Condition: HOPE has elected to use the de minimis indirect cost rate of 10%. While billing the federal grantor on a monthly basis, HOPE applied this 10% rate to the direct costs. However, there was no clear documentation demonstrating how this application related to the organization's actual indirect costs incurred to support the federal program, beyond simply adding the percentage to the direct cost billing. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Subpart E, § 200.403, states that costs charged to Federal awards must be allowable, allocable, and reasonable. While § 200.414(f) permits the use of a de minimis indirect cost rate of 10%, its application should serve as a mechanism to recover a portion of the organization's actual indirect costs. Cause and effect: HOPE experienced turnover in the CFO position during the year. In prior years, HOPE recorded all costs, including indirect costs, in the cost center (“class”) assigned to the funding source. During the year under audit, this practice wasn’t consistently followed. Recommendation: I recommend that HOPE continue to use “classes” consistently in the accounting software to capture program expenditures by funding source, including indirect costs. Views of Responsible Officials: This discrepancy resulted from a lack of understanding by the CFO in processing grant related funding. Grant policies have been updated, and personnel trained to direct and understand the role of independent accounting by funding sources through class codes.
Condition: HOPE has elected to use the de minimis indirect cost rate of 10%. While billing the federal grantor on a monthly basis, HOPE applied this 10% rate to the direct costs. However, there was no clear documentation demonstrating how this application related to the organization's actual indirect costs incurred to support the federal program, beyond simply adding the percentage to the direct cost billing. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Subpart E, § 200.403, states that costs charged to Federal awards must be allowable, allocable, and reasonable. While § 200.414(f) permits the use of a de minimis indirect cost rate of 10%, its application should serve as a mechanism to recover a portion of the organization's actual indirect costs. Cause and effect: HOPE experienced turnover in the CFO position during the year. In prior years, HOPE recorded all costs, including indirect costs, in the cost center (“class”) assigned to the funding source. During the year under audit, this practice wasn’t consistently followed. Recommendation: I recommend that HOPE continue to use “classes” consistently in the accounting software to capture program expenditures by funding source, including indirect costs. Views of Responsible Officials: This discrepancy resulted from a lack of understanding by the CFO in processing grant related funding. Grant policies have been updated, and personnel trained to direct and understand the role of independent accounting by funding sources through class codes.
Criteria – The Agency is required to follow OMB Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards contained in 2CFR Chapter I and Chapter II. One of the general criteria contained in §200.403, costs must be “necessary and reasonable for the performance of the Federal Award and be allocable thereto under these principles”. Condition – The Agency has a contract to purchase bulk cable services and is required to pass these costs to the tenants who are the users of the service. During our audit we noted the Agency did not have the fees charged to the tenants high enough to cover the cost incurred for the service. The amount of costs not recovered was $4,503 for the year ended September 30, 2024. Cause – This finding was repeated from the prior year. The Agency did not increase the amount charged to tenants during the year ended September 30, 2024. Effect or Potential Effect - The cost of the cable service does not meet the “necessary and reasonable” criteria and resulted in questioned costs of $4,503. Subsequent the fiscal year end, the Agency has increased the fees charged. Recommendation - We recommend in the future that the Agency consider the basic criteria of being “necessary and reasonable” before incurring costs in a Federal Award program. The costs of the cable services need to be paid fully by the tenants and should be monitored by management to ensure the Public Housing Program does not incur any of these costs. View of Responsible Official: Management agrees with the Finding.
Capital Fund Program Grants Draws Condition: During our audit procedures over revenue recognition for the Capital Fund Program (CFP), we identified drawdowns of federal funds for which the client was unable to provide adequate supporting documentation. Specifically, the expenditures associated with the draw requests lacked invoices, contracts, or other substantiating records to demonstrate that the costs were allowable, allocable, and incurred in accordance with applicable federal requirements. Criteria: Per 2 CFR §200.403 and §200.302, costs charged to federal awards must be adequately documented and supported by source documentation. Additionally, 2 CFR §200.516(a)(3) requires auditors to report known questioned costs exceeding $25,000 for any federal program, even if not selected as a major program. Cause: The deficiency appears to result from inadequate internal controls over documentation retention and grant compliance monitoring for the CFP. Effect: The lack of documentation impairs the auditor’s ability to verify the allowability of expenditures, resulting in known questioned costs exceeding $25,000. Questioned Cost: $90,149 Recommendations: We recommend that management implement procedures to ensure that all draw requests under the CFP are supported by complete and accurate documentation. This includes maintaining invoices, contracts, and payment records that clearly link expenditures to the approved scope of work under the grant. Management Response: Today’s Marlboro County Housing Authority management acknowledges the auditor’s finding that documentation to support certain CFP drawdowns was incomplete or missing and concurs that this represents a failure to comply with Uniform Guidance documentation requirements under 2 CFR §200.302 and §200.403. The Authority recognizes the importance of maintaining complete and accurate supporting records—such as invoices, contracts, and payment documentation—to substantiate costs charged to federal programs and ensure allowability and allocability under the Capital Fund Program. Effective October 1st, 2024, all draw requests under the Capital Fund Program ARE supported by: Approved contracts or purchase orders Invoices or other source documents Proof of payment (e.g., canceled checks, ACH confirmations) Documentation clearly linking each expense to an approved activity in the CFP Annual Statement
Finding Number: 2024-009 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: U.S. Department of the Treasury COVID-19 – Coronavirus Capital Projects Fund ALN: 21.029 Award #: CPFFN0167 Award Year: 02/09/2022 – 12/31/2026 Government Department/Agency: Office of the Deputy Mayor for Planning and Economic Development (DMPED) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.403, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented.” In addition, the U.S. Department of Treasury, Guidance for the Coronavirus Capital Projects Fund For States, Territories & Freely Associated States (CPF), Section D. Eligible and Ineligible Cost: states that “Allowable costs are determined in accordance with the cost principles identified in 2 CFR Part 200, Subpart E. Federal funds committed to an award may only be used to cover allowable costs incurred during the period of performance and for allowable closeout costs incurred during the grant closeout process. Cost sharing is not a requirement for the use of these funds” Section C. Project Eligibility: also states the following, “Capital Project or Project means the construction, purchase, and installation of, and/or improvements to capital assets where the costs of such assets are capitalized or depreciated, including ancillary costs necessary to put the capital asset to use. Examples of capital assets include buildings, towers, digital devices and equipment, fiber-optic lines, and broadband networks. Examples of ancillary costs include project costs related to project planning and feasibility, broadband installation, and community engagement, broadband adoption, digital literacy, and training associated with a planned or completed Project funded by the Capital Projects Fund program.” Condition – During our examination of Activities Allowed or Unallowed and Allowable Costs/Cost Principles, we observed that the agency used federal funds to reimburse their subrecipient for lease rent of $3,242,953 invoiced from August 2023 through May 2024. This amount was reported to the Federal agency as ancillary costs. However, upon reviewing the supporting documentation, it was found that the rent charged to the grant pertained to the period following the substantial completion of the capital project's construction. Additionally, the leased rent does not appear to align with the definition of ancillary costs as outlined by the CFP guidance mentioned earlier. Furthermore, the agency was unable to provide documentation from the U.S. Treasury approving the leased rent or indicating its knowledge that it was included as part of ancillary costs. Based on the procedures performed and the review of relevant guidance, BDO notes that these costs do not meet the requirements to be considered allowable under the program. Questioned Costs – Known amount $3,242,953. Context – This is a condition identified per review of DMPED’s compliance with specified requirements using a statistically valid sample. Total subrecipient expenditures reported as allowable costs were $14,400,000. Effect – DMPED was unable to demonstrate that the rent charged was approved by the Department of Treasury and was an allowable cost under the guidance. Cause – DMPED did not have proper internal controls and policies and procedures in place to identify allowable costs and activities. Recommendation – We recommend that DMPED evaluate its procedures to ensure only allowable expenses are charged to the program as required under 2 CFR Section 200.403. Related Noncompliance – Material noncompliance. Views of Responsible Officials and Planned Corrective Actions – DMPED does not concur with the auditor’s finding regarding the allowability of rent per the CPF guidance. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section. BDO’s Response – We have reviewed management’s response and our finding remains as indicated.
