Federal Agencies: Department of Health and Human Services Federal Assistance Listing Numbers: 93.224 & 93.527 Program: Health Center Program Cluster, COVID-19 Health Center Program Cluster Award/Pass-Through Entity Identifying Numbers: H80CS10606-16-00, H80CS10606-17-04, H80CS10606-17-05, H8GCS48224, H8L50900-01-00, H8NCS53911-01-04 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.403(e), costs must be in accordance with Generally Accepted Accounting Procedures (GAAP) to be allowable under Federal awards. Condition: During our testing of 2024 costs, we noted that 3 of the 60 payroll transactions selected for testing within the Health Center Program Cluster were incurred in 2023. This practice is not in accordance with GAAP, which require that costs be recorded in the period in which they are incurred. Cause: The Village did not have adequate policies and procedures in place to ensure that federal expenditures are properly accrued and recorded in the fiscal year in which the costs are actually incurred. Effect or Potential Effect: Failure to accrue costs in accordance with GAAP may result in expenditures being materially misstated on the SEFA that could lead to inaccurate reporting to the federal agencies. Questioned Costs: Health Center Program Cluster Known Questioned Costs: $473 Health Center Program Cluster Likely Questioned Costs: $26,444 Context: This is a condition identified per review of the Village’s compliance with specified requirements not using a statistically valid sample. Payroll costs including fringe benefits for the Health Center Program Cluster in 2024 were $1,714,998. Repeat Finding: 2023-001 Recommendation: We recommend Village implement policies and procedures to accrue for federal expenditures in the period the costs were incurred to ensure costs are being recorded in accordance with GAAP and the SEFA is representative of all federal expenditures incurred in the reporting year. Views of Responsible Officials:
Federal Agencies: Department of Health and Human Services Federal Assistance Listing Numbers: 93.224 & 93.527 Program: Health Center Program Cluster, COVID-19 Health Center Program Cluster Award/Pass-Through Entity Identifying Numbers: H80CS10606-16-00, H80CS10606-17-04, H80CS10606-17-05, H8GCS48224, H8L50900-01-00, H8NCS53911-01-04 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.403(e), costs must be in accordance with Generally Accepted Accounting Procedures (GAAP) to be allowable under Federal awards. Condition: During our testing of 2024 costs, we noted that 3 of the 60 payroll transactions selected for testing within the Health Center Program Cluster were incurred in 2023. This practice is not in accordance with GAAP, which require that costs be recorded in the period in which they are incurred. Cause: The Village did not have adequate policies and procedures in place to ensure that federal expenditures are properly accrued and recorded in the fiscal year in which the costs are actually incurred. Effect or Potential Effect: Failure to accrue costs in accordance with GAAP may result in expenditures being materially misstated on the SEFA that could lead to inaccurate reporting to the federal agencies. Questioned Costs: Health Center Program Cluster Known Questioned Costs: $473 Health Center Program Cluster Likely Questioned Costs: $26,444 Context: This is a condition identified per review of the Village’s compliance with specified requirements not using a statistically valid sample. Payroll costs including fringe benefits for the Health Center Program Cluster in 2024 were $1,714,998. Repeat Finding: 2023-001 Recommendation: We recommend Village implement policies and procedures to accrue for federal expenditures in the period the costs were incurred to ensure costs are being recorded in accordance with GAAP and the SEFA is representative of all federal expenditures incurred in the reporting year. Views of Responsible Officials:
Federal Agencies: Department of Health and Human Services Federal Assistance Listing Numbers: 93.224 & 93.527 Program: Health Center Program Cluster, COVID-19 Health Center Program Cluster Award/Pass-Through Entity Identifying Numbers: H80CS10606-16-00, H80CS10606-17-04, H80CS10606-17-05, H8GCS48224, H8L50900-01-00, H8NCS53911-01-04 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.403(e), costs must be in accordance with Generally Accepted Accounting Procedures (GAAP) to be allowable under Federal awards. Condition: During our testing of 2024 costs, we noted that 3 of the 60 payroll transactions selected for testing within the Health Center Program Cluster were incurred in 2023. This practice is not in accordance with GAAP, which require that costs be recorded in the period in which they are incurred. Cause: The Village did not have adequate policies and procedures in place to ensure that federal expenditures are properly accrued and recorded in the fiscal year in which the costs are actually incurred. Effect or Potential Effect: Failure to accrue costs in accordance with GAAP may result in expenditures being materially misstated on the SEFA that could lead to inaccurate reporting to the federal agencies. Questioned Costs: Health Center Program Cluster Known Questioned Costs: $473 Health Center Program Cluster Likely Questioned Costs: $26,444 Context: This is a condition identified per review of the Village’s compliance with specified requirements not using a statistically valid sample. Payroll costs including fringe benefits for the Health Center Program Cluster in 2024 were $1,714,998. Repeat Finding: 2023-001 Recommendation: We recommend Village implement policies and procedures to accrue for federal expenditures in the period the costs were incurred to ensure costs are being recorded in accordance with GAAP and the SEFA is representative of all federal expenditures incurred in the reporting year. Views of Responsible Officials:
Federal Agencies: Department of Health and Human Services Federal Assistance Listing Numbers: 93.224 & 93.527 Program: Health Center Program Cluster, COVID-19 Health Center Program Cluster Award/Pass-Through Entity Identifying Numbers: H80CS10606-16-00, H80CS10606-17-04, H80CS10606-17-05, H8GCS48224, H8L50900-01-00, H8NCS53911-01-04 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.403(e), costs must be in accordance with Generally Accepted Accounting Procedures (GAAP) to be allowable under Federal awards. Condition: During our testing of 2024 costs, we noted that 3 of the 60 payroll transactions selected for testing within the Health Center Program Cluster were incurred in 2023. This practice is not in accordance with GAAP, which require that costs be recorded in the period in which they are incurred. Cause: The Village did not have adequate policies and procedures in place to ensure that federal expenditures are properly accrued and recorded in the fiscal year in which the costs are actually incurred. Effect or Potential Effect: Failure to accrue costs in accordance with GAAP may result in expenditures being materially misstated on the SEFA that could lead to inaccurate reporting to the federal agencies. Questioned Costs: Health Center Program Cluster Known Questioned Costs: $473 Health Center Program Cluster Likely Questioned Costs: $26,444 Context: This is a condition identified per review of the Village’s compliance with specified requirements not using a statistically valid sample. Payroll costs including fringe benefits for the Health Center Program Cluster in 2024 were $1,714,998. Repeat Finding: 2023-001 Recommendation: We recommend Village implement policies and procedures to accrue for federal expenditures in the period the costs were incurred to ensure costs are being recorded in accordance with GAAP and the SEFA is representative of all federal expenditures incurred in the reporting year. Views of Responsible Officials:
Federal Agencies: Department of Health and Human Services Federal Assistance Listing Numbers: 93.224 & 93.527 Program: Health Center Program Cluster, COVID-19 Health Center Program Cluster Award/Pass-Through Entity Identifying Numbers: H80CS10606-16-00, H80CS10606-17-04, H80CS10606-17-05, H8GCS48224, H8L50900-01-00, H8NCS53911-01-04 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.403(e), costs must be in accordance with Generally Accepted Accounting Procedures (GAAP) to be allowable under Federal awards. Condition: During our testing of 2024 costs, we noted that 3 of the 60 payroll transactions selected for testing within the Health Center Program Cluster were incurred in 2023. This practice is not in accordance with GAAP, which require that costs be recorded in the period in which they are incurred. Cause: The Village did not have adequate policies and procedures in place to ensure that federal expenditures are properly accrued and recorded in the fiscal year in which the costs are actually incurred. Effect or Potential Effect: Failure to accrue costs in accordance with GAAP may result in expenditures being materially misstated on the SEFA that could lead to inaccurate reporting to the federal agencies. Questioned Costs: Health Center Program Cluster Known Questioned Costs: $473 Health Center Program Cluster Likely Questioned Costs: $26,444 Context: This is a condition identified per review of the Village’s compliance with specified requirements not using a statistically valid sample. Payroll costs including fringe benefits for the Health Center Program Cluster in 2024 were $1,714,998. Repeat Finding: 2023-001 Recommendation: We recommend Village implement policies and procedures to accrue for federal expenditures in the period the costs were incurred to ensure costs are being recorded in accordance with GAAP and the SEFA is representative of all federal expenditures incurred in the reporting year. Views of Responsible Officials:
FINDING 2024-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): 2024 Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/ Cost Principles, Period of Performance Audit Findings: Material Weakness, Other Matters Condition and Context As part of sound management of the federal award, the City was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The City had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. Prior to the receipt of direct COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF), all eligible entities were required to execute a Financial Assistance Agreement (Agreement), which included the Award Terms and Conditions that recipients must comply with in carrying out the objectives of their award. Per the Agreement, the City was responsible for the effective administration of the federal award, as well as the application of sound management practices and administration of federal funds in a manner consistent with program objectives and terms and conditions of the award. Recipients may use SLFRF funds for any eligible expenses subject to the restrictions set forth in sections 602 and 603 of the Social Security Act, as added by section 9901 of the American Rescue Plan Act of 2021. The SLFRF program provides substantial flexibility for each recipient to meet local needs within four separate eligible use categories. Recipients may use SLFRF funds to: • Respond to the COVID-19 public health emergency and its negative economic impacts; • Respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers of eligible employers that have eligible workers who are performing essential work; • Provide government services, to the extent COVID-19 caused a reduction in revenues collected in the most recent full fiscal year of the recipient; and • Make necessary investments in water, sewer, or broadband infrastructure. The City elected to receive the standard revenue loss allowance, allowing it to claim its total SLFRF allocation of $3,821,386 as revenue loss to use for government services. The allocated funds may only be used to cover costs incurred from the period beginning on March 3, 2021, and ending on December 31, 2024. Obligations for costs incurred are required to be liquidated no later than December 31, 2026. INDIANA STATE BOARD OF ACCOUNTS 18 CITY OF VINCENNES SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the audit period, the City completed one transfer of SLFRF funds from the Coronavirus State and Local Fi fund to the Grant Stipends fund in the amount of $30,000. The transfer was described as a reimbursement for stipends paid to essential workers. There was no documentation provided for audit to determine if the transfer was for allowable activities, met the cost objectives of the award, or that the associated expenditures were within the period of performance. The Grant Stipends fund was established in 2022, with total expenditures from the fund from 2022, 2023, and 2024 of only $28,009. Additionally, the transfer of SLFRF funds was commingled with other receipts into the Grant Stipends fund. Because the $30,000 transfer of SLFRF funds exceeded the total disbursements out of the Grant Stipends fund and because the City did not have an appropriate system in place to account for the federal expenditures separately from other grant and operating expenditures, we were unable to determine what, if any, expenditures from the Grant Stipends fund should be included in the population of federal expenditures under the award. Without a complete population of expenditures, we were unable to determine the City's compliance with the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Period of Performance compliance requirements. As such, the $30,000 transferred from the Coronavirus State and Local Fi fund is considered questioned costs. The City also did not have written procedures for determining the allowability of costs in accordance with subpart E of 2 CFR 200. The lack of effective internal controls and noncompliance were isolated to the situations described above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and 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 200.300(b) states in part: "The non-Federal entity is responsible for complying with all requirements of the Federal award. . . ." 2 CFR 200.302 states in part: "(a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other 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. . . . INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF VINCENNES SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) The financial management system of each non-Federal entity must provide for the following . . . (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . . (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. (4) Effective control over, and accountability for, all funds, property, and other assets. . . . (7) Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award." 2 CFR 200.403 states in part: "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. . . . (g) be adequately documented. . . ." Cause A proper system of internal controls over the SLFRF expenditures was not designed by management of the City to ensure the SLFRF funds were being used appropriately. The City did not have policies and procedures in place to ensure that expenditures of federal awards were allowable and occurred within the period of performance. The City initiated a transfer of SLFRF funds from the grant fund to another fund without proper supporting documentation. The City was unable to differentiate expenditures made from federal and nonfederal funds within its ledger for the Grant Stipends fund. Effect Without the proper implementation of an effectively designed system of internal controls, a population of expenditures associated with the Grant Stipends fund could not be determined. As such, the City cannot ensure nor can we determine that expenditures of the grant were not unallowable, within the proper period, and adhered to established practices and policies. As a result, noncompliance in the form of questioned costs occurred and remained undetected. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. INDIANA STATE BOARD OF ACCOUNTS 20 CITY OF VINCENNES SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs Questioned costs in the amount of $30,000 were identified as noted in the Condition and Context. Recommendation We recommended the City's management establish a proper system of internal controls and develop policies and procedures to ensure that expenditures of federal awards are allowable and occur within the period of performance. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding: 2024-001 ALN 10.559, USDA Summer Food Service Program (SFSP) Known/Likely Questioned Costs: $151,099.42 Criteria: Federal regulations require that costs charged to the program be necessary, reasonable, and properly documented (2 CFR 200.403–200.404). In addition, procurement must follow open and competitive bidding procedures (2 CFR 200.318), and contracts must be executed and approved before charging costs to the program. Deviation/Condition: The Organization paid $151,099.42 of SFSP program funds to UTA of Boro Park for outsourced payroll services without following federal procurement requirements and without an executed, approved contract. Cause: Inadequate internal controls over procurement and contract approval. Effect: Use of program funds for unallowable costs, resulting in questioned costs of $151,099.42. Perspective: The issue represents a material exception, as the entire amount of outsourced payroll services ($151,099.42) charged to the SFSP was deemed unallowable due to noncompliance with procurement and contract approval requirements. Reporting Period: 1/1/2024-12/31/2024 Repeat Finding: No Recommendation: The Organization should reimburse the SFSP program fund in the amount of $151,099.42 from its non-federal operating funds. In addition, the Organization should establish procedures to ensure all future service contracts are competitively procured, executed in writing, and approved by the State agency before being charged to the program. Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding, has reimbursed $151,099.42 to the SFSP account, and will strengthen procurement controls through competitive bidding and contract approvals to ensure compliance.
