19-CV-2-05Q/0190 Assistance Listing Number: 21.019 Assistance Listing Title: Coronavirus Relief Fund Federal Agency: Department of Treasury Pass-Through Entity: State of California Department of Finance County of San Bernardino Federal Award Identification Number: N/A CARES21-ALLC-ADE Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Pursuant to Code of Federal Regulation §200.403 Requirements for pass-through entities. 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. Finding 2021-006 Allowable Costs/Cost Principles – Internal Control and Compliance over Allowable Costs/Cost Principles (Continued) Condition: Community Development Block Grants/Entitlement Grants During our audit, we noted that two (2) out of four (4) samples summed up to $17,060 had no proper source documents to indicate the procurement and payment were properly approved. Coronavirus Relief Fund During our audit, we noted that three (3) out of ten (10) samples summed up to $79,085 had no proper source documents to indicate the procurement and payment were properly approved. Cause: The City was not able to safeguard the documents substantiating the transactions being charged to the grant. Effect or Potential Effect: The City did not comply with the CFR’s requirements for allowable costs. There is an increased risk that the charges do not represent the actual costs incurred. Questioned Costs: Known questionable costs $96,145. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommended the City to strengthen safeguarding of source documents to properly substantiate the charges made to the grant. Views of Responsible Officials: Management concurs the finding. (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).
Finding 2021-006 Allowable Costs/Cost Principles – Internal Control and Compliance over Allowable Costs/Cost Principles Identification of the Federal Program: Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants/Entitlement Grants Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: County of San Bernardino Community Development and Housing Federal Award Identification Number: ADEL-18-1-03K-0134 ADEL-19-CV-2-05Q/0190 Assistance Listing Number: 21.019 Assistance Listing Title: Coronavirus Relief Fund Federal Agency: Department of Treasury Pass-Through Entity: State of California Department of Finance County of San Bernardino Federal Award Identification Number: N/A CARES21-ALLC-ADE Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Pursuant to Code of Federal Regulation §200.403 Requirements for pass-through entities. 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. Finding 2021-006 Allowable Costs/Cost Principles – Internal Control and Compliance over Allowable Costs/Cost Principles (Continued) Condition: Community Development Block Grants/Entitlement Grants During our audit, we noted that two (2) out of four (4) samples summed up to $17,060 had no proper source documents to indicate the procurement and payment were properly approved. Coronavirus Relief Fund During our audit, we noted that three (3) out of ten (10) samples summed up to $79,085 had no proper source documents to indicate the procurement and payment were properly approved. Cause: The City was not able to safeguard the documents substantiating the transactions being charged to the grant. Effect or Potential Effect: The City did not comply with the CFR’s requirements for allowable costs. There is an increased risk that the charges do not represent the actual costs incurred. Questioned Costs: Known questionable costs $96,145. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommended the City to strengthen safeguarding of source documents to properly substantiate the charges made to the grant. Views of Responsible Officials: Management concurs the finding. (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).
Finding 2021-006 Allowable Costs/Cost Principles – Internal Control and Compliance over Allowable Costs/Cost Principles Identification of the Federal Program: Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants/Entitlement Grants Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: County of San Bernardino Community Development and Housing Federal Award Identification Number: ADEL-18-1-03K-0134 ADEL-19-CV-2-05Q/0190 Assistance Listing Number: 21.019 Assistance Listing Title: Coronavirus Relief Fund Federal Agency: Department of Treasury Pass-Through Entity: State of California Department of Finance County of San Bernardino Federal Award Identification Number: N/A CARES21-ALLC-ADE Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Pursuant to Code of Federal Regulation §200.403 Requirements for pass-through entities. 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. Finding 2021-006 Allowable Costs/Cost Principles – Internal Control and Compliance over Allowable Costs/Cost Principles (Continued) Condition: Community Development Block Grants/Entitlement Grants During our audit, we noted that two (2) out of four (4) samples summed up to $17,060 had no proper source documents to indicate the procurement and payment were properly approved. Coronavirus Relief Fund During our audit, we noted that three (3) out of ten (10) samples summed up to $79,085 had no proper source documents to indicate the procurement and payment were properly approved. Cause: The City was not able to safeguard the documents substantiating the transactions being charged to the grant. Effect or Potential Effect: The City did not comply with the CFR’s requirements for allowable costs. There is an increased risk that the charges do not represent the actual costs incurred. Questioned Costs: Known questionable costs $96,145. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommended the City to strengthen safeguarding of source documents to properly substantiate the charges made to the grant. Views of Responsible Officials: Management concurs the finding. (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).
Finding 2021-006 Allowable Costs/Cost Principles – Internal Control and Compliance over Allowable Costs/Cost Principles Identification of the Federal Program: Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants/Entitlement Grants Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: County of San Bernardino Community Development and Housing Federal Award Identification Number: ADEL-18-1-03K-0134 ADEL-19-CV-2-05Q/0190 Assistance Listing Number: 21.019 Assistance Listing Title: Coronavirus Relief Fund Federal Agency: Department of Treasury Pass-Through Entity: State of California Department of Finance County of San Bernardino Federal Award Identification Number: N/A CARES21-ALLC-ADE Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Pursuant to Code of Federal Regulation §200.403 Requirements for pass-through entities. 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. Finding 2021-006 Allowable Costs/Cost Principles – Internal Control and Compliance over Allowable Costs/Cost Principles (Continued) Condition: Community Development Block Grants/Entitlement Grants During our audit, we noted that two (2) out of four (4) samples summed up to $17,060 had no proper source documents to indicate the procurement and payment were properly approved. Coronavirus Relief Fund During our audit, we noted that three (3) out of ten (10) samples summed up to $79,085 had no proper source documents to indicate the procurement and payment were properly approved. Cause: The City was not able to safeguard the documents substantiating the transactions being charged to the grant. Effect or Potential Effect: The City did not comply with the CFR’s requirements for allowable costs. There is an increased risk that the charges do not represent the actual costs incurred. Questioned Costs: Known questionable costs $96,145. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommended the City to strengthen safeguarding of source documents to properly substantiate the charges made to the grant. Views of Responsible Officials: Management concurs the finding. (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).