Finding Number: 2024-028 Prior Year Finding Number: 2023-033 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: U.S. Department of Health and Human Services Opioid STR ALN: 93.788 Award #: Various Award Year: 09/30/2020 – 09/29/2024 Government Department/Agency: Department of Behavioral Health (DBH) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.403, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented.” Condition – During our testwork over nonpayroll transactions for the Activities Allowed or Unallowed and Allowable Costs/Cost Principles, we noted that for one (1) out of sixty-two (62) samples, the transaction was charged twice to the program. Total amount of nonpayroll transactions is $19,095,189, and the amount of exception is $122,311. Questioned Costs – Known amount is $122,311. Context – This is a condition identified per review of DBH’s compliance with specified requirements using a statistically valid sample. Total amount of samples selected for testing amounted to $5,633,513. Effect – Lack of proper review of expenditures could result to unallowable costs charged to the program. Cause – DBH does not have adequate controls in place to ensure that only allowable costs are charged to the program. Recommendation – We recommend that DBH strengthen internal control procedures to ensure that expenditures are allowable, and that sufficient documentation is retained to support that allowability. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – DBH concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
2024-002 – Material Weakness in Internal Control over Compliance and Noncompliance – Allowable Costs/Cost Principles: Indirect Costs Identification of federal program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Criteria: Uniform Guidance 2 C.F.R. § 200.414(f): Any non-federal entity that does not have a current negotiated cost rate may elect to charge a de minimis rate of 10% of modified total direct costs (MTDC) which may be used indefinitely. As described in § 200.403, costs must be consistently charged as either indirect or direct costs, but may not be double charged or inconsistently charged as both. If chosen, this methodology once elected must be used consistently for all federal awards until such time as a nonfederal entity chooses to negotiate for a rate, which the non-federal entity may apply to do at any time. Condition: As defined by the Uniform Guidance, the determination of MTDC excludes equipment and capital expenditures, in addition to various other categories of expenditures. The Council properly elected to utilize the 10% de minimis rate, however, improperly included amounts related to capital expenditures in their determination of the MTDC base. Cause: The Council was aware of the proper method to be used in calculations but the inclusion of capital expenditures was overlooked in error. Effect or potential effect: The Council charged indirect costs to the federal program that exceeded 10% of the MTDC. The overage that was charged to the federal program does not exceed 5% of the total program expenditures over the lifetime of the award. Questioned Costs: $121,838 Context: Over the lifetime of the award, the Council had various capital expenditure purchases totaling approximately $1,350,520 that were improperly included in the calculation of the MTDC. Identification of Repeat Finding: Not applicable. Recommendations: We recommend that the Council works to improve processes and controls over the calculation of, and monitoring of, indirect costs charged to federal programs. We also recommend that training be provided to ensure that all parties are aware of the proper methodology and processes. Views of Responsible Officials: See Corrective Action Plan.
Federal Program: AL 20.237 – High Priority Commercial Motor Vehicle Grant Program, Federal Motor Carrier Safety Administration (FMCSA) Cluster. Compliance Requirements: Period of Performance. Type of Finding: Material Noncompliance and Internal Control Over Noncompliance. Criteria: Per guidance provided by Section 7.5 of the Motor Carrier Safety Assistance Program – Grant Comprehensive Policy, 49 U.S. Code § 31104(f)(2), and 200 Code of Federal Regulations (“CFR”) Section 200.309, only allowable costs incurred during the period of performance specified in the Notice of Grant Award may be charged to the related federal award. Condition and Context: On September 30, 2023, IRP prepaid $174,465 for data repository hosting and maintenance services that were not incurred until the quarter ended December 31, 2023. IRP reported this expenditure in Reports SF-425 and requested its reimbursement on form SF-270, for the quarter ended September 30, 2023, and charged the amount to federal award FM-MP- 0580-21. As expenditure occurred during the fiscal year ending September 30, 2024, it should be charged to federal award FM-MHP-0762-23, which has a period of performance from September 1, 2023, to September 30, 2025 per review of the notice of grant award. Questioned Costs: $174,465. Cause: Management lacked the appropriate knowledge of the period of performance requirements specified by the federal awarding agency and Uniform Guidance. Effect or Potential Effect: This error resulted in a $174,465 charge to award FM-MP-0580-21 for services that were incurred outside of the period of performance. Recommendation: We recommend management implement pre-submission controls, such as requiring date validation for all expenses against the award's period of performance and providing training to educate staff on 2 CFR requirements and period-of-performance limitations. We understand management has alerted FMCSA to the error and intends to work with them to correct the reporting of these expenditures, upon submission to the Federal Audit Clearinghouse of the data collection form and single audit reporting package for the year ended September 30, 2024. Views of Responsible Officials: Management acknowledges the finding and concurs with the recommendation. Grant management procedures have been revised to verify that services are received and costs incurred within the authorized period of performance in accordance with 2 CFR § 200.403 before the costs are charged to a federal award. Staff involved in grant management will receive targeted training on 2 CFR requirements related to period-ofperformance compliance and allowable cost timing.