FINDING 2024-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): 2024 Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report for Allowable Costs/Cost Principles. The prior audit finding number was 2023-003. Condition and Context As a condition of receiving COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award funds, all eligible entities were required to execute a financial assistance agreement that set forth the applicable terms and conditions. In accordance with this agreement, the County was responsible for the proper administration of the federal award, the application of sound financial management practices, and ensuring that all expenditures complied with the program's objectives and the requirements of the award. The SLFRF offers recipients significant flexibility to address local needs across seven eligible use categories. One eligible use category is providing government services. Under this category, entities may use award funds for government services up to the greater of $10 million or the amount of revenue loss due to the pandemic. The County chose this category and elected the standard allowance of up to $10 million, allowing it to use its entire allocation of $4,014,711, for the provision of government services. On May 11, 2021, the Board of County Commissioners passed Ordinance 2021-07 that created a new fund and adopted the American Rescue Plan (ARP). The Ordinance included the procedures for spending the ARP funding, which included the following: The Board of County Commissioners will establish the plan, conditions, and rules upon which the funds are to be requested and used. Funds shall be appropriated by the County's fiscal body before use. All expenditure of funds shall be approved by the Board of County Commissioners with any and all claims to be paid from the County's ARP fund. During the audit period, the County Council approved appropriations for 17 expenditures from the ARP fund. All 17 expenditures were tested to verify that costs were allowable and adhered to the cost principles. Of these, 9 expenditures, totaling $300,000, were approved for payment by the Board of County Commissioners and classified by the County Council as appropriated and obligated for donations. The donations were distributed as follows: INDIANA STATE BOARD OF ACCOUNTS 14 SULLIVAN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Local camp and retreat center for insurance costs. Youth sportsplex for facility upgrades. Two non-profits for food purchases for needy individuals. Local volunteer fire department for a generator and equipment. Local fire territory for firefighting gear. Local humane society for connection into the wastewater system. Local ambulance service to assist with the purchase of an ambulance. Local park for road resurfacing. Documentation provided to support each expenditure consisted of a proposal for donations submitted by the requesting entity. The payment of donations does not constitute a government service of the County and is not an allowable cost. Therefore, the $300,000 disbursed as donations was considered questioned costs. The lack of internal controls and noncompliance were isolated to the donations identified above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and 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 states in part: "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. . . . (g) Be adequately documented. . . ." 2 CFR 200.434(a) states: "Costs of contributions and donations, including cash, property, and services, from the non-Federal entity to other entities, are unallowable." INDIANA STATE BOARD OF ACCOUNTS 15 SULLIVAN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 31 CFR 35.6 states in part: "(a) . . . a recipient may use funds for one or more of the purposes described in paragraphs (b) through (h) of this section. . . . (d) Providing government services. . . ." 31 CFR 35.9 states in part: "A recipient must comply with all other applicable Federal statutes, regulations, and executive orders . . ." Cause The lack of effective internal controls allowed for the County to charge questionable expenditures to the SLFRF program. County officials believed that the expenditures were allowable as they were made to organizations that provided services and benefits to residents of the County and did not understand that expenditures designated as donations are strictly prohibited under federal regulations. Effect Without a proper system of internal controls in place that operated effectively, the County expended $300,000 from the federal award that was not an allowable use of funds. The U.S. Department of the Treasury could request these funds be returned. Questioned Costs We identified $300,000 in known questioned costs as noted above in the Condition and Context. Recommendation We recommended the County's management establish a proper system of internal controls and develop policies and procedures to ensure that costs are allowable for SLFRF award funds. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Review of Casefiles Federal Agency: U.S. Department of Human Services Federal Program Name: Medical Assistance (Medicaid Cluster) Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2405MN5ADM, 2405MN5MAP; 2024 Pass-Through Agency: Minnesota Department of Human Services Compliance Requirement Affected: Eligibility Award Period: Year Ended December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: 2 CFR 200.403 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: During testing of eligibility requirements, it was noted there are no reviews being completed over MAXIS nor METS casefiles. Questioned Costs: None Context: No supervisor or peer review is being completed over METS and MAXIS casefiles. Cause: Due to staff turnover, the County did not have time to complete the reviews. Effect: Errors made in determining eligibility may not be discovered and benefits may be issued to clients who are not eligible. Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2024-005. Recommendation: We recommend that a supervisor or team lead perform regular internal reviews on MAXIS and METS casefiles to determine that proper policies and procedures are being followed in determining eligibility. Views of responsible officials: There is no disagreement with the audit finding. There is a corrective action plan in place.
Reporting Federal Agency: U.S. Department of Human Services Federal Program Name: Medical Assistance (Medicaid Cluster) Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2405MN5ADM, 2405MN5MAP; 2024 Pass-Through Agency: Minnesota Department of Human Services Compliance Requirement Affected: Reporting Award Period: Year Ended December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or Specific Requirement: 2 CFR 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Additionally, 2 CFR 200.403 lists general criteria for allowability of costs under federal awards, and the 2556 Social Services quarterly report has further guidance on what is allowed to be reported. Condition: Reports for the 2556 Social Services Quarterly Expense Report were reviewed, but were not reported correctly and sent to the state with incorrect direct charges reported. Auditor estimates that the reimbursed amount based on these ineligible costs reported on the 2556 is less than $25,000. Questioned Costs: Amount less than $25,000. Context: The quarterly report was reviewed, however it was determined that incorrect expenses were reported and was not caught during the review process. Cause: Lack of review of the requirements of the 2556 instructions by the County. Effect: Ineligible costs could be reported. Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2023-009. Recommendation: We recommend that the County implement review procedures to ensure that the reports are submitted timely and accurately, and record of review is kept on file. Views of responsible officials: There is no disagreement with the audit finding. There is a corrective action plan in place.
Review of Casefiles Federal Agency: U.S. Department of Human Services Federal Program Name: Medical Assistance (Medicaid Cluster) Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2405MN5ADM, 2405MN5MAP; 2024 Pass-Through Agency: Minnesota Department of Human Services Compliance Requirement Affected: Eligibility Award Period: Year Ended December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: 2 CFR 200.403 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: During testing of eligibility requirements, it was noted there are no reviews being completed over MAXIS nor METS casefiles. Questioned Costs: None Context: No supervisor or peer review is being completed over METS and MAXIS casefiles. Cause: Due to staff turnover, the County did not have time to complete the reviews. Effect: Errors made in determining eligibility may not be discovered and benefits may be issued to clients who are not eligible. Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2024-005. Recommendation: We recommend that a supervisor or team lead perform regular internal reviews on MAXIS and METS casefiles to determine that proper policies and procedures are being followed in determining eligibility. Views of responsible officials: There is no disagreement with the audit finding. There is a corrective action plan in place.
Reporting Federal Agency: U.S. Department of Human Services Federal Program Name: Medical Assistance (Medicaid Cluster) Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2405MN5ADM, 2405MN5MAP; 2024 Pass-Through Agency: Minnesota Department of Human Services Compliance Requirement Affected: Reporting Award Period: Year Ended December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or Specific Requirement: 2 CFR 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Additionally, 2 CFR 200.403 lists general criteria for allowability of costs under federal awards, and the 2556 Social Services quarterly report has further guidance on what is allowed to be reported. Condition: Reports for the 2556 Social Services Quarterly Expense Report were reviewed, but were not reported correctly and sent to the state with incorrect direct charges reported. Auditor estimates that the reimbursed amount based on these ineligible costs reported on the 2556 is less than $25,000. Questioned Costs: Amount less than $25,000. Context: The quarterly report was reviewed, however it was determined that incorrect expenses were reported and was not caught during the review process. Cause: Lack of review of the requirements of the 2556 instructions by the County. Effect: Ineligible costs could be reported. Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2023-009. Recommendation: We recommend that the County implement review procedures to ensure that the reports are submitted timely and accurately, and record of review is kept on file. Views of responsible officials: There is no disagreement with the audit finding. There is a corrective action plan in place.
Criteria – According to 2 CFR § 200.403, 2 CFR § 200.405, and 2 CFR § 200.405, costs charged to federal awards must be allowable, reasonable, and allocable. Specifically, costs must be necessary and reasonable for the performance of the federal award, must conform to limitations and exclusions set forth in the cost principles, must be consistent with policies that apply uniformly to both federally financed and other activities, and costs must comply with the terms and conditions of the federal award. Federal funds must also only be used for expenditures incurred during the award period. Condition – During our review of expenditures charged to the Crime Victim Assistance (VOCA) grant, we noted that management charged an expense prior to the completion of the project. The expense was allowable under the grant, but the timing of the charge did not align with when the activity occurred. Cause – The premature charge occurred due to management attempting to use the remaining grant funds for that period before they expired. Questioned Cost Amount – Based on deviations noted in our testwork the projected likely questioned costs resulting in noncompliance are as follows: Crime Victim Assistance (VOCA), 16.575: $74,661. Effect – The Organization was not in compliance with the requirements listed above. Recommendation – We recommend the Organization review and reinforce policies regarding timing of cost obligations and expenditures and ensure expenses are recorded in alignment with when the related activity occurs. View of Responsible Officials – Management agrees with the finding. Corrective Action Plan – See attached corrective action plan from management.