Finding 2021-006 Allowable Costs/Cost Principles – Internal Control and Compliance over Allowable Costs/Cost Principles Identification of the Federal Program: Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants/Entitlement Grants Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: County of San Bernardino Community Development and Housing Federal Award Identification Number: ADEL-18-1-03K-0134 ADEL-19-CV-2-05Q/0190 Assistance Listing Number: 21.019 Assistance Listing Title: Coronavirus Relief Fund Federal Agency: Department of Treasury Pass-Through Entity: State of California Department of Finance County of San Bernardino Federal Award Identification Number: N/A CARES21-ALLC-ADE Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Pursuant to Code of Federal Regulation §200.403 Requirements for pass-through entities. 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. Finding 2021-006 Allowable Costs/Cost Principles – Internal Control and Compliance over Allowable Costs/Cost Principles (Continued) Condition: Community Development Block Grants/Entitlement Grants During our audit, we noted that two (2) out of four (4) samples summed up to $17,060 had no proper source documents to indicate the procurement and payment were properly approved. Coronavirus Relief Fund During our audit, we noted that three (3) out of ten (10) samples summed up to $79,085 had no proper source documents to indicate the procurement and payment were properly approved. Cause: The City was not able to safeguard the documents substantiating the transactions being charged to the grant. Effect or Potential Effect: The City did not comply with the CFR’s requirements for allowable costs. There is an increased risk that the charges do not represent the actual costs incurred. Questioned Costs: Known questionable costs $96,145. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommended the City to strengthen safeguarding of source documents to properly substantiate the charges made to the grant. Views of Responsible Officials: Management concurs the finding. (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).
Finding 2021-006 Allowable Costs/Cost Principles – Internal Control and Compliance over Allowable Costs/Cost Principles Identification of the Federal Program: Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants/Entitlement Grants Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: County of San Bernardino Community Development and Housing Federal Award Identification Number: ADEL-18-1-03K-0134 ADEL-19-CV-2-05Q/0190 Assistance Listing Number: 21.019 Assistance Listing Title: Coronavirus Relief Fund Federal Agency: Department of Treasury Pass-Through Entity: State of California Department of Finance County of San Bernardino Federal Award Identification Number: N/A CARES21-ALLC-ADE Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Pursuant to Code of Federal Regulation §200.403 Requirements for pass-through entities. 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. Finding 2021-006 Allowable Costs/Cost Principles – Internal Control and Compliance over Allowable Costs/Cost Principles (Continued) Condition: Community Development Block Grants/Entitlement Grants During our audit, we noted that two (2) out of four (4) samples summed up to $17,060 had no proper source documents to indicate the procurement and payment were properly approved. Coronavirus Relief Fund During our audit, we noted that three (3) out of ten (10) samples summed up to $79,085 had no proper source documents to indicate the procurement and payment were properly approved. Cause: The City was not able to safeguard the documents substantiating the transactions being charged to the grant. Effect or Potential Effect: The City did not comply with the CFR’s requirements for allowable costs. There is an increased risk that the charges do not represent the actual costs incurred. Questioned Costs: Known questionable costs $96,145. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommended the City to strengthen safeguarding of source documents to properly substantiate the charges made to the grant. Views of Responsible Officials: Management concurs the finding. (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).
Finding 2021-006 Allowable Costs/Cost Principles – Internal Control and Compliance over Allowable Costs/Cost Principles Identification of the Federal Program: Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants/Entitlement Grants Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: County of San Bernardino Community Development and Housing Federal Award Identification Number: ADEL-18-1-03K-0134 ADEL-19-CV-2-05Q/0190 Assistance Listing Number: 21.019 Assistance Listing Title: Coronavirus Relief Fund Federal Agency: Department of Treasury Pass-Through Entity: State of California Department of Finance County of San Bernardino Federal Award Identification Number: N/A CARES21-ALLC-ADE Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Pursuant to Code of Federal Regulation §200.403 Requirements for pass-through entities. 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. Finding 2021-006 Allowable Costs/Cost Principles – Internal Control and Compliance over Allowable Costs/Cost Principles (Continued) Condition: Community Development Block Grants/Entitlement Grants During our audit, we noted that two (2) out of four (4) samples summed up to $17,060 had no proper source documents to indicate the procurement and payment were properly approved. Coronavirus Relief Fund During our audit, we noted that three (3) out of ten (10) samples summed up to $79,085 had no proper source documents to indicate the procurement and payment were properly approved. Cause: The City was not able to safeguard the documents substantiating the transactions being charged to the grant. Effect or Potential Effect: The City did not comply with the CFR’s requirements for allowable costs. There is an increased risk that the charges do not represent the actual costs incurred. Questioned Costs: Known questionable costs $96,145. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommended the City to strengthen safeguarding of source documents to properly substantiate the charges made to the grant. Views of Responsible Officials: Management concurs the finding. (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).
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management and Oklahoma Office and Management and Enterprise Services FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund FEDERAL AWARD NUMBER: Oklahoma CARES PPE; 4530-DR-OK; SA-2242 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed and Allowable Costs/Costs Principles QUESTIONED COSTS: $477,097 Condition: Upon inquiry, review, and testwork of 100% of major program expenditures, the following exceptions were noted: • The County was reimbursed $477,097 for payroll expenditures which were determined to be unallowable costs to mitigate or prevent the spread of COVID-19 as required by the grant agreement. Cause of Condition: Policies and procedures have not been designed and implemented to ensure that the compliance with applicable grant requirements. Effect of Condition: These conditions resulted in noncompliance with federal grant requirements. This could hinder the County from receiving future federal funding and could result in the repayment of grant funds to the grantor agency. Recommendation: OSAI recommends the County gain an understanding of requirements for this program and design and implement policies and procedures to ensure compliance with all applicable grant requirements. Management Response: District 1 County Commissioner: Ottawa County has designed and implemented policies and procedures to ensure compliance with all applicable grant requirements. District 2 County Commissioner: I was not in office at this time. This was a one-time grant. District 3 County Commissioner: I did not take office until January 2023; however, District 3 will work to better understand all requirements of federal programs and implement better procedures to follow all guidelines and ensure compliance. Criteria: 2 CFR § 200.403 - Factors affecting allowability costs states in relevant part, Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented. 42 United States Code § 801 – Coronavirus relief fund Section 801(d) requires the States, Tribal governments, or units of local government use the funds received to cover only those costs that (1) are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19); (2) were not accounted for in the budget most recently approved as of March 27, 2020, for the State or government; and (3) were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020.