Finding 2024-003: Unsupported Payroll Charges and Improper Drawdown of Federal Funds Compliance Requirements: Allowable Costs/Cost Principles; Cash Management; Reporting Type: Material Weakness in Internal Control over Compliance and Material Noncompliance Federal Agency: U.S. Department of Health and Human Services (Centers for Disease Control and Prevention) AL Numbers and Titles: 93.809 – National Organizations for Chronic Disease Prevention and Health Promotion Federal Award Number: NU58DP007562 Questioned Costs: $423,094 Repeat Finding: No Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to a federal award must be necessary, reasonable, and allocable, and must conform to the terms and conditions of the award. Per 2 CFR §200.430(i), charges for salaries and wages must be supported by records that accurately reflect the work performed and be supported by a system of internal control. Furthermore, 2 CFR §200.305(b) requires that non-federal entities minimize the time between federal fund drawdown and disbursement, and limits advances to amounts needed for the immediate cash requirements of the program. Condition: During our testing of payroll-related transactions charged to the 93.809 federal program, we identified a significant reallocation of personnel costs from unrestricted funds to the federal grant that occurred late in the audit period. These charges related to multiple employees whose compensation was not included in the originally approved budget for the federal program. At the time of our testing, no formal budget revision had been submitted to the awarding agency, and the names of these staff had not been recorded in the federal grant reporting system as required by the award terms. Additionally, the auditee was unable to provide any documentation, such as certifications, labor distribution reports, calendars, or other records, to support that these employees worked on activities allocable to the federal program. We further noted that the auditee drew down federal funds prior to the recording of these payroll charges, at a time when the costs in question had neither been incurred nor documented. This resulted in federal funds being drawn in advance of need, contrary to federal cash management requirements. Cause: The auditee did not have adequate internal controls to ensure that only appropriately budgeted and documented payroll costs were charged to the federal award. In addition, the organization lacked procedures to confirm that federal funds were drawn only for costs that were allowable, incurred, and supported at the time of drawdown. These weaknesses allowed significant payroll reallocations to be processed retroactively without timely budget amendments or sufficient documentation of allocability. Effect: As a result of these control deficiencies, a total of $423,094 in personnel-related costs, including direct salaries, fringe benefits, and associated indirect costs, was charged to the federal program without appropriate budget authorization or time and effort support. These unsupported costs were also used as the basis for a drawdown of federal funds that occurred before the expenditures were recorded or substantiated. This resulted in noncompliance with both cost principles and cash management requirements and exposes the auditee to potential disallowance or repayment of federal funds. Recommendation: We recommend that the auditee enhance internal controls related to grant budgeting, payroll allocations, and cash management. These controls should ensure that payroll costs charged to federal awards are included in the approved budget or are formally revised and submitted to the grantor, are supported by accurate time and effort documentation, and that federal funds are drawn only when actual, allowable costs have been incurred and documented. We further recommend that the auditee consult with the awarding agency to determine whether any retroactive budget revision or corrective action is available or whether repayment of questioned costs will be required. Views of Responsible Officials Corrective Actions: Management agrees with this finding. Please refer to the Corrective Action Plan.
U.S. Department of Health and Human Services - 93.432 Center for Independent Living 2024-005 Lack of Written Allocation Plan for Shared Costs Criteria: In accordance with 2 CFR §200.405(d), any cost allocated to a federal award must be allocable, reasonable, and based on a method that is supported and consistently applied. In addition, 2 CFR §200.403(g) requires that costs be adequately documented. A written allocation plan is essential to demonstrate that the allocation of shared costs is equitable and in compliance with Uniform Guidance. Condition: During our audit of federal award expenditures, we found that the Organization did not maintain a written cost allocation plan to support how shared costs, such as payroll, health insurance, and retirement, were distributed across programs, including federal awards. While costs were charged to various funding sources, no formal documentation existed to describe the basis or methodology for those allocations. Cause: The League relied on informal practices, but did not document or formalize the methodology in a written plan. As a result, there was no consistent or verifiable support for how shared costs were distributed. Effect: Without a written allocation plan, there is an increased risk that shared costs may be allocated inconsistently or inappropriately to federal awards, potentially resulting in noncompliance with federal costs principles and questioned costs. Questioned Costs: None noted. Recommendation: We recommend that the League develop and implement a written cost allocation plan that outlines the basis for distributing shared costs, including the allocation methodology, the types of costs involved, and the programs affected. The plan should be reviewed periodically and updated as necessary to reflect changes in funding or operations. Supporting documentation for allocations should be maintained and readily available for audit purposes. Views of Responsible Officials and Planned Corrective Actions: See corrective action plan on page 50.
Federal Agency: U.S. Department of the Interior - BOR Federal Program Name: Providing Water to At-Risk Natural Desert Terminal Lakes Assistance Listing Number: 15.508 Federal Award Identification Year: 2024 Pass-Through Agency: National Fish and Wildlife Foundation Award Period: 7/1/19-9/30/24 Type of Finding: Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.403(a) - When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: For eight procured vendors that were selected, verification of subrecipient's suspension or debarment status was not performed. Context: A nonstatistical sample of 21 out of 173 procured vendors were selected for testing for the above program. The condition noted above was identified during our procedures over WBC's procured vendors. Effect: WBC did not verify suspension or debarment status timely, which could result in procuring a vendor which is potentially suspended or debarred. Cause: WBC did not consistently ensure that Suspension or Debarment status was verified timely before naming procuring the vendor. Repeat Finding: The finding is not a repeat finding. Recommendation: We recommend that WBC strengthen its current policies and procedures to ensure that Suspension and Debarment Status is verified for each vendor subject to verification of suspension and debarment verification according to WBC's Procurement policy. Management’s Views: See separate corrective action plan.
Federal Agency: U.S. Department of the Interior - BOR Federal Program Name: Providing Water to At-Risk Natural Desert Terminal Lakes Assistance Listing Number: 15.508 Federal Award Identification Year: 2024 Pass-Through Agency: National Fish and Wildlife Foundation Award Period: 7/1/19-9/30/24 Type of Finding: Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.403(a) - When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: For eight procured vendors that were selected, verification of subrecipient's suspension or debarment status was not performed. Context: A nonstatistical sample of 21 out of 173 procured vendors were selected for testing for the above program. The condition noted above was identified during our procedures over WBC's procured vendors. Effect: WBC did not verify suspension or debarment status timely, which could result in procuring a vendor which is potentially suspended or debarred. Cause: WBC did not consistently ensure that Suspension or Debarment status was verified timely before naming procuring the vendor. Repeat Finding: The finding is not a repeat finding. Recommendation: We recommend that WBC strengthen its current policies and procedures to ensure that Suspension and Debarment Status is verified for each vendor subject to verification of suspension and debarment verification according to WBC's Procurement policy. Management’s Views: See separate corrective action plan.