Criteria – According to 2 CFR § 200.403, 2 CFR § 200.405, and 2 CFR § 200.405, costs charged to federal awards must be allowable, reasonable, and allocable. Specifically, costs must be necessary and reasonable for the performance of the federal award, must conform to limitations and exclusions set forth in the cost principles, must be consistent with policies that apply uniformly to both federally financed and other activities, and costs must comply with the terms and conditions of the federal award. Federal funds must also only be used for expenditures incurred during the award period. Condition – During our review of expenditures charged to the Crime Victim Assistance (VOCA) grant, we noted that management charged an expense prior to the completion of the project. The expense was allowable under the grant, but the timing of the charge did not align with when the activity occurred. Cause – The premature charge occurred due to management attempting to use the remaining grant funds for that period before they expired. Questioned Cost Amount – Based on deviations noted in our testwork the projected likely questioned costs resulting in noncompliance are as follows: Crime Victim Assistance (VOCA), 16.575: $74,661. Effect – The Organization was not in compliance with the requirements listed above. Recommendation – We recommend the Organization review and reinforce policies regarding timing of cost obligations and expenditures and ensure expenses are recorded in alignment with when the related activity occurs. View of Responsible Officials – Management agrees with the finding. Corrective Action Plan – See attached corrective action plan from management.
Criteria – According to 2 CFR § 200.403, 2 CFR § 200.405, and 2 CFR § 200.405, costs charged to federal awards must be allowable, reasonable, and allocable. Specifically, costs must be necessary and reasonable for the performance of the federal award, must conform to limitations and exclusions set forth in the cost principles, must be consistent with policies that apply uniformly to both federally financed and other activities, and costs must comply with the terms and conditions of the federal award. Federal funds must also only be used for expenditures incurred during the award period. Condition – During our review of expenditures charged to the Crime Victim Assistance (VOCA) grant, we noted that management charged an expense prior to the completion of the project. The expense was allowable under the grant, but the timing of the charge did not align with when the activity occurred. Cause – The premature charge occurred due to management attempting to use the remaining grant funds for that period before they expired. Questioned Cost Amount – Based on deviations noted in our testwork the projected likely questioned costs resulting in noncompliance are as follows: Crime Victim Assistance (VOCA), 16.575: $74,661. Effect – The Organization was not in compliance with the requirements listed above. Recommendation – We recommend the Organization review and reinforce policies regarding timing of cost obligations and expenditures and ensure expenses are recorded in alignment with when the related activity occurs. View of Responsible Officials – Management agrees with the finding. Corrective Action Plan – See attached corrective action plan from management.
Criteria – According to 2 CFR § 200.403, 2 CFR § 200.405, and 2 CFR § 200.405, costs charged to federal awards must be allowable, reasonable, and allocable. Specifically, costs must be necessary and reasonable for the performance of the federal award, must conform to limitations and exclusions set forth in the cost principles, must be consistent with policies that apply uniformly to both federally financed and other activities, and costs must comply with the terms and conditions of the federal award. Federal funds must also only be used for expenditures incurred during the award period. Condition – During our review of expenditures charged to the Crime Victim Assistance (VOCA) grant, we noted that management charged an expense prior to the completion of the project. The expense was allowable under the grant, but the timing of the charge did not align with when the activity occurred. Cause – The premature charge occurred due to management attempting to use the remaining grant funds for that period before they expired. Questioned Cost Amount – Based on deviations noted in our testwork the projected likely questioned costs resulting in noncompliance are as follows: Crime Victim Assistance (VOCA), 16.575: $74,661. Effect – The Organization was not in compliance with the requirements listed above. Recommendation – We recommend the Organization review and reinforce policies regarding timing of cost obligations and expenditures and ensure expenses are recorded in alignment with when the related activity occurs. View of Responsible Officials – Management agrees with the finding. Corrective Action Plan – See attached corrective action plan from management.
Criteria – According to 2 CFR § 200.403, 2 CFR § 200.405, and 2 CFR § 200.405, costs charged to federal awards must be allowable, reasonable, and allocable. Specifically, costs must be necessary and reasonable for the performance of the federal award, must conform to limitations and exclusions set forth in the cost principles, must be consistent with policies that apply uniformly to both federally financed and other activities, and costs must comply with the terms and conditions of the federal award. Federal funds must also only be used for expenditures incurred during the award period. Condition – During our review of expenditures charged to the Crime Victim Assistance (VOCA) grant, we noted that management charged an expense prior to the completion of the project. The expense was allowable under the grant, but the timing of the charge did not align with when the activity occurred. Cause – The premature charge occurred due to management attempting to use the remaining grant funds for that period before they expired. Questioned Cost Amount – Based on deviations noted in our testwork the projected likely questioned costs resulting in noncompliance are as follows: Crime Victim Assistance (VOCA), 16.575: $74,661. Effect – The Organization was not in compliance with the requirements listed above. Recommendation – We recommend the Organization review and reinforce policies regarding timing of cost obligations and expenditures and ensure expenses are recorded in alignment with when the related activity occurs. View of Responsible Officials – Management agrees with the finding. Corrective Action Plan – See attached corrective action plan from management.
Information on the Federal Program: Assistance Listing Number 20.616—National Priority Safety Programs, United States Department of Transportation. Pass-Through Entity: New York State Governor’s Traffic Safety Committee Award Number: HS1-2024-NYS STOP DWI Found.-00199-(088) Compliance Requirement: Allowable Costs, Allowable Activities Type of Finding: Significant deficiency in internal control over compliance Criteria: Per 2 CFR 200.403, costs must be allowable, allocable, and adequately supported to be charged to a federal award. Payments should not exceed the documented amount requested by vendors. Condition and Context: During testing of grant expenditures, we noted management was unable to provide support for a payment made by the Foundation to a county. Specifically, the county invoices provided totaled $16,085 while the Foundation issued a reimbursement check of $20,085, resulting in questioned costs of $4,000. The Foundation included the larger amount on its grant funding request, which was approved and paid by the funding agency. Management was unable to locate the source of the discrepancy. Cause: The Foundation experienced turnover in the grant administrator role during the year. This transaction was processed by the prior grant administrator and the current grant administrator was unable to locate the supporting documentation or other source of the discrepancy. Effect: The Foundation was unable to support amounts paid to the county, resulting in questioned costs as noted above. Questioned Costs: $4,000. Known and likely questioned costs are less than $25,000. Repeat Finding: No Recommendation: We recommend the Foundation strengthen its document retention and review process over payments to ensure that all amounts paid are supported by appropriate documentation. Views of Responsible Officials: Management of the Foundation concurs with this audit finding.
#2024-004 – Major Federal Award Finding - Period of Performance Nature of Finding: Period of Performance – Compliance Finding and Material Weakness in Internal Control over Compliance Criteria/Condition: The Organization recorded certain expenses upon payment of invoices rather than when the service was provided. The guidelines provided at 2 CFR 200.403(e) require that costs be determined in accordance with GAAP to be allowable. In accordance with GAAP and the accrual basis of accounting, such expenses are to be recorded when services are performed, rather than upon payment of invoice. Cause/Context: The Organization had limited accounting resources which impacted timing and frequency of processing certain transactions. In addition, the Organization has contracts with providers that include pre-determined payment terms that may not precisely correlate to the actual work performed in terms of timing. The Organization recorded certain contract costs as the invoices were processed, and not necessarily as the providers’ actual work was completed. Effect: Adjusting journal entries were proposed during the audit to record expenses in the proper period for the financial statements. Federal grant expenses of approximately $100,700 were originally recorded in 2024 that related to 2025 services. Similarly, federal grant expenses of approximately $117,100 were recorded in 2025 that related to 2024 services. These net adjustments increased federal grant revenue and expenditures by approximately $16,400 for the year ended December 31, 2024. Recommendation: We recommend that care be exercised to evaluate financial activity considering the cost factors contained in 2 CFR 200.403, the accrual basis of accounting and period of performance. Controls should be enhanced to ensure that expenses are recorded to the proper period based on when the service or work is provided. Views of Responsible Officials and Planned Corrective Actions: Contracts are recorded as prepaid or accrued expenses and are being expensed monthly. Salaries and benefits incurred before month-end will be accrued to grants at grant cutoff dates and at year-end. Estimated monthly accruals for salaries will be implemented.
CORPORATION FOR NATIONAL AND COMMUNITY SERVICE- NON MAJOR PROGRAM Program Information: Assistance Listing Number: 94.016 AmeriCorps Seniors Senior Companion Program Federal Award Project Title: Senior Companion Program Federal Award Number: 21SCBMD001 Questioned Costs: $55,548 Compliance Requirement: Activities Allowed or Unallowed 2024-002 Unallowable Costs Condition: During an audit of the program by Office of Monitoring’s Financial and Operational Fitness and the National Service Criminal History Checks for the fiscal year 2023 expenses, it was noted that $13,513 arose from noncompliance with allowability of costs (2 CFR 200.403) and $42,035 for noncompliance with National Service Criminal History Checks Federal Regulations (45 CFR 2540.200-207) Criteria: The Code of Federal Regulations (CRF) requires organizations to be in compliance with 2 CFR 200.403 and 45 CFR 2540.200-207. Cause: Management was not aware of the specific federal requirement. Effect: AACF is not in compliance with 2 CFR 200.403 and 45 CFR 2540.200-207. Repeat Finding: No. Auditor’s Recommendation: We recommend AACF review its policies and procedures over compliance to ensure all requirements under 2 CFR 200.403 and 45 CFR 2540.200-207 are adopted in a formal written policy. Views of Responsible Officials and Planned Correct Action: AACF concurs with this finding. AACF submitted a corrective action plan to AmeriCorps and on January 31, 2025 AmeriCorps accepted their corrective action plan and closed the finding. AACF will ensure all requirements under 2 CFR 200.403 and 45 CFR 2540.200-207 are met moving forward.