Finding 2021-012 – Noncompliance Over Major Federal Program – Coronavirus Relief Fund – Activities Allowed or Unallowed and Allowable Costs/Cost Principles PASS-THROUGH GRANTOR: Oklahoma Office of Management and Enterprise Services FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISGING: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund FEDERAL AWARD NUMBER: SA-0187 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed and Allowable Costs/Cost Principles QUESTIONED COSTS: $1,089,096 Condition: During the test of 100% of federal expenditures for Coronavirus Relief Fund, program disbursement totaling $1,089,096 were not expended in accordance with the Activities Allowed or Unallowed and Allowable Costs/Cost Principles due to unsubstantiated, duplicated, and ineligible costs as detailed below: Payroll Reimbursements • Unallowable reimbursement in the amount of $1,900 for longevity bonus. • Sick leave totaling $2,285 for a county official. • Duplicate payroll reimbursements totaling $17,668 were reimbursed by another grant. Expenditure Reimbursements • Reimbursements totaling $1,059,350 for hazard runs on behalf of Muskogee EMS District. • Reimbursements totaling $7,879 were not supported with adequate documentation. • Reimbursement in the amount of $14 that exceeded the purchase order amount. Cause of Condition: Policies and procedures have not been designed and implemented to ensure compliance with federal award requirements. Effect of Condition: This condition resulted in noncompliance with federal grant requirements for this program and could result in loss of federal funds. Recommendation: OSAI recommends the County gain an understanding of the requirements for this program and design and implement policies and procedures to ensure compliance with these requirements. Management Response: Chairman of the Board of County Commissioners: Muskogee County has hired an internal grant administrator to assist in keeping the county compliant with all local, state, and federal requirements. Efforts will be made going forward to ensure that all grant funds are properly expended within the allowable period of performance. It should be noted that Oklahoma Office of Management Enterprise Services did not review any of the submitted information to determine eligibility prior to sending reimbursements for items that have now been determined questionable. County Clerk: Documentation was scanned into the Purchase Order’s images and once the Purchase Order was paid, the images were then deleted by the Board of County Commissioners secretary. Images were later recovered by the software system and since the incident, restrictions have been implemented to no longer allow deletions. Criteria: 2 CFR § 200.303(a) - Internal Controls reads as follows: 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). Additionally, 2 CFR § 200.403 - Factors affecting allowability costs states in part, Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented. The Department of the Treasury Federal Register, Vol. 86, No. 10 states, “Fund payments may not be used for expenses that have been or will be reimbursed by another federal program.” Additional guidance provided in the Subrecipient Agreement - Federal Funding Certification executed 6/3/20 between Muskogee County and the State of Oklahoma states in part, “4.Funds provided as direct payment from the State of Oklahoma pursuant to this certification for necessary expenditures that were or will be incurred during the period that begins on March 1, 2020, and ending on December 30, 2020, that are not expended on those necessary expenditures on or before March 31, 2021, by the political subdivision or its grantee(s), must be returned to the State of Oklahoma on or before April 1, 2021.”, 5. Funds provided as a direct payment from the State of Oklahoma pursuant to this certification must adhere to official federal guidance issued or to be issued on what constitutes a necessary expenditure. Any funds expended by a political subdivision or its grantee(s) in any manner that does not adhere to official federal guidance or in violation of this certification shall be returned to the State of Oklahoma Coronavirus Relief Fund. 6. Any local government entity receiving funds pursuant to this certification shall retain documentation of all uses of the funds… 8. Any funds provided pursuant to this certification cannot be used as a revenue replacement for lower than expected tax or other revenue collections. 10. I acknowledge and certify that Recipient has not received, and will not apply for, federal funds from any other source, to reimburse it for the expenditures for which funds are sought pursuant hereto.”
Finding 2021-007: Period of Performance - Material Weakness Grantor: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) COVID-19 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Grants for New and Expanded Services under the Health Center Program Federal Assistance Listing Numbers: 93.224 and 93.527 Federal Award Identification Number and Year: H80CS26638 - 2020 and 2021, H8DCS35487 - 2020, H8CCS34364 - 2020, H8ECS38373 - 2020, and H8F40829 - 2021 Criteria A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award's period of performance that were authorized by the federal awarding agency or pass-through entity (2 CFR sections, 200.308, 200.309 and 200.403(h)). Condition There was no evidence of the Center's review and approval of the period of performance for expenditures during the year. Cause The Center did not have adequate controls to review period of performance to ensure all goods and services are appropriately included or excluded. Effect The Center may charge goods or services to the grant that are not within the grant's period of performance. Questioned Costs None. Context We selected 25 payroll transactions charged to the federal program to test controls over period of performance. Out of the 25 transactions tested, we noted 25 instances where there was no formal approval of the cost charged to the major program by evidence of a review signature on the labor reports. Additionally, we selected five nonpayroll transactions where all five instances did not have evidence of review. Identification of Repeat Finding Yes, see finding 2020-007. Recommendation The Center should develop written procedures to review all expenditures to ensure they are within the proper period of performance of the grant. Views of Responsible Officials Management and the Board of Directors agree with the finding and will implement additional controls to ensure there is formal evidence of approval over the period of performance for goods and services purchased under the grant.