Federal Agency: U.S. Department of the Interior - BOR Federal Program Name: Providing Water to At-Risk Natural Desert Terminal Lakes Assistance Listing Number: 15.508 Federal Award Identification Year: 2024 Pass-Through Agency: National Fish and Wildlife Foundation Award Period: 7/1/19-9/30/24 Type of Finding: Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.403(a) - When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: For eight procured vendors that were selected, verification of subrecipient's suspension or debarment status was not performed. Context: A nonstatistical sample of 21 out of 173 procured vendors were selected for testing for the above program. The condition noted above was identified during our procedures over WBC's procured vendors. Effect: WBC did not verify suspension or debarment status timely, which could result in procuring a vendor which is potentially suspended or debarred. Cause: WBC did not consistently ensure that Suspension or Debarment status was verified timely before naming procuring the vendor. Repeat Finding: The finding is not a repeat finding. Recommendation: We recommend that WBC strengthen its current policies and procedures to ensure that Suspension and Debarment Status is verified for each vendor subject to verification of suspension and debarment verification according to WBC's Procurement policy. Management’s Views: See separate corrective action plan.
Federal Agency: U.S. Department of the Interior - BOR Federal Program Name: Providing Water to At-Risk Natural Desert Terminal Lakes Assistance Listing Number: 15.508 Federal Award Identification Year: 2024 Pass-Through Agency: National Fish and Wildlife Foundation Award Period: 7/1/19-9/30/24 Type of Finding: Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.403(a) - When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: For eight procured vendors that were selected, verification of subrecipient's suspension or debarment status was not performed. Context: A nonstatistical sample of 21 out of 173 procured vendors were selected for testing for the above program. The condition noted above was identified during our procedures over WBC's procured vendors. Effect: WBC did not verify suspension or debarment status timely, which could result in procuring a vendor which is potentially suspended or debarred. Cause: WBC did not consistently ensure that Suspension or Debarment status was verified timely before naming procuring the vendor. Repeat Finding: The finding is not a repeat finding. Recommendation: We recommend that WBC strengthen its current policies and procedures to ensure that Suspension and Debarment Status is verified for each vendor subject to verification of suspension and debarment verification according to WBC's Procurement policy. Management’s Views: See separate corrective action plan.
Criteria or specific requirement: Per the 2024 OMB Compliance Supplement, "A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308, 200.309, and 200.403(h))." Allowable costs must meet the standards set forth in 2 CFR Part 200, Subpart E. Condition: Costs were booked to incorrect program codes, resulting in unsupported charges being booked to the federal program. Both payroll and non-payroll expenditures were charged to the Federal program prior to the period of performance start date. Questioned costs: Known $1,098 Context: In period of performance testing, the majority of samples tested for beginning period of performance (31/40 samples) related to June 2024 payroll. In all of these tested samples, time was booked to the Federal program prior to the program start date of June 20, 2024. Similarly, there was no adjustments for other charges that are normally booked for the full month at a time, including: per diems (2/40 samples) and fuel (1/40 samples). One additional error was related to time booked to the Federal program when no time was coded to that program during the pay period tested. The final error was related to February amortization that was not processed in time and therefore mistakenly booked to the program. In payroll testing, 2/40 samples tested were booked to a charge code that was not reflected in the supporting timesheets. The amounts booked incorrectly to the major program are considered unallowable costs. Cause: MTI payroll is run monthly. Time should not have been coded to the Federal program in question until the program start date of June 20, 2024, however as most programs begin on the first of the month (not mid-month) this was overlooked by the supervisors and finance team who are supposed to review timesheets and make correction to ensure allocations are booked to the correct programs for the correct dates. Additional errors due to human error. Effect: Costs incurred outside of the Federal program's period of performance and costs that are not supported by underlying documentation are not allowable under the program. The organization may be required to submit reimbursements for these amounts. Repeat Finding: No Recommendation: Management should review its existing control structure and ensure that there are adequate processes and controls to ensure only expenditures incurred during the period of performance are booked to Federal programs and that the correct program codes are charged, based on the underlying supporting documentation. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: Per the 2024 OMB Compliance Supplement, "A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308, 200.309, and 200.403(h))." Allowable costs must meet the standards set forth in 2 CFR Part 200, Subpart E. Condition: Costs were booked to incorrect program codes, resulting in unsupported charges being booked to the federal program. Both payroll and non-payroll expenditures were charged to the Federal program prior to the period of performance start date. Questioned costs: Known $1,098 Context: In period of performance testing, the majority of samples tested for beginning period of performance (31/40 samples) related to June 2024 payroll. In all of these tested samples, time was booked to the Federal program prior to the program start date of June 20, 2024. Similarly, there was no adjustments for other charges that are normally booked for the full month at a time, including: per diems (2/40 samples) and fuel (1/40 samples). One additional error was related to time booked to the Federal program when no time was coded to that program during the pay period tested. The final error was related to February amortization that was not processed in time and therefore mistakenly booked to the program. In payroll testing, 2/40 samples tested were booked to a charge code that was not reflected in the supporting timesheets. The amounts booked incorrectly to the major program are considered unallowable costs. Cause: MTI payroll is run monthly. Time should not have been coded to the Federal program in question until the program start date of June 20, 2024, however as most programs begin on the first of the month (not mid-month) this was overlooked by the supervisors and finance team who are supposed to review timesheets and make correction to ensure allocations are booked to the correct programs for the correct dates. Additional errors due to human error. Effect: Costs incurred outside of the Federal program's period of performance and costs that are not supported by underlying documentation are not allowable under the program. The organization may be required to submit reimbursements for these amounts. Repeat Finding: No Recommendation: Management should review its existing control structure and ensure that there are adequate processes and controls to ensure only expenditures incurred during the period of performance are booked to Federal programs and that the correct program codes are charged, based on the underlying supporting documentation. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: Per the 2024 OMB Compliance Supplement, "A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308, 200.309, and 200.403(h))." Allowable costs must meet the standards set forth in 2 CFR Part 200, Subpart E. Condition: Costs were booked to incorrect program codes, resulting in unsupported charges being booked to the federal program. Both payroll and non-payroll expenditures were charged to the Federal program prior to the period of performance start date. Questioned costs: Known $1,098 Context: In period of performance testing, the majority of samples tested for beginning period of performance (31/40 samples) related to June 2024 payroll. In all of these tested samples, time was booked to the Federal program prior to the program start date of June 20, 2024. Similarly, there was no adjustments for other charges that are normally booked for the full month at a time, including: per diems (2/40 samples) and fuel (1/40 samples). One additional error was related to time booked to the Federal program when no time was coded to that program during the pay period tested. The final error was related to February amortization that was not processed in time and therefore mistakenly booked to the program. In payroll testing, 2/40 samples tested were booked to a charge code that was not reflected in the supporting timesheets. The amounts booked incorrectly to the major program are considered unallowable costs. Cause: MTI payroll is run monthly. Time should not have been coded to the Federal program in question until the program start date of June 20, 2024, however as most programs begin on the first of the month (not mid-month) this was overlooked by the supervisors and finance team who are supposed to review timesheets and make correction to ensure allocations are booked to the correct programs for the correct dates. Additional errors due to human error. Effect: Costs incurred outside of the Federal program's period of performance and costs that are not supported by underlying documentation are not allowable under the program. The organization may be required to submit reimbursements for these amounts. Repeat Finding: No Recommendation: Management should review its existing control structure and ensure that there are adequate processes and controls to ensure only expenditures incurred during the period of performance are booked to Federal programs and that the correct program codes are charged, based on the underlying supporting documentation. Views of responsible officials: There is no disagreement with the audit finding.