Finding 2024-002 Material Weakness in Controls over Compliance and Material Noncompliance – Allowable Costs Federal Program: 93.137 Community Programs to Improve Minority Health Year: 2024 Federal Agency: Department of Health and Human Services Criteria – In accordance with 2 CFR 200.403 and 2 CFR 200.302 (b)(3) costs charged to the federal program should be adequately supported by source documentation. Condition – Payroll expenses for one employee were inadvertently recorded twice for the fiscal year, resulting in an overstatement of personnel costs charged to the federal award. Further, indirect costs were charged in excess of the budgeted and approved amount under the grant agreement. Cause – The capturing of payroll expenses to the federal grant was not set up appropriately in the general ledger system which led management to record the above entries manually to the grant program. The manual process led to the duplication of the payroll journal entry and the overcharging of the indirect cost. Perspective – There are six key personnel who charged payroll to the federal program. Out of the six personnel one individual’s payroll was incorrectly duplicated. This resulted in a $30,291 over charge to the grant. Further, from an indirect cost perspective, the grant budget limited indirect costs to $18,296, however a total of $70,965 was charged to the grant, resulting in a $52,669 overcharge. Questioned Cost - $82,960 Effect – Overcharging expenses may result in the granting agency withholding future funding for this grant. Recommendation – Ensure the grant is appropriately set up in the system to capture the relevant expenses. Management also needs to have a more precise control to ensure no expense items are duplicated and are within budget. View of Responsible Officials – See Corrective Action Plan
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 64.033, Department of Veteran Affairs, VA Supportive Services for Veteran Families Program Federal Award Identification Number and Year: 20-MI-221-SS, 20-MI-221-LT, 20-MI-221 Pass-through Entity – N/A Finding Type – Significant deficiency in internal control over compliance Repeat Finding – No Criteria – Per 2 CFR § 200.403(h), cost must be incurred during the approved budget period. Budget period means the time interval from the start date of a funded portion of an award to the end date of that funded portion during which recipients are authorized to expend the funds awarded, including any funds carried forward or other revisions pursuant to 200.308. A non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance and any costs incurred before the Federal awarding agency or passthrough entity made the Federal award that were authorized by the Federal awarding agency or pass-through entity. Condition – During our testing for Period of Performance, it was noted that 1 out of 60 disbursements did not comply with the Period of Performance requirements as specified in the Supportive Services for Veteran Families grant agreement. Funds were disbursed for expenses incurred after the expiration date as noted in the grant agreement. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause/Effect – Management did not follow their internal controls to ensure that compliance with Period of Performance requirements were met. Recommendation – We recommend that the Organization establish procedures and internal, controls to ensure that all expenditures charged under the grant fall within the required Period of Performance requirements as specified in the grant agreement. View of Responsible Officials and Corrective Action Plan – The Agency agrees with the finding. We will provide training to program managers who are approving program expenditures to ensure proper allocation of costs to the appropriate grant cycles. We will also update our purchasing procedures to ensure that the proper allocation of costs is reviewed prior to supervisor's approval of the cost.
Support for Employee Reimbursement Transactions – Allowable Costs Criteria: 2 CFR Part 200.403(g) requires that costs should be adequately documented to support the nature and amount of a transaction for such charges to be allowable under federal awards. In addition, 2 CFR Part 200.334 requires recipients to maintain financial records sufficient to show compliance with federal statues, regulations, and terms and conditions of the award. Condition: During our audit we identified certain transactions without adequate documentation. Context: A review of 23 disbursements totaling $90,636 noted 2 requests for mileage reimbursement that were not supported. Cause: Supporting calculations and documents were not obtained from employees requesting mileage reimbursements. Effect: Costs could be deemed unallowable by the awarding agency if not properly substantiated. Questioned Costs: $141 of known costs charged to federal awards without adequate documentation. The estimation of possible additional questioned costs is $1,302. Recommendation: We recommend the Organization reiterate its policy to employees to provide supporting calculations and documents when requesting reimbursement for business expenses prior to making payment. View of Responsible Officials and Planned Corrective Action: We are in agreement with the finding and will reinforce our policies on reimbursements.
Finding number:2024-004 AL number:10.561 and 21.027 AL title:Supplemental Nutrition Assistance Program and Coronavirus State and Local Fiscal Recovery Funds Name of federal agency:U.S. Department of Agriculture and U.S. Department of Treasury Repeat Finding: No Criteria:The Code of Federal Regulations 2 CFR 200.344 states, "the recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to, financial records, supporting documentation, and statistical records. Condition:During audit testing, it was noted that the Organization had charged expenditures to a federal grant without obtaining or retaining the appropriate underlying support for the transactions. The absence of this documentation represents a failure to meet the record retention and documentation standards required under federal regulations. This gap in documentation undermines the audit trail and raises concerns about the eligibility and allowability of the expenditures. Cause:The deficiency was attributed to ineffective internal controls over the documentation and review process for grant-related disbursements. Specifically, the Organization's formalized procedure was not effectively operating to ensure all expenditures submitted for reimbursement were supported by current and complete documentation. This control lapse allowed unsupported expenditures to be processed without adequate scrutiny. Effect or potential effect:Without proper documentation, the expenditures submitted for reimbursement may be deemed ineligible under federal cost principles. This could result in: - Disallowed costs during audit or federal review, - Reimbursement delays or denials, and - Potential reputational risk or future funding implications.Although no questioned costs were identified, the lack of documentation exposes the Organization to future audit findings and financial risk. Questioned Cost: None Recommendation:We recommend the Organization strengthen its internal controls by implementing a formal documentation review protocol for all expenditures submitted for federal reimbursement. This protocol should include: - Verification that current and complete supporting documentation (e.g., lease agreements, contracts, signed affidavits from participants, etc.) is retained and reviewed prior to submission. - Integration of this review into the monthly and year-end close processes to ensure compliance with 2 CPR§ 200.334 and§ 200.403. - Staff training on federal documentation standards and the importance of maintaining a robust audit trail.By ensuring that all expenses are properly supported, the Organization will enhance compliance, reduce audit risk, and uphold the integrity of its financial reporting. Views of responsible officials:Management agrees with the finding. Management has reinforced the effective execution of existing controls around proper documentation of all expenditures and record retention for these expenditures. Monthly and year-end procedures have been updated to ensure compliance with these procedures.
2 CFR § 2400.101 provides that unless excepted under 24 CFR chapter I through IX, the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, set forth in 2 CFR part 200, shall apply to Federal Awards made by the Department of Housing and Urban Development to non-Federal entities. 2 CFR § 200.403 factors affecting allowability of 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: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles…and (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. 24 CFR § 982.161(a)(2) provides that neither the Public Housing Authority (PHA) nor any of its contractors or subcontractors may enter into any contract or arrangement in connection with the Housing Choice Voucher program in which any of the following classes of persons has any interest, direct or indirect, during tenure or for one year thereafter: Any employee of the PHA, or any contractor, subcontractor or agent of the PHA, who formulates policy or who influences decisions with respect to the programs. The Ashtabula Metropolitan Housing Authority’s Administrative Plan for its Housing Choice Voucher program provides in section 3.4 that the Executive Director or designated representative reviews and provides decisions regarding grievances for a tenant’s request for an auxiliary aid or services, provides in section 5.1.3 that the Executive Director, Resident Coordinator, or designated appointee will perform an informal review if an applicant is determined ineligible, and provides in section 9.3 that applicants being denied housing for abusive behavior must be reviewed and approved by the Executive Director. The Administrative Plan further provides in section 10.11 that only the Executive Director or his/her designee can grant an additional extension beyond suspension time for the term of a voucher, provides in section 11.3 that if the Resident Coordinator is not available or conflicted, the Executive Director will serve as the hearing officer and may also overturn or modify a decision in light of certain circumstances, and provides in section 18.1.4 that the Executive Director or his designee will perform quality control inspections on the number of participant files required by the Section 8 Management Assessment Program. Additionally, the Administrative Plan provides in section 18.1.6 that the Executive Director or his designee may approve an extension beyond thirty days for major repairs, provides in section 21.1.1 that the Executive Director or his/her designee may approve any terms allowing more time for repayment or for a lower down payment, provides in section 21.1.3 that if a family owes $10,000.00 or more, the Executive Director and the Board of Commissioners may refer the case for criminal prosecution, and lastly provides that complaints from members of the public may file complaints against owners, tenants, and employees of the Authority to the Executive Director. The following was noted for the year ended December 31, 2024: • For 1 of 40 (2.5%) transactions tested, totaling $3,767, the Executive Director approved/authorized payments for processing relating to housing he himself owned. Upon further review, it was noted that a total of $44,983 was paid to the Executive Director through the Housing Voucher Cluster Program for the fiscal year. This issue was also noted in our prior year report, however as of November 2024, the Executive Director recused himself from the approval of these payments, and they are now reviewed and authorized by two designated Board members. Furthermore, the Executive Director has sold these properties for the fiscal year 2025 and no longer owns any properties that receive monies from the Authority. Therefore, we consider the payments to the Executive Director prior to November 2024, in the amount of $37,662, to be those monies that constitute questioned costs. The Executive Director influences decisions with regards to the Housing Choice Voucher program pursuant to the Ashtabula Metropolitan Housing Authority’s Administrative Plan. The above payments to the Executive Director do not meet the criteria of being reasonable. In addition, with the Executive Director approving the payments, the control environment and processes for allowable costs are ineffective in preventing or detecting the above noncompliance and other potential noncompliance with the payments that are made through the program by the Authority. Failure to have alternative controls in place for approval and failure to adhere to the Authority's policies governing such transactions allowed these activities to go undetected for the majority of the audit period. This lack of controls could have resulted in potential findings for recovery, additional questioned costs, and referrals to the Ohio Ethics Commission. The Authority should review the Authority's administrative plan for their conflict of interest policy. The Authority should develop a formal policy regarding related party transactions to govern transactions in which employees of the Authority, including members of the Board, may have a personal interest and ensure they consult with legal counsel, Ohio Ethics Commission, and the Department of Housing and Urban Development when a potential conflict is identified.
Federal Agency: U.S. Department of Homeland Security Federal Program Title: Federal Emergency Management Agency Disaster Grants Assistance Listing Number: 97.036 Federal Award Number and Year: 4496DR 2024 Pass-Through Agency: State of Massachusetts Pass-Through Number: CTFEMA4496STPAT00971 Award Period: Year Ended December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: In accordance with 2 CFR §200.403(g), to be allowable under federal awards, costs must be adequately documented. Additionally, 2 CFR §200.303 requires nonfederal entities to establish and maintain effective internal control over the federal award that provides reasonable assurance that the entity is managing the award in compliance with federal statutes, regulations, and the terms and conditions of the award. Condition: During testing of expenditures under the FEMA grant, the System was unable to provide documentation showing approval of an invoice dated May 2020. This invoice was selected as part of the single audit sample. The lack of approval documentation represents a deficiency in internal controls over compliance with federal requirements. Questioned Costs: None. Context: The invoice in question was incurred in May 2020, prior to the implementation of the Acumatica AP approval workflow. In June 2020, the facility transitioned to Acumatica, which provides electronic tracking of invoice approvals. Cause: At the time of the expenditure, the facility did not have a centralized or electronic approval process in place. Approval documentation was maintained manually and was not retained or accessible during the audit. Effect: The absence of approval documentation for the invoice creates a risk that expenditures may not be properly reviewed or authorized, potentially leading to noncompliance with federal requirements. Although the cost was ultimately deemed allowable, the control deficiency could impact future compliance if not addressed. Recommendation: We recommend that the System ensure all expenditures under federal awards are supported by documented approvals. For legacy transactions, efforts should be made to retain or reconstruct approval documentation where feasible. Continued use and monitoring of the Acumatica system should be maintained to ensure compliance going forward. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. The invoice in question was incurred during an emergency response period prior to the implementation of the Acumatica system. While approval was likely obtained at the time, documentation was not retained. With the implementation of the Acumatica AP approval process in June 2020, the System has taken appropriate steps to address the finding and enhance internal controls over invoice approvals.