Finding 2021-007: Period of Performance - Material Weakness Grantor: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) COVID-19 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Grants for New and Expanded Services under the Health Center Program Federal Assistance Listing Numbers: 93.224 and 93.527 Federal Award Identification Number and Year: H80CS26638 - 2020 and 2021, H8DCS35487 - 2020, H8CCS34364 - 2020, H8ECS38373 - 2020, and H8F40829 - 2021 Criteria A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award's period of performance that were authorized by the federal awarding agency or pass-through entity (2 CFR sections, 200.308, 200.309 and 200.403(h)). Condition There was no evidence of the Center's review and approval of the period of performance for expenditures during the year. Cause The Center did not have adequate controls to review period of performance to ensure all goods and services are appropriately included or excluded. Effect The Center may charge goods or services to the grant that are not within the grant's period of performance. Questioned Costs None. Context We selected 25 payroll transactions charged to the federal program to test controls over period of performance. Out of the 25 transactions tested, we noted 25 instances where there was no formal approval of the cost charged to the major program by evidence of a review signature on the labor reports. Additionally, we selected five nonpayroll transactions where all five instances did not have evidence of review. Identification of Repeat Finding Yes, see finding 2020-007. Recommendation The Center should develop written procedures to review all expenditures to ensure they are within the proper period of performance of the grant. Views of Responsible Officials Management and the Board of Directors agree with the finding and will implement additional controls to ensure there is formal evidence of approval over the period of performance for goods and services purchased under the grant.
Finding 2021-007: Period of Performance - Material Weakness Grantor: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) COVID-19 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Grants for New and Expanded Services under the Health Center Program Federal Assistance Listing Numbers: 93.224 and 93.527 Federal Award Identification Number and Year: H80CS26638 - 2020 and 2021, H8DCS35487 - 2020, H8CCS34364 - 2020, H8ECS38373 - 2020, and H8F40829 - 2021 Criteria A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award's period of performance that were authorized by the federal awarding agency or pass-through entity (2 CFR sections, 200.308, 200.309 and 200.403(h)). Condition There was no evidence of the Center's review and approval of the period of performance for expenditures during the year. Cause The Center did not have adequate controls to review period of performance to ensure all goods and services are appropriately included or excluded. Effect The Center may charge goods or services to the grant that are not within the grant's period of performance. Questioned Costs None. Context We selected 25 payroll transactions charged to the federal program to test controls over period of performance. Out of the 25 transactions tested, we noted 25 instances where there was no formal approval of the cost charged to the major program by evidence of a review signature on the labor reports. Additionally, we selected five nonpayroll transactions where all five instances did not have evidence of review. Identification of Repeat Finding Yes, see finding 2020-007. Recommendation The Center should develop written procedures to review all expenditures to ensure they are within the proper period of performance of the grant. Views of Responsible Officials Management and the Board of Directors agree with the finding and will implement additional controls to ensure there is formal evidence of approval over the period of performance for goods and services purchased under the grant.
Finding 2021-007: Period of Performance - Material Weakness Grantor: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) COVID-19 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Grants for New and Expanded Services under the Health Center Program Federal Assistance Listing Numbers: 93.224 and 93.527 Federal Award Identification Number and Year: H80CS26638 - 2020 and 2021, H8DCS35487 - 2020, H8CCS34364 - 2020, H8ECS38373 - 2020, and H8F40829 - 2021 Criteria A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award's period of performance that were authorized by the federal awarding agency or pass-through entity (2 CFR sections, 200.308, 200.309 and 200.403(h)). Condition There was no evidence of the Center's review and approval of the period of performance for expenditures during the year. Cause The Center did not have adequate controls to review period of performance to ensure all goods and services are appropriately included or excluded. Effect The Center may charge goods or services to the grant that are not within the grant's period of performance. Questioned Costs None. Context We selected 25 payroll transactions charged to the federal program to test controls over period of performance. Out of the 25 transactions tested, we noted 25 instances where there was no formal approval of the cost charged to the major program by evidence of a review signature on the labor reports. Additionally, we selected five nonpayroll transactions where all five instances did not have evidence of review. Identification of Repeat Finding Yes, see finding 2020-007. Recommendation The Center should develop written procedures to review all expenditures to ensure they are within the proper period of performance of the grant. Views of Responsible Officials Management and the Board of Directors agree with the finding and will implement additional controls to ensure there is formal evidence of approval over the period of performance for goods and services purchased under the grant.
Finding 2021-007: Period of Performance - Material Weakness Grantor: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) COVID-19 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Grants for New and Expanded Services under the Health Center Program Federal Assistance Listing Numbers: 93.224 and 93.527 Federal Award Identification Number and Year: H80CS26638 - 2020 and 2021, H8DCS35487 - 2020, H8CCS34364 - 2020, H8ECS38373 - 2020, and H8F40829 - 2021 Criteria A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award's period of performance that were authorized by the federal awarding agency or pass-through entity (2 CFR sections, 200.308, 200.309 and 200.403(h)). Condition There was no evidence of the Center's review and approval of the period of performance for expenditures during the year. Cause The Center did not have adequate controls to review period of performance to ensure all goods and services are appropriately included or excluded. Effect The Center may charge goods or services to the grant that are not within the grant's period of performance. Questioned Costs None. Context We selected 25 payroll transactions charged to the federal program to test controls over period of performance. Out of the 25 transactions tested, we noted 25 instances where there was no formal approval of the cost charged to the major program by evidence of a review signature on the labor reports. Additionally, we selected five nonpayroll transactions where all five instances did not have evidence of review. Identification of Repeat Finding Yes, see finding 2020-007. Recommendation The Center should develop written procedures to review all expenditures to ensure they are within the proper period of performance of the grant. Views of Responsible Officials Management and the Board of Directors agree with the finding and will implement additional controls to ensure there is formal evidence of approval over the period of performance for goods and services purchased under the grant.