Finding 2024-007 – Allowable Costs & Period of Performance (Material Weakness and Noncompliance) Information on the Federal Program: U.S. Department of Education, Higher Education- Institutional Aid (Title III), Assistance Listing No. 84.031 Criteria: 2 CFR Part 200 Subpart E establishes cost principles to apply in determining costs under federal awards. Non-federal entities are also required to establish controls over the disbursement process to ensure compliance with allowable cost requirements. In addition, a non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). Condition: We selected a sample of 25 non-payroll disbursements and 25 payroll disbursements charged to the grant. Of the 25 non-payroll, 4 were missing an approval by the Director of Title III Programs and 4 costs were not in the applicable budgets. In addition, 2 were charged to a fund code for a grant period that ended September 30, 2023. There were 44 pay checks tested in the sample of 25; of those 44, 31 exceptions were noted as having an issue around the approved pay rate documentation. In 9 instances, there was no documented approved pay rate, only support provided was a local salary schedule for multiple positions for 6 of the exceptions. In 15 instances, there was no approval for salary to be charged to the grant number and documentation showed unrestricted, a different account or offer letter had no Title III documentation. In 7 instances, the approved pay rate did not agree to actual paycheck report. Cause: The College did not obtain proper approval by the Director of the program, expenses did not fit into the grant budget line items, approved pay rates were not properly documented and the College continued to use funds after the grant period ended based on verbal instruction. Effect: The College’s grant disbursements were not properly approved. Questioned Costs: $35,461 Recommendation: We recommend the College strengthen its policies and procedures surrounding payroll and non-payroll grant disbursements to ensure controls are functioning and compliant with federal regulations Views of Responsible Officials: See Management’s View and Corrective Action Plan included at the end of the report.
Finding Number 2024-001 Assistance Listing # 21.027 - Coronavirus State and Local Fiscal Recovery Funds Allowable Activities and Costs Material Weakness in Internal Control Over Financial Reporting and Compliance Immaterial Noncompliance Criteria: Federal regulations 2 CFR Part 200, §200.403(g) require allowable costs be adequately documented. Condition: The Organization did not retain general ledger supporting detail of the costs directly coded to the federal award program and requested for reimbursement. Further, the Organization does not allocate administrative costs directly within the general ledger. Cause: A breakdown in procedures, partially attributable to the federal award program being new during the year, led to expenses being coded to the federal award program within the general ledger that were not submitted for reimbursement. In some cases, expense coding was changed after reimbursement requests were submitted, thereby effectively reclassifying expenses into the federal award program within the general ledger, or out of the federal award program. Additionally, the Organization does not journalize the allocation of administrative costs to specific federal award programs within the general ledger. Effect: As a result of this condition, the Organization's general ledger does not reconcile to the total expenses requested for reimbursement for the federal award program. The general ledger supports expenses of approximately $13,000 less than the reimbursements received, because it excludes the administrative costs allocation. Administrative costs claimed for reimbursement approximated $15,000, and when combined with expenses directly coded to the federal award program, total expenses exceed the reimbursements received, therefore, there are no questioned costs. Questioned Costs: None. Recommendation: We recommend management develop procedures whereby administrative allocations are journalized monthly to each applicable program. Upon submitting reimbursement requests, the Organization should retain documentation for each federal award program that supports the costs claimed for reimbursement. Management's Response: The Organization acknowledges the finding and agrees with the auditors' recommendations. We recognize the importance of maintaining accurate documentation and financial controls to ensure compliance with federal regulations. To address the finding, the Organization will implement the following corrective actions: 1) Journalizing administrative allocations - effective March 31, the Organization will implement a procedure to allocate administrative costs to each applicable federal award program through monthly journal entries within the general ledger. 2) Improved documentation retention - the Organization will establish a process to retain supporting documentation for all costs submitted for reimbursement, ensuring alignment between the general ledger and reimbursement requests. 3) Internal controls for expense classification - the Organization will implement additional controls to prevent expenses from being reclassified within the general ledger after reimbursement requests have been submitted. Any necessary adjustments will be documented with a clear audit trail. These corrective actions will be fully implemented by March 31, 2025, will include and cover all such costs from the start of the fiscal year which began October 1, 2024, and management will monitor compliance to ensure ongoing adherence to these procedures. Responsible Party for Corrective Action: Bryce Hundley, Director of Finance Anticipated Completion Date: February 2025
Finding Number 2024-001 Assistance Listing # 21.027 - Coronavirus State and Local Fiscal Recovery Funds Allowable Activities and Costs Material Weakness in Internal Control Over Financial Reporting and Compliance Immaterial Noncompliance Criteria: Federal regulations 2 CFR Part 200, §200.403(g) require allowable costs be adequately documented. Condition: The Organization did not retain general ledger supporting detail of the costs directly coded to the federal award program and requested for reimbursement. Further, the Organization does not allocate administrative costs directly within the general ledger. Cause: A breakdown in procedures, partially attributable to the federal award program being new during the year, led to expenses being coded to the federal award program within the general ledger that were not submitted for reimbursement. In some cases, expense coding was changed after reimbursement requests were submitted, thereby effectively reclassifying expenses into the federal award program within the general ledger, or out of the federal award program. Additionally, the Organization does not journalize the allocation of administrative costs to specific federal award programs within the general ledger. Effect: As a result of this condition, the Organization's general ledger does not reconcile to the total expenses requested for reimbursement for the federal award program. The general ledger supports expenses of approximately $13,000 less than the reimbursements received, because it excludes the administrative costs allocation. Administrative costs claimed for reimbursement approximated $15,000, and when combined with expenses directly coded to the federal award program, total expenses exceed the reimbursements received, therefore, there are no questioned costs. Questioned Costs: None. Recommendation: We recommend management develop procedures whereby administrative allocations are journalized monthly to each applicable program. Upon submitting reimbursement requests, the Organization should retain documentation for each federal award program that supports the costs claimed for reimbursement. Management's Response: The Organization acknowledges the finding and agrees with the auditors' recommendations. We recognize the importance of maintaining accurate documentation and financial controls to ensure compliance with federal regulations. To address the finding, the Organization will implement the following corrective actions: 1) Journalizing administrative allocations - effective March 31, the Organization will implement a procedure to allocate administrative costs to each applicable federal award program through monthly journal entries within the general ledger. 2) Improved documentation retention - the Organization will establish a process to retain supporting documentation for all costs submitted for reimbursement, ensuring alignment between the general ledger and reimbursement requests. 3) Internal controls for expense classification - the Organization will implement additional controls to prevent expenses from being reclassified within the general ledger after reimbursement requests have been submitted. Any necessary adjustments will be documented with a clear audit trail. These corrective actions will be fully implemented by March 31, 2025, will include and cover all such costs from the start of the fiscal year which began October 1, 2024, and management will monitor compliance to ensure ongoing adherence to these procedures. Responsible Party for Corrective Action: Bryce Hundley, Director of Finance Anticipated Completion Date: February 2025