Criteria: Under 2 CFR 200.403, costs charged to federal awards must be necessary, reasonable, and allocable, and must conform to limitations or exclusions set forth in the Uniform Guidance. 2 CFR 200.431 further specifies that fringe benefits must be actually incurred and in accordance with established written policies. Condition: During testing of payroll and related benefits, we identified instances where the organization billed federal awards for employee benefits (e.g., health insurance and retirement contributions) that were not provided or paid on behalf of the employees. The amounts were charged based on estimated budget allocations rather than actual costs incurred, and no reconciliation was performed. Cause: The Organization lacked adequate internal controls to ensure only paid fringe benefit costs were charged to federal awards. There was no process in place to reconcile estimated benefits to paid benefits. Effect: Charging unexpended costs to federal awards resulted in questioned costs totaling $22,241. This practice may lead to misrepresentation of expenditures and noncompliance with federal cost principles. Questioned Costs: $22,241 Recommendation: We recommend the organization implement procedures to ensure benefits charged to federal awards reflect actual costs expended, perform regular reconciliations between estimated and actual benefit costs, and update written policies to align with Uniform Guidance requirements for allowable fringe benefit charges. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and in the summer of 2024, the Organization has contracted with a third party accounting company to provide services.
Identification of the federal program: Federal grantor: United States Department of Health and Human Services (HHS) Assistance Listing No.: 93.048 Program name: Special Programs for the Aging, Title IV, and Title II, Discretionary Projects Criteria or specific requirement (including statutory, regulatory, or other citation): Under 2 CFR 200.403 costs must be allowable; 2 CFR 200.405 allocable; and indirect costs must follow 2 CFR 200.414 and Appendix IV to Part 200 (nonprofit rate determination). Entities without a current negotiated rate may elect the 10% de minimis rate (2 CFR 200.414(f)). HHS adopts these requirements at 45 CFR Part 75. Condition: The organization applied and included an expired provisional indirect cost rate in its HHS grant application and budgets. HHS approved the application and budgets; however, the rate in use was not current and the Organization had no active negotiated indirect cost rate agreement (NICRA). Cause: Lapse in monitoring and renewing the negotiated indirect cost rate. Effect or potential effect: Risk of noncompliance with cost principles and potential unallowable indirect cost recoveries if the expired rate differs from an approved current rate. Questioned costs: Undetermined. The variance between the expired rate and an allowable rate was not calculated. Recommendation: Either (1) obtain an updated NICRA from the cognizant agency (HHS) and apply it prospectively and, if required, retroactively. Implement controls to track rate expirations and require documented verification of the current rate before budget submissions and draw requests. Views of responsible officials: Management occurs with the recommendation. See Management’s Corrective Action Plan.
2024-002 — Allowable Costs/Cost Principles Federal program information: Funding agency: U.S. Department of Health and Human Services Title: Indian Self-Determination, Medical Assistance Program ALN: 93.441, 93.778 Award period: 1/1/2024 – 12/31/2026, 1/1/2024 – 12/31/2024 Criteria: According to 2 CFR Part 200.403, to be allowable under federal awards, costs must be adequately documented. Additionally, the 2 CFR Part 200.430 requires that charges to Federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: Employee benefits expenditures charged to the programs do not agree to supporting documentation, such as employee benefit provider premium invoices. Context: All employee benefits charged to the programs. Questioned Costs: Undeterminable Cause: The payroll module and account structure setup in the accounting system (multiple benefits going into one benefit account) made it virtually impossible to reconcile employer benefits to the employer benefits provider premium invoices and/or employee benefit election forms. Effect: ABHS may not be able to demonstrate that the costs charged to federal programs are allowable. Auditor’s Recommendations: ABHS should implement a reconciliation process to ensure that employee benefit expenditures charged to federal programs agree with employee benefit provider premiums invoices and/or employee benefit election forms. Management’s Response: ABHS has implemented a new accounting and payroll system which allows the organization to reconcile employee benefit expenditures monthly. These systems were implemented in March and April of 2025 and management expects this finding to be resolved in 2025.
Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal agency: U.S. Department of Health and Human Services Pass-through entity: Council of Medical Specialty Societies Assistance listing number: 93.083 Assistance listing name: COVID-19 Prevention of Disease, Disability, and Death through Immunization and Control of Respiratory and Related Diseases Award number: 1NH231P922656-01-00 Award name: Improving adult immunization rates for COVID-19, influenza and routine adult vaccination through partnerships with medical subspecialty societies Award year: 9/30/2021 – 9/30/2026 Criteria – The Uniform Guidance in 2 CFR Appendix IV to Part 200 contains the requirements for development of indirect cost rates for nonprofit organizations in accordance with federal regulations. The guidance defines a provisional rate as a temporary indirect cost rate applicable to a specified period which is used for funding, interim reimbursement, and reporting indirect costs on federal awards. Provisional rates must be actualized and upward or downward adjustments made based on the actual allowable costs incurred for the period involved. In addition to the above, costs charged to federal awards, including indirect costs, must conform to the allowability of cost principles in 2 CFR Part 200, Subpart E. Specifically, 2 CFR §200.403 states that costs must be necessary, reasonable, and allocable to the federal award, and must conform to any limitations or exclusions set forth in the cost principles or in the federal award as to types or amounts of cost items. Condition – The College continued to apply indirect costs to the major federal program using provisional rates established for fiscal year 2016, which were formalized in a written agreement with the cognizant agency on February 25, 2014. In both 2023 and 2024, the College did not calculate the actual indirect costs incurred and compare them to the indirect costs charged using the provisional rates to determine necessary adjustments, as required under 2 CFR Part 200. Management calculated a preliminary final rate for 2024 during 2025 and continues to refine the actual rates for 2024. Until those rates are actualized, the College continues to request reimbursement using the provisional rate. Although corrective action was initiated after the finalization of the 2023 audit, this deficiency persisted throughout the 2024 audit period. Cause – The College's existing policies, procedures, and internal controls were inadequate to effectively manage and ensure compliance with the Uniform Guidance requirements pertaining to indirect costs, as specified in the aforementioned criteria. This hindered the College's ability to properly oversee and adhere to the established guidelines, leading to stated non-compliance. Questioned Costs – Questioned costs for 2024 are currently indeterminable, as management is still in the process of finalizing the indirect cost rate calculations for the year. Until the final rates are established, management is unable to estimate whether actual costs exceed provisional billings or if provisional billings exceed actual cost. Context – This is a condition identified per review of the College’s compliance with the allowable costs/cost principles provisions of the Uniform Guidance. The prevalence of this finding is detailed in the condition section above. Effect – The College did not actualize its provisional rate, or properly calculate and adjust actual indirect costs for 2024. Inadequate documentation and verification increased the risk of unallowable costs being charged to federal awards, which may result in noncompliance, questioned costs, potential disallowance or repayment of federal funding, and an inability to fully demonstrate compliance with Uniform Guidance requirements. Repeat Finding – This is a repeat finding; however, during the audit period, the College took steps to address the deficiency, including engaging external experts to assist with the indirect cost calculation. The finding is repeated to allow the College additional time to refine its methodology and calculation to ensure full compliance with federal regulations. Recommendation – Establish and implement robust policies, procedures, and controls to manage and monitor indirect costs. Regularly review and update indirect cost rates to ensure they reflect actual costs and comply with 2 CFR Part 200, Subpart E. Ensure proper identification, documentation, and verification of accounts in the indirect cost pool and base, and routinely review costs for allowability with adequate supporting documentation. Views of Responsible Officials – During 2025, the College developed a preliminary actual rate for 2024 and is continuing to refine the actual rates for that year. Following the finalization of the 2023 audit, the College implemented formal policies and procedures for identifying, documenting, and verifying accounts in the indirect cost pool and base. Management has assigned responsibility for reviewing the allowability of costs and will actualize the indirect cost rate once the calculations are complete.
Condition: During our review of expense allocations charged to the Economic Development Administration (EDA) for the Chew Street Technology Center Project, we noted that the client did not appropriately account for EDA grant draws: - January 2024 Draw #3 totaling $144,654 was fully paid by the City of Houston. However, 80% of the same amount ($115,723) was also drawn from EDA funds. - February 2024 Draw #4 totaling $668,967 was partially paid by the City of Houston and the FWCRC. Nonetheless, 80% ($535,173) was also drawn from EDA funds. These duplicate reimbursements resulted in an overcharge of $330,523 to the EDA. The client subsequently funded future draws from its own resources, and no further adjustments were deemed necessary. Cause: The overcharges were primarily due to errors in the initial draw submissions, likely stemming from inadequate internal controls and oversight in the grant reporting process. Effect: This resulted in noncompliance with federal cost principles and an overstatement of expenses charged to the federal award. If not corrected, such issues could lead to questioned costs or potential disallowance of funds. Criteria Per 2 CFR §200.403–405, only actual, unreimbursed, and allocable costs may be charged to a federal award. Duplicate reimbursement of expenses violates these principles and may result in noncompliance with the Uniform Guidance. Overcharges or duplicate reimbursements must be formally corrected, typically through: - Repayment to the grantor, or - Offsetting future draws, with written approval from the grantor agency. Recommendation: We recommend that the organization strengthen its internal controls over the grant reporting process to prevent similar overcharges in the future. Specifically: - Implement regular reviews of draw submissions to ensure expenses have not been previously reimbursed. - Provide targeted training to accounting and grants management staff on federal cost principles and drawdown procedures. - Enhance oversight mechanisms, including supervisory review and reconciliation of funding sources prior to draw submissions.
Repeat finding: There was a simialr finding in the prior year, but it related to a different program and was assessed to be a significant deficiency. Condition: During our testing of payments charged to the federal major program, we noted that employee timesheets lacked evidence of review and approval. Certain employees charged to the grant did not prepare timesheets and a separate tracking system was used. Federal regulations require that expenditures charged to Federal awards be properly reviewed, approved, and documented to ensure allowability and compliance with grant terms. Criteria: Under the Uniform Guidance, specifically 2 CFR 200.430, charges to Federal awards for compensation must be supported by a system of internal control which provides reasonable assurance that costs are allocated appropriately and accurately. Per 2 CFR §200.403, allowable costs must be "necessary, reasonable, and adequately documented." Additionally, 2 CFR §200.302(b)(3) requires non- Federal entities to maintain records that sufficiently detail financial transactions to support Federal expenditures. Cause: The Federal program was new to the organization and controls over the program had not been fully established. Turnover in the accounting department contributed to the lack of resources for tracking these costs. Effect: Management provided documentation on personnel costs allocated to the program, but was unable to provide evidence of review. Lack of review increases the risk of unauthorized or unallowable costs being charged to the Federal award, potentially leading to questioned costs and noncompliance with Federal grant requirements. Context: This issue applied to approximately 50% of the compensation costs charged to the grant expenditures. Management performed time studies on some of the employees whose costs were shared among programs, and the local granting organization did not cite this as a finding in their review of their subrecipient’s activities. Recommendation: Management should review the requirements of CFR 200.430 and ensure that current processes, whether digital or hard-copy driven, are consistent with the requirements of the Uniform Guidance. In addition, management should consider adding additional staff to its accounting and/or grants management team. Views or reponsible officials: Management will evaluate systems and processes to ensure time tracking procedures meet the standards outlined in the Uniform Guidance.