Finding 2021-007: Period of Performance - Material Weakness Grantor: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) COVID-19 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Grants for New and Expanded Services under the Health Center Program Federal Assistance Listing Numbers: 93.224 and 93.527 Federal Award Identification Number and Year: H80CS26638 - 2020 and 2021, H8DCS35487 - 2020, H8CCS34364 - 2020, H8ECS38373 - 2020, and H8F40829 - 2021 Criteria A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award's period of performance that were authorized by the federal awarding agency or pass-through entity (2 CFR sections, 200.308, 200.309 and 200.403(h)). Condition There was no evidence of the Center's review and approval of the period of performance for expenditures during the year. Cause The Center did not have adequate controls to review period of performance to ensure all goods and services are appropriately included or excluded. Effect The Center may charge goods or services to the grant that are not within the grant's period of performance. Questioned Costs None. Context We selected 25 payroll transactions charged to the federal program to test controls over period of performance. Out of the 25 transactions tested, we noted 25 instances where there was no formal approval of the cost charged to the major program by evidence of a review signature on the labor reports. Additionally, we selected five nonpayroll transactions where all five instances did not have evidence of review. Identification of Repeat Finding Yes, see finding 2020-007. Recommendation The Center should develop written procedures to review all expenditures to ensure they are within the proper period of performance of the grant. Views of Responsible Officials Management and the Board of Directors agree with the finding and will implement additional controls to ensure there is formal evidence of approval over the period of performance for goods and services purchased under the grant.
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management and Oklahoma Office and Management and Enterprise Services FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING NO: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance QUESTIONED COSTS: $731,856 Condition: The County submitted and received reimbursement for $4,244,344 in expenditures related to the COVID-19 Pandemic. After performing testwork on 100% of the County’s expenditures, $731,856 was not expended in accordance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Period of Performance due to ineligible costs. • The County was reimbursed $630,738 for payroll expenditures for the Northeast Oklahoma Enhanced 9-1-1 Trust Authority for the period of March 2020, through August 2020. The reimbursement of these funds was determined to be unallowable, as these costs were not expenditures of the County. • The County was reimbursed $63,000 for the October 2020 payment to the Tulsa Port of Catoosa (the Port) for proposed project costs of the Port. The reimbursement of these funds was determined to be unallowable, as this cost was not an allowable cost of Rogers County. • The County was reimbursed $24,620 for the September 2020 payment to the Rogers County Youth Services for estimated COVID related expenses of Rogers County Youth Services. The reimbursement of these funds was determined to be unallowable, as this cost was not an allowable cost of Rogers County. • The County was reimbursed $7,821 for the September 2020 payment to the City of Claremore for advertising expenses of the City of Claremore. The reimbursement of these funds was determined to be unallowable, as this cost was not an allowable cost of Rogers County. • The County was reimbursed $5,455 for duplicate expenses submitted between August 2020 and October 2020. • The County was reimbursed $650 for office supplies and equipment purchased in August 2020 when actual cost of the supplies and equipment was $428 causing the County to be reimbursed $222 more than allowed. • The County relied on the Oklahoma Office of Management and Enterprise Services to ensure that the County reimbursement request was for eligible expenditures. Cause of Condition: Policies and procedures have not been designed and implemented to ensure that the County has proper internal controls over federal grant expenditures and that the expenditures were for an allowable cost. Effect of Condition: These conditions resulted in noncompliance with federal grant requirements. The County runs the risk of misappropriation of funds which could hinder the County from receiving future federal funding. Further, this could result in the repayment of funds. Recommendation: OSAI recommends the County gain an understanding of requirements for this program and design and implement policies and procedures to ensure compliance with all applicable grant requirements. Management Response: Board of County Commissioners: The BOCC is responsible for the overall fiscal concerns of the county. See OKLA. STAT. Title 19, § 345. The BOCC, with the cooperation and participation of all elected officials, reviews, develops and implements policies and procedures to create a strong internal control environment. The BOCC will work with all elected officials and with the state and local partners in each federal award to develop policies, procedures, and internal controls designed to accurately track grants, including the application process, verification, oversight, and reporting of grant requirements. These policies and procedures will be designed to identify requirements for recipients and sub-recipients of grants, ensure accurate equipment and real property management, procurement, recipient and subrecipient monitoring and reporting. Further, policies will ensure a proper understanding of all grant requirements and compliance of the same. The BOCC engaged a third party to assist in program evaluation, determination of eligible costs, subrecipient oversight and tracking, and grant documentation and reporting. Based on the third party’s qualifications and experience, the BOCC relied upon the experience and expertise of the third party to oversee COVID-19 funds. Further, with respect to submissions to the Oklahoma Office of Management and Enterprise Services (OMES), the BOCC relied on OMES to ensure that expenses submitted for reimbursement were eligible expenses. Criteria: 42 United States Code § 801 – Coronavirus relief fund Section 801(d) requires the States, Tribal governments, or units of local government use the funds received to cover only those costs that (1) are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19); (2) were not accounted for in the budget most recently approved as of March 27, 2020, for the State or government; and (3) were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020. Additionally, 2 CFR § 200.303(a) Internal Controls reads as follows: 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). 2 CFR § 200.403 - Factors affecting allowability costs states in relevant part, Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (f) not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented.