2024 – 001 – Factors Affecting Allowability of Costs Health Center Program & Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.224 & 93.527 Federal Award ID Number: H8004213 H8F41284 C1650401 H8G47667 H8L51683 H2E45573 Department of Health and Human Services Funding 2024 Criteria: 2 CFR Part 200.403 sets forth the requirements for costs to be allowable. This section specifically states that costs should “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.” 2 CFR 200.303 provides that non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance of compliance with Uniform Guidance. Condition: Brevard Health Alliance requested reimbursement for $8,978 of expenditures under two different federal grants. One grant is requested based upon clinic hours and another based on an individual’s time and effort. Cause: The cause of the situation was due to poorly designed internal control procedures related to the allocation of payroll expense requested for reimbursement between various grants. Effect: If the same expenditure is requested multiple times from the granting agency, they may request funds be returned. Questioned Cost: $8,978 of known questioned costs. However, the Alliance has additional allowable payroll costs to cover the amounts duplicated. Perspective: Total payroll that was requested for reimbursement was $5,251,473, with known questioned cost being $8,978 resulting in only 0.2% of payroll expenditures. Recommendation: The client should verify that reimbursement request do not include payroll expenditures submitted for other grants. The allocation of payroll should be done monthly. Management Response: Brevard Health Alliance will ensure allocation of payroll expenditures submitted for grants is done monthly to ensure stronger internal controls regarding grant funds.
2024 – 001 – Factors Affecting Allowability of Costs Health Center Program & Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.224 & 93.527 Federal Award ID Number: H8004213 H8F41284 C1650401 H8G47667 H8L51683 H2E45573 Department of Health and Human Services Funding 2024 Criteria: 2 CFR Part 200.403 sets forth the requirements for costs to be allowable. This section specifically states that costs should “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.” 2 CFR 200.303 provides that non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance of compliance with Uniform Guidance. Condition: Brevard Health Alliance requested reimbursement for $8,978 of expenditures under two different federal grants. One grant is requested based upon clinic hours and another based on an individual’s time and effort. Cause: The cause of the situation was due to poorly designed internal control procedures related to the allocation of payroll expense requested for reimbursement between various grants. Effect: If the same expenditure is requested multiple times from the granting agency, they may request funds be returned. Questioned Cost: $8,978 of known questioned costs. However, the Alliance has additional allowable payroll costs to cover the amounts duplicated. Perspective: Total payroll that was requested for reimbursement was $5,251,473, with known questioned cost being $8,978 resulting in only 0.2% of payroll expenditures. Recommendation: The client should verify that reimbursement request do not include payroll expenditures submitted for other grants. The allocation of payroll should be done monthly. Management Response: Brevard Health Alliance will ensure allocation of payroll expenditures submitted for grants is done monthly to ensure stronger internal controls regarding grant funds.
2024 – 001 – Factors Affecting Allowability of Costs Health Center Program & Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.224 & 93.527 Federal Award ID Number: H8004213 H8F41284 C1650401 H8G47667 H8L51683 H2E45573 Department of Health and Human Services Funding 2024 Criteria: 2 CFR Part 200.403 sets forth the requirements for costs to be allowable. This section specifically states that costs should “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.” 2 CFR 200.303 provides that non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance of compliance with Uniform Guidance. Condition: Brevard Health Alliance requested reimbursement for $8,978 of expenditures under two different federal grants. One grant is requested based upon clinic hours and another based on an individual’s time and effort. Cause: The cause of the situation was due to poorly designed internal control procedures related to the allocation of payroll expense requested for reimbursement between various grants. Effect: If the same expenditure is requested multiple times from the granting agency, they may request funds be returned. Questioned Cost: $8,978 of known questioned costs. However, the Alliance has additional allowable payroll costs to cover the amounts duplicated. Perspective: Total payroll that was requested for reimbursement was $5,251,473, with known questioned cost being $8,978 resulting in only 0.2% of payroll expenditures. Recommendation: The client should verify that reimbursement request do not include payroll expenditures submitted for other grants. The allocation of payroll should be done monthly. Management Response: Brevard Health Alliance will ensure allocation of payroll expenditures submitted for grants is done monthly to ensure stronger internal controls regarding grant funds.
2024 – 001 – Factors Affecting Allowability of Costs Health Center Program & Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.224 & 93.527 Federal Award ID Number: H8004213 H8F41284 C1650401 H8G47667 H8L51683 H2E45573 Department of Health and Human Services Funding 2024 Criteria: 2 CFR Part 200.403 sets forth the requirements for costs to be allowable. This section specifically states that costs should “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.” 2 CFR 200.303 provides that non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance of compliance with Uniform Guidance. Condition: Brevard Health Alliance requested reimbursement for $8,978 of expenditures under two different federal grants. One grant is requested based upon clinic hours and another based on an individual’s time and effort. Cause: The cause of the situation was due to poorly designed internal control procedures related to the allocation of payroll expense requested for reimbursement between various grants. Effect: If the same expenditure is requested multiple times from the granting agency, they may request funds be returned. Questioned Cost: $8,978 of known questioned costs. However, the Alliance has additional allowable payroll costs to cover the amounts duplicated. Perspective: Total payroll that was requested for reimbursement was $5,251,473, with known questioned cost being $8,978 resulting in only 0.2% of payroll expenditures. Recommendation: The client should verify that reimbursement request do not include payroll expenditures submitted for other grants. The allocation of payroll should be done monthly. Management Response: Brevard Health Alliance will ensure allocation of payroll expenditures submitted for grants is done monthly to ensure stronger internal controls regarding grant funds.