Finding 2024-001: H. Period of Performance – Nonpayroll expenditures Federal award agency: U.S. Department of Treasury Pass-through granting agency: Unified Government of Wyandotte County, Kansas and Kansas City, Kansas Program name and ALN: Coronavirus State and Local Fiscal Recovery Funds, 21.027 (COVID-19) Federal award identification number: SLFRP3214 Federal award year: November 17, 2022 to December 31, 2024 Criteria: The Uniform Guidance stipulates that recipients may only use funds to cover costs incurred during the period stated in the grant agreement (Section 1 states November 17, 2022 until December 31, 2024) and in accordance with U.S. GAAP per 2 CFR 200.403(e). Condition: During testing, we identified cutoff errors with expenditures where items with a 2023 service period were recorded as an expenditure in 2024 (and therefore reimbursed). Cause: Lack of controls and oversight; change in upper level management/turnover during the grant period. Effect or potential effect: Failure to comply with requirements would result in return of unallowable costs and a breach in agreement and may be basis to recover grant funds by grantor. Questioned costs: $19,594. Known questioned costs identified were $15,000 relating to 1 non-payroll expenditure tested. This extrapolates to 4% of nonpayroll expenditures (tested population totaled $392,877 over total population of $513,201). As such, total questioned costs would calculate to $19,594 (projected costs total $4,594 plus known questioned costs of $15,000). Context: Expenditure period of performance was recorded in the incorrect year for 1 of 47 nonpayroll expenditures tested. Repeat finding: No. Recommendation: We recommend that the Agency establish controls and personnel establish and follow procedures to determine proper cutoff of expenditures prior to recording within the general ledger under the program code. Views of responsible officials: Management agrees with this finding. See corrective action plan.
Finding 2024-003: Period of Performance – Indirect Costs Federal award agency: U.S. Department of Treasury Pass-through granting agency: Unified Government of Wyandotte County, Kansas and Kansas City, Kansas Program name and ALN: Coronavirus State and Local Fiscal Recovery Funds, 21.027 (COVID-19) Federal award identification number: SLFRP3214 Federal award year: November 17, 2022 to December 31, 2024 Criteria: The Uniform Guidance stipulates that recipients may apply the De Minimis rate at 10% of total direct costs. However, these indirect costs must be charged during the fiscal period (Section 1 states grant period is November 17, 2022 until December 31, 2024) and in accordance with U.S. GAAP per 2 CFR 200.403(e). Condition: During testing, we identified indirect costs were charged at a 13% rate for 2024 grant expenditures due to a catch up from the 2023 year. Cause: Lack of controls and oversight; change in upper level management/turnover during the grant period. Effect or potential effect: Failure to comply with requirements would result in return of unallowable costs and a breach in agreement and may be basis to recover grant funds by grantor. Questioned costs: $34,869 Context: During testing, we identified indirect costs were not charged to the grant at a 10% rate for the 2024 grant year. As such, the Agency's controls were not operating effectively to ensure appropriate calculations of indirect cost rates through the grant period. Repeat finding: No. Recommendation: We recommend that the Agency establish controls and personnel establish and follow procedures to calculate indirect costs charged against grants in accordance with U.S. GAAP. Views of responsible officials: Management agrees with this finding. See corrective action plan.
Finding Number: 2024-003 Federal Program: CDBG – Entitlement Grants Cluster Federal Award Identification Number and Year: B-22-MC-39-0001, 2024 Assistance Listing Number (ALN): 14.218 Federal Awarding Agency: Department of Housing and Urban Development Pass-through Entity: None Repeat Finding: No Material Weakness and Noncompliance – Period of Performance Criteria: A non-Federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the Federal awarding agency or pass-through entity made the Federal award that were authorized by the Federal awarding agency or pass-through entity sections 2 CFR 200.308, 200.309, and 200.403(h). A period of performance may contain one or more budget periods. Condition: The City charged costs that were incurred prior to the beginning of the period of performance of the grant. Questioned Costs: Total of $44,198 Identification of How Questioned Costs Were Computed: Total known questioned costs of $22,110, and total projection of $22,088 for a total of $44,198. Context: During testing, we identified three operational journals with transactions that were incurred outside of the period of performance of the grant. The requirement is outlined in the funding approval/agreement and applicable guidelines referenced above. Cause and Effect: The City did not have internal controls in place to ensure that only costs that occurred within the period of performance were charged to grant. As a result, the City charged costs that were incurred prior to the start of the grant’s period of performance. Recommendation: The City should implement controls and processes to ensure costs are charged within the appropriate grant period. Views of Responsible Officials and Corrective Action Plan: See Corrective Action Plan.
Condition: During testing of allowable costs/cost principles charged to the federal program, we identified a $450,000 payment made to a former executive in settlement of an employment dispute. This cost was charged directly to the federal program. Criteria: Title 2, CFR, Part 200, Subpart E-Cost Principles, Basic Considerations, section 200.403, Factors Affecting Allowability of Costs, states, in part, that “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, b) be properly documented showing the business nature of the charge. Cause: Internal controls over allowable costs compliance requirements were not properly designed and were not placed in operation. Management is responsible for compliance with the requirements of allowable costs and for the design, implementation, and maintenance of effective internal controls over compliance with the requirements of laws, statutes, regulations, rules, and provisions of grant agreements applicable to its federal program. Effect: As a result, $450,000 of unallowable costs were charged to the program. This represents questioned costs that must be refunded to the federal awarding agency or otherwise resolved. Questioned Costs: $450,000 Recommendation: We recommend the Agency develop a written policies and procedures manual for allowable/unallowable costs compliance, which should include a checklist detailing all the necessary steps to ensure proper review of all costs charged to the federal program.
Compliance Requirement Allowable Costs and Allowable Activities Type of Finding Material Weakness in Internal Control over Compliance, Material Noncompliance Program Port Security Grant Program ALN # 97.056 Federal Agency Department of Homeland Security – Direct Award Federal Award Year 2021 and 2023 Grant Numbers EMW-2021-PU-00030- IJ#3 EMW-2023-PU-00164- IJ#4 Questioned Costs $209,855 Criteria - Federal rules require that grant funds be spent only on allowable and necessary costs that are directly related to the purpose of the award. For the Port Security Grant Program (PSGP), this means expenditures must match the projects described in the approved Investment Justification (IJ). In addition, all costs must be incurred within the official grant period; expenses made before or after the authorized performance dates are not permitted. Uniform Guidance establishes clear requirements for allowability of costs under federal awards: • 2 CFR 200.403 – Costs must be necessary, reasonable, allocable, and consistently treated in accordance with the terms and conditions of the federal award. • 2 CFR 200.405 – Costs must be directly allocable to the federal award in proportion to the benefits received. • 2 CFR 200.403(c) and 200.404 – Costs must conform to limitations or exclusions set forth in the award documents and applicable federal regulations. • 2 CFR 200.309 – A non-federal entity may charge to the federal award only allowable costs incurred during the period of performance, unless specifically authorized otherwise.Condition - Testing of 50 invoices identified significant noncompliance. Fourteen (14) invoices represented expenditures that were not aligned with the approved Investment Justification (IJ), indicating that funds were used for purposes outside the scope of the grant award. In addition, one (1) invoice reflected costs incurred prior to the authorized period of performance, in direct violation of federal grant requirements. a) Expenditures were charged to the 2021 PSGP for the purchase of camera equipment, installation, and project management activities that lacked support within the approved Investment Justification No. 3 MSOC Security Sustainment Costs, resulting in questioned costs of $78,910. b) Expenditures were charged to the 2023 PSGP for the purchase of computer equipment, conference room enhancements, and biological and cultural survey that lacked support within the approved Investment Justification No. 3 GIS Acquisition and Implementation, resulting in questioned costs of $115,044 c) Expenditures were charged to the 2023 PSGP for the purchase of executive leadership training and datto backups that lacked support within the approved Investment Justification No. 4 Sustainment for Cybersecurity Network and IT Systems, resulting in questioned costs of $15,901Cause - The District failed to implement and enforce adequate internal controls to ensure that expenditures were reviewed and validated against both the approved Investment Justification and the grant’s period of performance prior to authorization. This lack of oversight reflects a breakdown in management’s responsibility for compliance with federal grant requirements. Effect - Because the District did not ensure expenditures were properly reviewed against the approved Investment Justifications and the authorized period of performance, a total of $209,855 in questioned costs was identified. These unallowable expenditures increase the risk that federal grantor agencies may require repayment or disallowance of costs, and indicate material noncompliance with federal grant requirements. The lack of adequate review and oversight also undermines accountability for federal funds, creating heightened risk of waste, abuse, and additional future noncompliance. Recommendation - The District must implement and enforce formal review procedures requiring all PSGP expenditures to be cross-checked against the approved Investment Justification (IJ) and verified for compliance with the grant’s period of performance prior to payment. No disbursement of federal funds should occur until documentation demonstrates that the expenditure directly aligns with the approved grant scope and timing. The District must consult with FEMA regarding the allowability of identified questioned costs.
Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Aging Cluster & National Family Caregiver Support CFDA Numbers: 93.044, 93.045, 93.053, 93.052 Pass-Through Entity: Wisconsin Department of Health Services Pass-Through Numbers: 560300; 560700 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matter Criteria: According to 2 CFR, Part 200.403(e) of the Office of Management and Budget’s Uniform Grant Guidance, allowable costs should be determined in accordance with generally accepted accounting principles (GAAP). Condition: During our testing of allowable costs, it was noted that certain costs were included in expenditures when paid and not when the expense is incurred. Questioned Costs: Known - $85,021 Context: We sampled thirteen general cash disbursements, noting 2 instances of expenses reported when paid, not incurred. Cause: GWAAR’s current policy is to claim certain expenses when the related invoice is paid, and not over the period of time in which the actual expense is incurred. This is done to help facilitate cash flow for the organization to pay for the related cash outflow. Effect: Expenditures could be claimed during the wrong grant award period. Repeat Finding: No Recommendation: We recommend that GWAAR implement policies that ensure expenses are being recorded and reported in the proper period. Views of Responsible Officials: There is no disagreement with the audit finding.
Finding 2024-002 Lack of Supporting Documentation for Disbursements (Including Credit Card Transactions) Condition: During our testing of disbursements, including credit card transactions, we identified several instances where supporting invoices or receipts were missing or incomplete. In these cases, the organization was unable to provide sufficient documentation to substantiate the nature, purpose, or business justification of the expenditures charged to federal programs. Criteria: The Uniform Guidance requires that costs charged to federal awards be necessary, reasonable, allocable, and adequately documented. Specifically, §200.403(g) states that a cost is allowable only if it is adequately documented, and §200.302(b)(3) requires recipients to maintain records that identify the source and application of funds for federally funded activities.Questioned Costs: The total questioned costs cannot be determined due to lack of adequate supporting documentation.Cause: This issue occurred due to inadequate internal controls over the documentation and retention of support for disbursements. Management has not fully implemented procedures to ensure all expenditures are properly supported before being approved or charged to a federal program.Effect: Without proper supporting documentation, there is an increased risk that unallowable or unsupported costs were charged to the federal award. This condition could result in repayment of disallowed costs, noncompliance with the Uniform Guidance, and potential impact on future federal funding.Recommendation: We recommend that management: 1. Implement a formal written policy requiring original invoices or receipts to be obtained and reviewed for every disbursement, including credit card purchases, prior to payment or cost allocation to a federal award. 2. Ensure that documentation is reviewed and approved by an individual independent of the preparer or cardholder. 3. Maintain supporting documentation in accordance with the record retention requirements of 2 CFR §200.334. 4. Provide staff training on the documentation requirements for allowable costs under the Uniform Guidance.Views of Responsible Officials: We concur with this finding. The organization acknowledges that complete documentation is essential to substantiate the nature, purpose, and justification of all expenditures, particularly those funded by federal awards.