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management and Oklahoma Office and Management and Enterprise Services FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING NO: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance QUESTIONED COSTS: $731,856 Condition: The County submitted and received reimbursement for $4,244,344 in expenditures related to the COVID-19 Pandemic. After performing testwork on 100% of the County’s expenditures, $731,856 was not expended in accordance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Period of Performance due to ineligible costs. • The County was reimbursed $630,738 for payroll expenditures for the Northeast Oklahoma Enhanced 9-1-1 Trust Authority for the period of March 2020, through August 2020. The reimbursement of these funds was determined to be unallowable, as these costs were not expenditures of the County. • The County was reimbursed $63,000 for the October 2020 payment to the Tulsa Port of Catoosa (the Port) for proposed project costs of the Port. The reimbursement of these funds was determined to be unallowable, as this cost was not an allowable cost of Rogers County. • The County was reimbursed $24,620 for the September 2020 payment to the Rogers County Youth Services for estimated COVID related expenses of Rogers County Youth Services. The reimbursement of these funds was determined to be unallowable, as this cost was not an allowable cost of Rogers County. • The County was reimbursed $7,821 for the September 2020 payment to the City of Claremore for advertising expenses of the City of Claremore. The reimbursement of these funds was determined to be unallowable, as this cost was not an allowable cost of Rogers County. • The County was reimbursed $5,455 for duplicate expenses submitted between August 2020 and October 2020. • The County was reimbursed $650 for office supplies and equipment purchased in August 2020 when actual cost of the supplies and equipment was $428 causing the County to be reimbursed $222 more than allowed. • The County relied on the Oklahoma Office of Management and Enterprise Services to ensure that the County reimbursement request was for eligible expenditures. Cause of Condition: Policies and procedures have not been designed and implemented to ensure that the County has proper internal controls over federal grant expenditures and that the expenditures were for an allowable cost. Effect of Condition: These conditions resulted in noncompliance with federal grant requirements. The County runs the risk of misappropriation of funds which could hinder the County from receiving future federal funding. Further, this could result in the repayment of funds. Recommendation: OSAI recommends the County gain an understanding of requirements for this program and design and implement policies and procedures to ensure compliance with all applicable grant requirements. Management Response: Board of County Commissioners: The BOCC is responsible for the overall fiscal concerns of the county. See OKLA. STAT. Title 19, § 345. The BOCC, with the cooperation and participation of all elected officials, reviews, develops and implements policies and procedures to create a strong internal control environment. The BOCC will work with all elected officials and with the state and local partners in each federal award to develop policies, procedures, and internal controls designed to accurately track grants, including the application process, verification, oversight, and reporting of grant requirements. These policies and procedures will be designed to identify requirements for recipients and sub-recipients of grants, ensure accurate equipment and real property management, procurement, recipient and subrecipient monitoring and reporting. Further, policies will ensure a proper understanding of all grant requirements and compliance of the same. The BOCC engaged a third party to assist in program evaluation, determination of eligible costs, subrecipient oversight and tracking, and grant documentation and reporting. Based on the third party’s qualifications and experience, the BOCC relied upon the experience and expertise of the third party to oversee COVID-19 funds. Further, with respect to submissions to the Oklahoma Office of Management and Enterprise Services (OMES), the BOCC relied on OMES to ensure that expenses submitted for reimbursement were eligible expenses. Criteria: 42 United States Code § 801 – Coronavirus relief fund Section 801(d) requires the States, Tribal governments, or units of local government use the funds received to cover only those costs that (1) are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19); (2) were not accounted for in the budget most recently approved as of March 27, 2020, for the State or government; and (3) were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020. Additionally, 2 CFR § 200.303(a) Internal Controls reads as follows: 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). 2 CFR § 200.403 - Factors affecting allowability costs states in relevant part, Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (f) not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented.
Finding 2021-006 – Noncompliance Over Major Federal Program – Activities Allowed or Unallowed and Allowable Costs/Cost Principles-Coronavirus Relief Fund PASS THROUGH GRANTOR: Oklahoma Office of Management and Enterprise Services FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund FEDERAL AWARD NUMBER: SA-0161 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed and Allowable Costs/Cost Principles QUESTIONED COSTS: $59,595 Condition: After performing expenditure testwork on 100% of the program, disbursements totaling $59,595 were not expended in accordance with the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements due to unsubstantiated and ineligible costs. We noted the following: • Reimbursed payroll expenditures totaling $51,552 were previously reimbursed by another entity. • Reimbursed payroll expenditures totaling $7,075 were previously reimbursed by another federal grant. • One employee’s salary totaling $569 was submitted and paid twice on two reimbursement requests. • Expenditures totaling $399 were unaccounted for and were not supported by adequate documentation to determine costs were incurred for allowable cost/cost principles. Cause of Condition: Policies and procedures have not been designed and implemented to ensure compliance with federal award requirements. Effect of Condition: These conditions resulted in noncompliance with grant requirements. The County runs the risk of misappropriation of funds which could hinder the County from receiving future federal funding. Further, this condition could result in the repayment of funds. Recommendation: OSAI recommends the County design and implement policies and procedures to ensure compliance with applicable grant requirements. Management Response: Chairman of the Board of County Commissioners: We will implement policies and procedures to ensure compliance with applicable grant requirements. County Clerk: We will watch closer ensure compliance with applicable grant requirements. County Treasurer: I will do my part to assist in the design and implementation of policies and procedures to ensure compliance with applicable grant requirements. Criteria: 2 CFR § 200.303(a) Internal Controls reads as follows: 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). Additionally, 2 CFR § 200.403 - Factors affecting allowability costs states in part, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented.” The Department of the Treasury Federal Register, Vol. 86, No. 10 states in part, “Fund payments may not be used for expenses that have been or will be reimbursed by another federal program.” Additionally, guidance provided in the Subrecipient Agreement - Federal Funding Certification executed 6/04/2020 between Choctaw County and the State of Oklahoma states in part, 5. Funds provided as a direct payment from the State of Oklahoma pursuant to this certification must adhere to official federal guidance issued or to be issued on what constitutes a necessary expenditure. Any funds expended by a political subdivision or its grantee(s) in any manner that does not adhere to official federal guidance or in violation of this certification shall be returned to the State of Oklahoma Coronavirus Relief Fund. 6. Any local government entity receiving funds pursuant to this certification shall retain documentation of all uses of the funds… 10. I acknowledge and certify that Recipient has not received, and will not apply for, federal funds from any other source, to reimburse it for the expenditures for which funds are sought pursuant hereto.