2024 – 001 – Factors Affecting Allowability of Costs Health Center Program & Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.224 & 93.527 Federal Award ID Number: H8004213 H8F41284 C1650401 H8G47667 H8L51683 H2E45573 Department of Health and Human Services Funding 2024 Criteria: 2 CFR Part 200.403 sets forth the requirements for costs to be allowable. This section specifically states that costs should “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.” 2 CFR 200.303 provides that non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance of compliance with Uniform Guidance. Condition: Brevard Health Alliance requested reimbursement for $8,978 of expenditures under two different federal grants. One grant is requested based upon clinic hours and another based on an individual’s time and effort. Cause: The cause of the situation was due to poorly designed internal control procedures related to the allocation of payroll expense requested for reimbursement between various grants. Effect: If the same expenditure is requested multiple times from the granting agency, they may request funds be returned. Questioned Cost: $8,978 of known questioned costs. However, the Alliance has additional allowable payroll costs to cover the amounts duplicated. Perspective: Total payroll that was requested for reimbursement was $5,251,473, with known questioned cost being $8,978 resulting in only 0.2% of payroll expenditures. Recommendation: The client should verify that reimbursement request do not include payroll expenditures submitted for other grants. The allocation of payroll should be done monthly. Management Response: Brevard Health Alliance will ensure allocation of payroll expenditures submitted for grants is done monthly to ensure stronger internal controls regarding grant funds.
2024 – 001 – Factors Affecting Allowability of Costs Health Center Program & Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.224 & 93.527 Federal Award ID Number: H8004213 H8F41284 C1650401 H8G47667 H8L51683 H2E45573 Department of Health and Human Services Funding 2024 Criteria: 2 CFR Part 200.403 sets forth the requirements for costs to be allowable. This section specifically states that costs should “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.” 2 CFR 200.303 provides that non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance of compliance with Uniform Guidance. Condition: Brevard Health Alliance requested reimbursement for $8,978 of expenditures under two different federal grants. One grant is requested based upon clinic hours and another based on an individual’s time and effort. Cause: The cause of the situation was due to poorly designed internal control procedures related to the allocation of payroll expense requested for reimbursement between various grants. Effect: If the same expenditure is requested multiple times from the granting agency, they may request funds be returned. Questioned Cost: $8,978 of known questioned costs. However, the Alliance has additional allowable payroll costs to cover the amounts duplicated. Perspective: Total payroll that was requested for reimbursement was $5,251,473, with known questioned cost being $8,978 resulting in only 0.2% of payroll expenditures. Recommendation: The client should verify that reimbursement request do not include payroll expenditures submitted for other grants. The allocation of payroll should be done monthly. Management Response: Brevard Health Alliance will ensure allocation of payroll expenditures submitted for grants is done monthly to ensure stronger internal controls regarding grant funds.
2024 – 001 – Factors Affecting Allowability of Costs Health Center Program & Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.224 & 93.527 Federal Award ID Number: H8004213 H8F41284 C1650401 H8G47667 H8L51683 H2E45573 Department of Health and Human Services Funding 2024 Criteria: 2 CFR Part 200.403 sets forth the requirements for costs to be allowable. This section specifically states that costs should “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.” 2 CFR 200.303 provides that non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance of compliance with Uniform Guidance. Condition: Brevard Health Alliance requested reimbursement for $8,978 of expenditures under two different federal grants. One grant is requested based upon clinic hours and another based on an individual’s time and effort. Cause: The cause of the situation was due to poorly designed internal control procedures related to the allocation of payroll expense requested for reimbursement between various grants. Effect: If the same expenditure is requested multiple times from the granting agency, they may request funds be returned. Questioned Cost: $8,978 of known questioned costs. However, the Alliance has additional allowable payroll costs to cover the amounts duplicated. Perspective: Total payroll that was requested for reimbursement was $5,251,473, with known questioned cost being $8,978 resulting in only 0.2% of payroll expenditures. Recommendation: The client should verify that reimbursement request do not include payroll expenditures submitted for other grants. The allocation of payroll should be done monthly. Management Response: Brevard Health Alliance will ensure allocation of payroll expenditures submitted for grants is done monthly to ensure stronger internal controls regarding grant funds.
Condition: Rent expense for the 2025 fiscal year in one branch office was paid in advance, in order to receive a discount, and charged to the federal award rather than capitalized and amortized over the period of benefit. Criteria: Costs must be determined in accordance with generally accepted accounting principles (GAAP). Context: World Relief follows GAAP in financial reporting. Cause: As rent is routinely charged each month it is paid, management overlooked capitalizing the payment and amortizing it over the periods benefited. Effect: As this cost was a prepayment for future period benefit, it was not determined in accordance with generally accepted accounting principles as required under 2 CFR 200.403, Factors affecting allowability of costs.
2024-002 Internal Controls over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs/Cost Principles Requirements (Significant Deficiency) Information on the Federal Program: U.S. Agency for International Development Assistance Listing Number: 98.001 Assistance Listing Name: USAID Foreign Assistance for Programs Overseas Grant Award Number(s): Direct Award Number Award Period 720BHA22GR00225 May 13, 2022 through May 10, 2024 720BHA22GR00127 April 15, 2022 through April 14, 2024 Criteria or Specific Requirement: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D ‐ Post Federal Award Requirements, Section 200.303 ‐ Internal Controls, requires the auditee to 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 a framework such as the “Internal Control Integrated Framework”, issued by the COSO. In accordance with 2 CFR §200. 308, 200.309, and 200.403(h), 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. A period of performance may contain one or more budget periods. Condition: During our testing of the activities allowed or unallowed and allowable costs/cost principles compliance requirements, we identified one disbursement sample out of a total of twenty-five disbursement samples tested wherein management charged the federal program on June 2024 when the transaction happened on December 2022. In particular, the inventory distribution in the amount of $4,258.53 that took place in December 2022 should have been recorded as an expense in fiscal year 2023 rather than in fiscal year 2024. In addition, during our testing of period of performance compliance requirements, we also noted another inventory distribution in the amount of $235.89 that took place on August 2023 but it was only recorded on June 2024. The expenditures are allowable and within the period of performance, however, the controls over timely reconciliation and recording the inventory distributions did not occur in the appropriate reporting period. Questioned Costs: There are no known or likely questioned costs. Context: This is a condition based on testing of CRS’s compliance with specified requirements. The prevalence of the finding is detailed in the condition section above. The samples were selected using a non-statistical method. Cause: Delays in performing the reconciliation and timely recording of inventory distributions in certain CRS country offices were caused by personnel’s unfamiliarity with the use of the new Supply Chain Management system, a system used in inventory management. Effect: Failure to timely reconcile and record transactions in the correct accounting period results in incorrect SEFA reporting to the U.S. government. Repeat Finding: No. Recommendation: We recommend that management ensure timely reconciliation of inventory distributions in order to record the transactions in the correct accounting period. In addition, management should conduct appropriate training to CRS country office personnel with the proper use of the Supply Chain Management system to ensure timely reconciliation and recording of inventory distributions. Views of Responsible Officials: CRS management agrees with the finding and recommendations and will enhance the inventory reconciliation processes.