2024-007 Allowable Costs/Cost Principles – Cost Allocation Plan Prior Year Finding Number: N/A Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Health and Human Services Programs: 93.563 Child Support Services, 93.778 Medicaid Cluster Award Number and Year: 2301MNCSES; 2024, 2405MN5ADM; 2024 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 U.S. Code of Federal Regulations § 2 CFR 200.403(a) and § 2 CFR 200.403(g) require costs to be necessary and reasonable and be adequately documented. Condition: For two of the five departments tested, incorrect expenditure amounts were used in the cost allocation plan. In addition, for one of the five departments tested, the County did not have support for the basis of allocating the costs to benefiting departments. Questioned Costs: $2,968,953, which is calculated as $1,299,253 of department costs tested within the cost allocation plan that were derived from incorrect information and $1,669,700 in department costs without a documented basis for allocating costs. Not all questioned costs were allocated to the department reporting grant expenditures or to the grant tested as a major program. Additionally, the rate of reimbursement of allocated costs to the grant is not known to the auditor. Context: The 2024 cost allocation plan is prepared using activity and expenditures from 2022. The cost allocation plan is prepared annually by a contractor and submitted to the Minnesota Department of Human Services (DHS) for reimbursement of county-wide indirect cost reimbursement. For one department, the cost allocation plan included expenditure accounts with credit balances as debit balances and, for another department, the 2023 general ledger expenditures were used rather than 2022. Furthermore, the basis for one department was determined in direct conversation between the cost allocation plan preparer and the County, with no documented support retained. Effect: Errors in reporting expenditures and the basis of the allocations used in the cost allocation plan calculation could result in incorrect county-wide indirect cost reimbursements from DHS. Cause: The cost allocation plan preparer’s work contained errors or lacked proper support, and the County did not identify the errors or lack of support. Recommendation: We recommend the County provide accurate and supported information to the cost allocation plan preparer and appropriate staff review the cost allocation plan to ensure the data, basis, and calculation are accurate, complete, and supported. View of Responsible Official: Concur
CONDITION: During the calendar year 2024, the City did not record the necessary adjustments to the various ‘Fund’ general ledgers of the City to properly reconcile the balance sheet accounts, such as cash, receivables, payables, and payroll-related liabilities to the underlying supporting documentation available at the City (which includes reconciliations of cash prepared independently by City personnel but do not agree to amounts reported in the various general ledgers). This included ‘Funds” containing significant federal funding such as the City’s Community Development Block Grant (CDBG) Program and American Rescue Plan Act (ARPA) funding known as the Coronavirus State and Local Fiscal Recovery Fund. As a result, the financial position and results of operations as shown throughout the calendar year were inaccurately stated. However, it should be noted that the Community Development Department of the City and other City personnel maintain separate financial reporting for these federal funds, independent of the aforementioned ‘Fund’ general ledgers sufficient to ascertain the revenues and expenditures of the federal programs. This is a repeat finding (2023-001) from the prior year. CRITERIA: Prudent internal control procedures in the areas of general ledger management and financial reporting include the reconciliation of all general ledger account balances to underlying supporting documentation monthly with independent oversight and approval as part of the process. In specific as it relates to federal programs, Section 2 CFR 200.403(g) of the Uniform Guidance requires that federal costs must be adequately documented which would include the applicable general ledgers of the City. EFFECT: The lack of procedures in place for reconciling balance sheet accounts throughout the calendar year, with independent oversight, 1) reduces the City’s internal control over the financial reporting processes, 2) exposes the City to inaccurate financial reporting to management for decision-making purposes, and 3) increases the potential for irregularities that may result (unintentional or otherwise) that are not detected in a timely manner. Had these reconciliations been performed, issues such as non-postings, and inaccurate postings to the City’s various general ledgers could have been detected and corrected in a timely manner to enhance internal controls and financial reporting in this important area of financial management. As a result, the City is not incompliance with Section 2 CFR 200.403(g) of the Uniform Guidance which requires federal costs to be adequately documented in the applicable general ledgers of the City.Findings and questioned costs related to Federal Awards which are required to be reported in accordance with the Uniform Guidance 2 CFR 200.516(a):CAUSE: City business office personnel perform a variety of duties such as accounting for deposits, invoice processing, reconciliation of cash (but not to the various general ledger accounts of the City), preparation of payroll, and posting of financial transactions to the City’s general ledgers. However, no one individual is responsible for managing and reconciling all of the aforementioned procedures to the various ‘Fund’ general ledgers at the City. RECOMMENDATION: I am recommending that the management of the City establish written procedures for all accounting functions, but most notably for recording the necessary adjustments to the City’s general ledgers throughout the calendar year (monthly) to ensure that all balance sheet account balances are supported by the underlying documentation available at the City. It is anticipated that additional training will be required for in-house personnel to perform this function, or the City may want to consider contracting these services to a third-party professional with the expertise to perform these functions for the City on a monthly or quarterly basis throughout the year. These procedures should significantly enhance the internal control over the financial accounting and reporting process relative to the City’s general ledgers for each Fund. VIEWS OF RESPONSIBLE OFFICIALS: The City concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
• CONDITION: During the calendar year 2024, the City did not utilize a formal general ledger system of accounting to track the financial activity (financial position and results of operations) for several ‘Funds’ held at the City. The activity of these funds is either 1) maintained in spreadsheet fashion similar to a checkbook used in personal finances, 2) recorded partially (expenses only with no revenue), or 3) not tracked at all. As these funds are not maintained using the City’s accounting software package, management does not have the ability to efficiently generate financial reports necessary to provide management with the proper fiscal oversight. This condition included the American Rescue Plan Act (ARPA) funding known as the Coronavirus State and Local Fiscal Recovery Fund. However, it should be noted that City personnel were able to prepare spreadsheets to document which expenditures were utilized to prepare the necessary quarterly reporting requirements to the Department of Treasury. This is a repeat finding (2023-002) from the prior year. CRITERIA: Prudent internal control procedures in the areas of general ledger management and financial reporting include maintaining a formal general ledger system of accounting to track the activity of all ‘Funds’ maintained by the City. In specific as it relates to federal programs, Section 2 CFR 200.403(g) of the Uniform Guidance requires that federal costs must be adequately documented which would include the maintaining of a formal general ledger system of accounting for all ‘Funds’ of the City. EFFECT: The lack of procedures in place for maintaining a formal general ledger system of accounting for all ‘Funds’ of the City 1) reduces the City’s internal control over the financial reporting processes, 2) exposes the City to inaccurate financial reporting to management for decision-making purposes, and 3) increases the potential for irregularities that may result (unintentional or otherwise) that are not detected in a timely manner. As a result, the City is not incompliance with Section 2 CFR 200.403(g) of the Uniform Guidance which requires federal costs to be adequately documented in the applicable general ledgers of the City. CAUSE: The City began the process during calendar year 2019 of creating general ledgers on the computer accounting software system for all funds of the City, however due to changes in business office personnel, and other workload responsibilities, the City has not been able to fully complete this process.RECOMMENDATION: I am recommending that the City continue the process of making sure the financial activity for all funds individually is entered into the software accounting system. It is anticipated that additional training will be required for in-house personnel to perform this function, or the City may want to consider contracting these services to a third-party professional with the expertise to perform these functions for the City on a monthly or quarterly basis throughout the year. These procedures should significantly enhance the internal control over the financial accounting and reporting process relative to the City’s general ledgers for each Fund. VIEWS OF RESPONSIBLE OFFICIALS: The City concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
Finding Reference: 2024-004 – Inappropriate Allocation of Expenses Federal Agency: U.S. Department of Treasury Pass-Through Entity: Commonwealth Financing Authority Federal Program: Coronavirus State and Local Fiscal Recovery Funds – ALN 21.027 Compliance Requirement: Allowable Costs / Cost Principles Type of Finding: Compliance and Material Weakness in Internal Control over Compliance Criteria: Per 2 CFR §200.403 and §200.405, costs charged to a federal award must be allowable, allocable, and not reimbursed by another federal source. Internal controls should ensure that expenses are properly reviewed and approved prior to being charged to federal programs. Condition: During our audit, we noted that the Borough initially charged expenses to the COVID-19 ARPA H20 PA grant that were also being reimbursed under a separate federal grant. This resulted in duplicate reimbursement requests for the same costs, rendering the original charges to the COVID-19 ARPA H20 PA grant unallowable. Cause: The Borough’s internal controls over compliance did not detect that the same expenses were being submitted for reimbursement under multiple federal programs. This indicates a lack of adequate review procedures to prevent duplicate claims. Possible Asserted Effects: Although the expenses were ultimately not reimbursed twice, the initial submission of unallowable costs could have resulted in questioned costs and noncompliance with federal requirements. Upon identification by the auditors, the Borough communicated with the grantor agency and received approval to substitute allowable expenses under the grant. Questioned Costs: None noted. The Borough corrected the issue prior to final grant closeout, and no federal funds were improperly expended. Context: All grant expenditures were tested. Repeat Finding: Not Applicable Recommendations: We recommend that the Borough strengthen its internal control procedures over grant expense allocations, including implementing a cross-check process to ensure expenses are not submitted to multiple grants simultaneously. Views of responsible officials and planned corrective actions: After the review of the audit findings, the Borough has implemented additional oversight to include the review/validation of expenses prior to grant payment processing and/or grant closeout. The process and implementation are further detailed on the separate corrective action plan.
2024-001 Coronavirus State and Local Fiscal Recovery Funds – Assistance Listing No. 21.027 Significant Deficiency in Internal Control Over Compliance and Noncompliance – Inadequate Documentation Non-payroll Transactions B. Allowable Costs/Cost Principles Criteria: Per 2 CFR § 200.403(g), charges to federal awards should be adequately documented to determine allowability of costs. Condition and Context: We haphazardly selected a sample of 25 non-payroll transactions. Our sample was not statistically valid. During our testing of non-payroll expenses charged to the federal program, we noted two instances for the 25 transactions selected for testing where the documentation retained was not adequate to support allowable cost determinations. These two transactions resulted in questioned costs that totaled $732. Cause and Effect: Control activities for retaining supporting documentation did not operate consistently as designed throughout the year. As a result, certain costs were recorded to federal awards without adequate supporting documentation, resulting in questioned costs and increasing the risk of unauthorized or otherwise unallowable expenditures. Recommendation: We recommend that management train staff on documentation retention policies. Management should also implement preventative or detective controls to ensure adequate documentation is retained for federal awards. Views of Responsible Officials and Planned Corrective Action: Management agrees with the recommendation and it was implemented effective July 1, 2025.