Condition - The Municipality’s staff could not provide us with the officially prepared and certified reports that supported compliance with the filing or submission of reports and financial information, as required by federal award and regulatory agreements. Likewise, reconciliations were not provided between the information used to prepare the required and submitted reports with the formal information presented and accounted for in the official Municipality’s accounting system. According to an analysis prepared by the Municipality of the bank account assigned to manage the use of Coronavirus Relief Fund (CRF) PHE - Transfer Funds, and transactions through this bank account during the fiscal year ended June 30, 2021, $1,055,864 has been expended or transferred to the general fund to cover eligible expenses under the terms allowed by the CRF PHE - Transfer Funds. As a consequence of these conditions, compliance with reporting requirements established by the pass-through entity, and related internal controls, could not be verified. Criteria - According to the Transfer Agreements, the transferee shall submit reports as the transferor determines are needed to verify use of the funds and compliance with conditions that are imposed on the transfer, and such reports shall be in such form, with such content, as specified by the transferor in the transfer plan and future program instructions directed to all recipients. Transferor will transfer emergency assistance fund to transferee for necessary expenditures related to the COVID-19 emergency by making a transfer on the basis set out in this Agreement and in the Transfer Plan. The reports must be due on the 15th day of each month, the transferee will submit a use of funds transfer report for the prior month’s expenses. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403, states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. Cause - There is a lack of knowledge and training to the personnel assigned to the management and reports preparation, as required by this federal award. Additionally, the Municipality does not have an adequate monitoring and internal control regarding the activity, filing and custody of reports, as required by the federal awards and the pass-through entity, and in a way that documents and supports the compliance with reporting requirements. Effect - The program is exposed to not being in compliance with the Reporting Requirements as established in agreement. Also, the Municipality is exposed to the Grantor questioning the use of funds. Recommendation - We recommend that the staff or department in charge locate and document all required reports that were filed according to the requirements of the grant agreement, including the reconciliation thereof with the official Municipality’s accounting subsidiaries. Also, it is absolutely necessary for the Municipality to design, document, establish and provide the necessary and required training, including guidelines and procedures, to all personnel who work directly or indirectly with the management of these federal funds.
Condition - The Municipality’s staff could not provide us with the officially prepared and certified reports that supported compliance with the filing or submission of reports and financial information, as required by federal award and regulatory agreements. Likewise, reconciliations were not provided between the information used to prepare the required and submitted reports with the formal information presented and accounted for in the official Municipality’s accounting system. According to an analysis prepared by the Municipality of the bank account assigned to manage the use of Coronavirus Relief Fund (CRF) PHE – Testing and Contact Tracing, and transactions through this bank account during the fiscal year ended June 30, 2021, $344,461 has been expended or transferred to the general fund to cover eligible expenses under the terms allowed by the CRF PHA - Tracing and Contact Tracing. As a consequence of these conditions, compliance with reporting requirements established by the pass-through entity, and related internal controls, could not be verified. Criteria - According to the Transfer Agreements, the transferee shall submit reports as the transferor determines are needed to verify use of the funds and compliance with conditions that are imposed on the transfer, and such reports shall be in such form, with such content, as specified by the transferor in the transfer plan and future program instructions directed to all recipients. Transferor will transfer emergency assistance fund to transferee for necessary expenditures related to the COVID-19 emergency by making a transfer on the basis set out in this Agreement and in the Transfer Plan. The reports must be due on the 15th day of each month, the transferee will submit a use of funds transfer report for the prior month’s expenses. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403, states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. Cause - There is a lack of knowledge and training to the personnel assigned to the management and reports preparation, as required by this federal award. Additionally, the Municipality does not have an adequate monitoring and internal control regarding the activity, filing and custody of reports, as required by the federal awards and the pass-through entity, and in a way that documents and supports the compliance with reporting requirements. Effect - The program is exposed to not being in compliance with the Reporting Requirements as established in agreement. Also, the Municipality is exposed to the Grantor questioning the use of funds. Recommendation - We recommend that the staff or department in charge locate and document all required reports that were filed according to the requirements of the grant agreement, including the reconciliation thereof with the official Municipality’s accounting subsidiaries. Also, it is absolutely necessary for the Municipality to design, document, establish and provide the necessary and required training, including guidelines and procedures, to all personnel who work directly or indirectly with the management of these federal funds.
Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, 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 and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-federal activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.
Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, 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 and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-federal activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.
Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, 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 and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-federal activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.
Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, 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 and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-federal activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.
Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, 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 and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-federal activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.
Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, 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 and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-federal activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.
Finding 2021-009 – Lack of Internal Controls and Noncompliance Over Major Federal Program - Activities Allowed or Unallowed; Allowed Costs/Cost Principles – Coronavirus Relief Fund PASS-THROUGH GRANTOR: Oklahoma Office of Management and Enterprise Services FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: $804,695 Condition: A test of 100% of payroll expenditures reflected program disbursements totaling $804,695 that were not expended in accordance with the Activities Allowed or Unallowed; Allowable Costs/Cost Principles due to ineligible costs. • The County was reimbursed $726,310 for General Government payroll expenditures for the offices of the County Commissioners, County Clerk, County Treasurer, County Assessor, and the County Court Clerk, for the period March 15, 2020, through October 30, 2020, which was determined to be an unallowed cost to mitigate or prevent the spread of COVID-19 in accordance with grant requirements. • The County was reimbursed $78,385 for 911 Trust Authority payroll expenditures, for the period August 15, 2020, through October 30, 2020, which was determined to be an unallowed cost of non-county employees to mitigate or prevent the spread of COVID-19 in accordance with grant requirements. Cause of Condition: Policies and procedures have not been designed and implemented to ensure that the County has proper internal controls over federal grant expenditures and that the expenditures were for an allowable cost. Effect of Condition: This condition resulted in noncompliance with grant requirements. This could hinder the County from receiving future federal funding and could result in the repayment of grants funds to the grantor agency. Recommendation: OSAI recommends the County design and implement policies and procedures to ensure compliance with applicable grant requirements. Management Response: Chairman of the Board of County Commissioners: The Board of County Commissioners will work to ensure federal disbursements comply with federal grant requirements. The County relied on the Oklahoma Office of Management and Enterprise Services to ensure that the County reimbursement request was for eligible expenditures. Criteria: Title 42 United States Code § 801 – Coronavirus relief fund Section 601(d) requires the States, Tribal governments, or units of local government use the funds received to cover only those costs that (1) are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19); (2) were not accounted for in the budget most recently approved as of March 27, 2020, for the State or government; and (3) were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020. Additionally, CFR § 200.300(a) Internal Controls reads as follows: The Non-Federal entity must: (a) 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. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2 CFR § 200.403 - Factors affecting allowability costs states in part, Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented.
Finding 2021-011 Expenditure Documentation - Activities Allowed and Unallowed, Allowable Costs/Cost Principles – Noncompliance and Material Weakness in Internal Control Over Compliance Agency Department of the Treasury ALN 21.019 Program COVID-19 - Coronavirus Relief Fund Award Year FY 2021 Pass-Through Agency State of Alaska Department of Commerce, Community, and Economic Development Pass-Through Entity Identifying Number 20-CRF-024 Criteria 2 CFR 200.403(g) states that for costs to be allowable under federal awards, they must be adequately documented and there must be sufficient documentation. Condition During our testing of nonpayroll disbursements, we noted the following exception: Three of the 62 disbursements sampled did not have adequate supporting documentation. Cause Policies and procedures were not appropriately adhered to in certain instances to ensure that supporting documentation was maintained correctly to evidence that costs were allowable and that an appropriate level of review and approval was completed prior to charging costs to a federal program. Effect or potential effect We were unable to confirm the allowability and existence of three disbursements charged to the program. Questioned costs None over the questioned costs reporting threshold. Context We tested a sample of 62 nonpayroll transactions totaling to $947,814 from a population of 470 transactions totaling to $2,768,962. We noted three exceptions as noted in the condition. This is a condition identified per review of the City’s compliance with the specified requirements not using a statistically valid sample. The known amount of the three exceptions is $1,608. Identification as a repeat finding Not a repeat finding. Recommendation Management should review policy and ensure documentation supporting each expenditure will be retained. Views of responsible officials Management concurs with the finding. Management will implement policies and procedures to ensure supporting documentation over expenditures are retained.
Finding 2021-013 Gift Cards - Activities Allowed or Unallowed; Allowable Costs/Cost Principles – Noncompliance and Material Weakness in Internal Controls Over Compliance Agency Department of the Treasury ALN 21.019 Program COVID-19 – Coronavirus Relief Fund Award Year FY 2021 Pass-Through Agency State of Alaska Department of Commerce, Community, and Economic Development Pass-Through Entity Identifying Number 20-CRF-024 Criteria 2 CFR 200.403(g) states that for costs to be allowable under Federal awards, they must be adequately documented and there must be sufficient documentation. 2 CFR 200.303 requires that non-federal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal statutes, regulations, and terms and conditions of the federal award. Condition During our testing of gift cards purchased by the City for distribution to individuals as an incentive for receiving the COVID-19 vaccine, we noted that the City did not maintain evidence of reconciling the gift card purchases to the gift cards distributed. Cause Policies and procedures were not appropriately adhered to in certain instances to ensure that reconciliation is done for gift card distributions. Effect or potential effect We were unable to confirm that all gift cards purchased using program funds were distributed only to eligible individuals per the City’s COVID-19 vaccination incentive program. Gift cards may have been distributed to individuals not meeting the City’s requirements for eligibility. Questioned costs None. Context The City used program funds to purchase $76,013 in gift cards for use as an incentive to encourage individuals to receive the COVID-19 vaccine. The City was not able to provide documentation that reconciled the gift cards purchases against distributions of gift cards. Identification as a repeat finding Not a repeat finding. Recommendation We recommend the City ensure its policies and procedure are followed on a consistent basis. Views of responsible officials Management concurs with the finding. Management will review current policies and will ensure that policies and procedures are adhered to ensure that proper reconciliations are done.
Condition - The Municipality’s staff could not provide us with the officially prepared and certified reports that supported compliance with the filing or submission of reports and financial information, as required by federal award and regulatory agreements. Likewise, reconciliations were not provided between the information used to prepare the required and submitted reports with the formal information presented and accounted for in the official Municipality’s accounting system. According to an analysis of the related transactions prepared by the Municipality’s consultants for financial statements and Schedule of Expenditures of Federal Awards purposes for the fiscal year ended June 30, 2021, $1,082,613 has been expended or transferred to the general fund to cover eligible expenses under the terms allowed by the CDL grant. As a consequence of these conditions, compliance with reporting requirements established by the grantor entity, and related internal controls, could not be verified. Criteria - Code of Federal Regulations, 44 CFR Section 206, establishes, among other requirements, that the borrower must maintain complete and accurate accounts and other records for the program in accordance with the CDL requirements and regulations. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403, states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. Cause - The Municipality has not properly established a formal recording system to identify and itemize the transactions that must be reported as eligible expenditures under the expense / cost category allowed by the provisions of the CDL. Also, there is a lack of knowledge and training to the personnel assigned to the management and reports preparation, as required by this federal award. Additionally, the Municipality does not have an adequate monitoring and internal control regarding the activity, filing and custody of reports, as required by the federal awards and the pass-through entity, and in a way that documents and supports the compliance with reporting requirements. Effect - The Municipality is exposed to the Grantor questioning the use of funds and affecting aspects and amounts associated with the qualification for the Loan Cancellation, if eligible at the end of the term to request this cancellation. Recommendation - We recommended management to prepare the necessary analyses, according to the requirements of the CDL, to identify and detail the expenditures that have been charged against the CDL funds. Also, it is absolutely necessary for the Municipality to design, document, establish and provide the necessary and required training, including guidelines and procedures, to all personnel who work directly or indirectly with the management of these federal funds.