Finding 2024-004: 93.591 - U.S. Department of Health and Human Services - Family Violence Prevention and Services/State Domestic Violence Coalitions Allowable Costs/Cost Principles, Material Weakness in Internal Control and Noncompliance Criteria: In accordance with 2 CFR §200.403(g), costs must be adequately documented in order to be allowable under a federal award. Additionally, per 2 CFR §200.302(b)(3), recipients must maintain records that identify the source and application of funds for federally funded activities. Furthermore, effective internal controls per 2 CFR §200.303 require that transactions be properly authorized and reviewed to ensure compliance with applicable requirements. Condition: During our testing of expenses charged to the federal award, we reviewed a sample of 10 transactions totaling $9,284. Of those, 7 transactions (representing $8,980) were found to be noncompliant due to one or both of the following: • Missing supporting documentation, such as receipts or invoices • Missing approval documentation, such as required supervisor sign-offs These issues impaired our ability to determine whether the expenses were allowed, reasonable, and allocable under the terms of the award. Due to the high rate of errors, we performed extrapolation procedures over the population of similar expenses totaling $107,782. Based on the sample error rate and our extrapolation methodology, we estimate that $36,846 of the total expenses charged to the federal award may be unallowable and are thus considered extrapolated questioned costs. Effect: As a result of insufficient supporting and approval documentation, the allowability of a significant portion of expenses charged to the federal award could not be determined. This has led to an extrapolated questioned cost of $36,846. Questioned Costs: $36,846 (extrapolated) Cause: The deficiencies noted appear to be the result of weak internal controls related to documentation and approval workflows for federal expenditures. Specifically, the Organization does not appear to have a consistent process to: • Ensure documentation is retained for all expenses • Verify and record supervisory or grant-related approvals Recommendation: We recommend the Organization take immediate steps to improve internal controls related to documentation and record retention for federal program expenditures. The Organization should ensure that all expenses charged to the federal award are supported with adequate documentation. Additionally, the Organization should also ensure approvals are properly documented regardless if the expense is paid by check or electronic payment.
Finding 2024-003 – Allowable Costs Federal Agency: U.S. Department of Treasury Federal Program: Coronavirus State and Local Fiscal Recovery Funds AL Number: 21.027 Pass-through: City of Columbus Award Number: 2576-2021 Award Year: 10/18/2021 – 12/31/2026 Type of Finding: Material Weakness and Noncompliance Criteria: Per 2 CFR 200.403, Costs charged to federal awards must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. In addition, they must not be included as a cost or used to meet cost-sharing requirements of any other federally-financed program in either the current or a prior period. Condition: The controls in place were not sufficient to ensure costs submitted for reimbursement were complete and accurate. Context: The Association included the same payroll costs to two different invoices (requests for cost reimbursement) for the ARPA Relocation subgrant passed through the City of Columbus. These two invoices were submitted and recorded as revenue in 2024 and consist of costs incurred in 2023 and 2024. The payroll costs submitted in the first invoice totaled $107,668 while the second invoice contained payroll costs of $119,120. The difference between those amounts represents additional payroll costs for one employee for pay dates between May and June 2024. Cause: The underlying cause was due to an oversight of the disbursement journal reviewer. Effect: The Association submitted a duplicate invoice for payroll expenditures that were already reimbursed. Questioned costs: $107,668 Identification of how questioned costs were computed: See explanation provided in the Context. Repeat finding: No. Recommendation: The Association should review its policies and procedures to ensure the same costs are not duplicated among different invoices submitted for cost reimbursement. Views of responsible officials: See Corrective Action Plan
Finding 2024-005 – Period of Performance Federal Agency: U.S. Department of Treasury Federal Program: Coronavirus State and Local Fiscal Recovery Funds AL Number: 21.027 Pass-through: Community Shelter Board Award Number: YMCA-24-CSB and YMCA-25-CSB Award Year: 7/1/2023 – 6/30/2024 and 7/1/2024 – 6/30/2025 Type of Finding: Material Weakness and Noncompliance Criteria: 2 CFR 200.403(h): Administrative closeout costs may be incurred until the due date of the final report(s). If incurred, these costs must be liquidated prior to the due date of the final report(s) and charged to the final budget period of the award unless otherwise specified by the Federal agency. All other costs must be incurred during the approved budget period. 2 CFR 200.302: The recipient's and subrecipient's financial management system must provide for the following: Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Condition: The Association was unable to verify whether costs recorded in the financial accounting system were included in invoices submitted for cost reimbursement. As such, auditors could not verify whether these costs were included in the appropriate period of performance. Context: Out of a sample of 40 transactions tested for compliance with period of performance requirements, 27 of them could not be traced to a reimbursement invoice. Most of these transactions were transfers of payroll costs from one program to another. Cause: The Association did not have a strong process to track program expenses with the financial accounting system and did not effectively reconcile expenditures between the general ledger and the Schedule of Expenditures of Federal Awards. In addition, the Association did not maintain support for expenditures charged to federal grants to be able to support whether they were within the allowable period of performance. Effect: The Association could not provide evidence of whether the transactions tested were within the period of performance. Questioned costs: $602,142 Identification of how questioned costs were computed: Known questioned costs were computed by summing the dollar amount of selections that were identified as errors which totaled $6,829. An error rate was calculated by taking the number of errors divided by the total sample size as described in the Context section. This error rate was then applied to the untested population to calculate projected questioned costs of $595,313. Repeat finding: Not applicable. Recommendation: The Association should review its policies and procedures to ensure costs recorded in the financial accounting system are able to be reconciled to invoices submitted for cost reimbursement as well as the Schedule of Expenditures of Federal Awards. Views of responsible officials: See Corrective Action Plan.
2024 – 003 Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Low-Income Home Energy Assistance Program (LIHEAP) Assistance Listing Number: 93.568 Federal Award Identification Number and Year: G-2402LLIEA 6/1/2024; 2302ILLIEI 3/1/2023; G 2302ILLIEA 10/1/2022 Pass-Through Agency: Illinois Department of Commerce and Economic Opportunity Pass-Through Numbers: 23-221038; 23-274038; 23-224038 Award Period: June 1, 2024 through September 30, 2025; March 1, 2023 through August 31, 2024; October 1, 2022 through August 31, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or Specific Requirement: Uniform Grant Guidance (2 CFR 200.303) requires non-federal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Uniform Grant Guidance (2 CFR 200.308, 200.309, and 200.403(h)) requires that only allowable costs incurred during the approved budget period of a federal award’s period of performance be charged to the award. Effective internal controls should include procedures that involve costs charged to federal awards being reviewed and approved for proper period of performance. Condition: The County charged costs to the federal award after the end of the period of performance. Furthermore, although payroll transactions charged to the federal award were reviewed and approved, documentation of such review was not retained. Questioned Costs: $706 Context: 4 of 97 transactions tested were incurred after the period of performance end date. All 18 payroll transactions tested lacked documentation of review and approval. Cause: Costs were inadvertently claimed outside the period of performance. Documentation of review and approval for payroll transactions was also not retained. Effect: Charging costs outside the period of performance can result in unallowable costs being charged to federal awards, which could lead to noncompliance with federal requirements and potential repayment obligations. Repeat Finding: The finding is a repeat of a finding in the prior year. The prior year finding number was 2023-005. Section III – Findings and Questioned Costs – Major Federal Programs (Continued) 2024 – 003 Period of Performance (Continued) Recommendation: We recommend that the County review and strengthen its internal controls to ensure that only costs incurred within the period of performance are charged. Costs charged to federal awards should be reviewed and approved for proper period of performance, and documentation of such review should be retained. Views of Responsible Officials: There is no disagreement with the audit finding.
2024 – 003 Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Low-Income Home Energy Assistance Program (LIHEAP) Assistance Listing Number: 93.568 Federal Award Identification Number and Year: G-2402LLIEA 6/1/2024; 2302ILLIEI 3/1/2023; G 2302ILLIEA 10/1/2022 Pass-Through Agency: Illinois Department of Commerce and Economic Opportunity Pass-Through Numbers: 23-221038; 23-274038; 23-224038 Award Period: June 1, 2024 through September 30, 2025; March 1, 2023 through August 31, 2024; October 1, 2022 through August 31, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or Specific Requirement: Uniform Grant Guidance (2 CFR 200.303) requires non-federal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Uniform Grant Guidance (2 CFR 200.308, 200.309, and 200.403(h)) requires that only allowable costs incurred during the approved budget period of a federal award’s period of performance be charged to the award. Effective internal controls should include procedures that involve costs charged to federal awards being reviewed and approved for proper period of performance. Condition: The County charged costs to the federal award after the end of the period of performance. Furthermore, although payroll transactions charged to the federal award were reviewed and approved, documentation of such review was not retained. Questioned Costs: $706 Context: 4 of 97 transactions tested were incurred after the period of performance end date. All 18 payroll transactions tested lacked documentation of review and approval. Cause: Costs were inadvertently claimed outside the period of performance. Documentation of review and approval for payroll transactions was also not retained. Effect: Charging costs outside the period of performance can result in unallowable costs being charged to federal awards, which could lead to noncompliance with federal requirements and potential repayment obligations. Repeat Finding: The finding is a repeat of a finding in the prior year. The prior year finding number was 2023-005. Section III – Findings and Questioned Costs – Major Federal Programs (Continued) 2024 – 003 Period of Performance (Continued) Recommendation: We recommend that the County review and strengthen its internal controls to ensure that only costs incurred within the period of performance are charged. Costs charged to federal awards should be reviewed and approved for proper period of performance, and documentation of such review should be retained. Views of Responsible Officials: There is no disagreement with the audit finding.
2024 – 003 Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Low-Income Home Energy Assistance Program (LIHEAP) Assistance Listing Number: 93.568 Federal Award Identification Number and Year: G-2402LLIEA 6/1/2024; 2302ILLIEI 3/1/2023; G 2302ILLIEA 10/1/2022 Pass-Through Agency: Illinois Department of Commerce and Economic Opportunity Pass-Through Numbers: 23-221038; 23-274038; 23-224038 Award Period: June 1, 2024 through September 30, 2025; March 1, 2023 through August 31, 2024; October 1, 2022 through August 31, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or Specific Requirement: Uniform Grant Guidance (2 CFR 200.303) requires non-federal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Uniform Grant Guidance (2 CFR 200.308, 200.309, and 200.403(h)) requires that only allowable costs incurred during the approved budget period of a federal award’s period of performance be charged to the award. Effective internal controls should include procedures that involve costs charged to federal awards being reviewed and approved for proper period of performance. Condition: The County charged costs to the federal award after the end of the period of performance. Furthermore, although payroll transactions charged to the federal award were reviewed and approved, documentation of such review was not retained. Questioned Costs: $706 Context: 4 of 97 transactions tested were incurred after the period of performance end date. All 18 payroll transactions tested lacked documentation of review and approval. Cause: Costs were inadvertently claimed outside the period of performance. Documentation of review and approval for payroll transactions was also not retained. Effect: Charging costs outside the period of performance can result in unallowable costs being charged to federal awards, which could lead to noncompliance with federal requirements and potential repayment obligations. Repeat Finding: The finding is a repeat of a finding in the prior year. The prior year finding number was 2023-005. Section III – Findings and Questioned Costs – Major Federal Programs (Continued) 2024 – 003 Period of Performance (Continued) Recommendation: We recommend that the County review and strengthen its internal controls to ensure that only costs incurred within the period of performance are charged. Costs charged to federal awards should be reviewed and approved for proper period of performance, and documentation of such review should be retained. Views of Responsible Officials: There is no disagreement with the audit finding.