2024-002 Internal Controls over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs/Cost Principles Requirements (Significant Deficiency) Information on the Federal Program: U.S. Agency for International Development Assistance Listing Number: 98.001 Assistance Listing Name: USAID Foreign Assistance for Programs Overseas Grant Award Number(s): Direct Award Number Award Period 720BHA22GR00225 May 13, 2022 through May 10, 2024 720BHA22GR00127 April 15, 2022 through April 14, 2024 Criteria or Specific Requirement: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D ‐ Post Federal Award Requirements, Section 200.303 ‐ Internal Controls, requires the auditee to 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 a framework such as the “Internal Control Integrated Framework”, issued by the COSO. In accordance with 2 CFR §200. 308, 200.309, and 200.403(h), 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. A period of performance may contain one or more budget periods. Condition: During our testing of the activities allowed or unallowed and allowable costs/cost principles compliance requirements, we identified one disbursement sample out of a total of twenty-five disbursement samples tested wherein management charged the federal program on June 2024 when the transaction happened on December 2022. In particular, the inventory distribution in the amount of $4,258.53 that took place in December 2022 should have been recorded as an expense in fiscal year 2023 rather than in fiscal year 2024. In addition, during our testing of period of performance compliance requirements, we also noted another inventory distribution in the amount of $235.89 that took place on August 2023 but it was only recorded on June 2024. The expenditures are allowable and within the period of performance, however, the controls over timely reconciliation and recording the inventory distributions did not occur in the appropriate reporting period. Questioned Costs: There are no known or likely questioned costs. Context: This is a condition based on testing of CRS’s compliance with specified requirements. The prevalence of the finding is detailed in the condition section above. The samples were selected using a non-statistical method. Cause: Delays in performing the reconciliation and timely recording of inventory distributions in certain CRS country offices were caused by personnel’s unfamiliarity with the use of the new Supply Chain Management system, a system used in inventory management. Effect: Failure to timely reconcile and record transactions in the correct accounting period results in incorrect SEFA reporting to the U.S. government. Repeat Finding: No. Recommendation: We recommend that management ensure timely reconciliation of inventory distributions in order to record the transactions in the correct accounting period. In addition, management should conduct appropriate training to CRS country office personnel with the proper use of the Supply Chain Management system to ensure timely reconciliation and recording of inventory distributions. Views of Responsible Officials: CRS management agrees with the finding and recommendations and will enhance the inventory reconciliation processes.
2024-003 Internal Controls over Compliance and Compliance with Period of Performance Requirement (Significant Deficiency) Information on the Federal Program: U.S. Department of Agriculture Assistance Listing Number: 10.612 Assistance Listing Name: USDA Local and Regional Food Aid Procurement Program Grant Award Number: Direct Award Number Award Period LRP-686-2019/015-00-A October 1, 2019 through September 30, 2024 Criteria or Specific Requirement: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D ‐ Post Federal Award Requirements, Section 200.303 ‐ Internal Controls, requires the auditee to 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 a framework such as the “Internal Control Integrated Framework”, issued by the COSO. In accordance with 2 CFR §200. 308, 200.309, and 200.403(h), 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. A period of performance may contain one or more budget periods. Condition: During our testing of the period of performance compliance requirements, we identified two disbursement samples for a total of $1,574.09 out of a total of twenty-five disbursement samples tested wherein management was unable to provide evidence that the expenditures charged to the program were valid and incurred within the appropriate period of performance. Management also subsequently concluded that these transactions should have been captured as inventory and not charged as expenditure to the federal program. Questioned Costs: $1,574.09 from our samples. Context: This is a condition based on testing of CRS’s compliance with specified requirements. The prevalence of the finding is detailed in the condition section above. The samples were selected using a non-statistical method. The total amount of the twenty-five samples selected for testing was $62,914. Cause: CRS country office personnel did not adhere to CRS’s documented policies and procedures for ensuring only valid and allowable expenses are charged to the federal program within the appropriate period of performance. Effect: Without adequate internal controls in place to ensure costs are properly reviewed for allowability and appropriate period of performance, CRS could be noncompliant with the allowability and period of performance requirements and could request funds for costs that are unallowed. Repeat Finding: No. Recommendation: We recommend that management follow its own policies, procedures and controls to ensure that the inventory expenses charged to the federal program are allowable within the period of performance. Views of Responsible Officials: CRS management agrees with the finding and recommendations and will enhance processes around inventory expense allowability.
2024-001 [2023-001] — INDIRECT COST CALCULATIONS AND REPORTING Type of Finding: (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards (G) Instance of Noncompliance Related to Federal Awards Funding Agency: U.S. Department of Veteran Affairs Title: VA Homeless Providers Grant and Per Diem Program Assistance Listing #: 64.024 Award #: NMVI604-2909-501-PD Award Period: 10/1/2023–9/30/2024 Estimated Questioned Costs: $29,745 Statement of Condition: During our review of the NMVIC’s indirect cost (IDC) calculations, we identified discrepancies between the calculated allowable IDC and the amounts reported. The NMVIC reported total direct costs of $652,406, and after removing rent of $9,083, we calculated a Modified Total Direct Cost (MTDC) base of $643,323. However, because the NMVIC does not separately track federal versus non-federal expenditures, the accuracy of this base is uncertain. As a result, we used revenue received of $427,443 as the base for estimating allowable IDC, applying the approved indirect cost rate of 10% to arrive at an allowable IDC of $42,744. In comparison, the NMVIC’s Profit and Loss report reflected IDC of $64,830, and the SF-425 reports and client-provided calculations indicated IDC of $72,490. The variance appears to have resulted from the calculation method and inconsistent bases used by the NMVIC. Criteria: Per Uniform Guidance (2 CFR 200.403 and 2 CFR 200.414), indirect costs must be calculated based on the approved indirect cost rate agreement and applied to the appropriate base (Modified Total Direct Costs), excluding specifically unallowable costs such as rent. Additionally, the cost base should be properly supported and consistently applied. Cause: The NMVIC did not apply the approved indirect cost rate to an appropriate and supported cost base. Instead, alternative and inconsistent calculation methods were used, resulting in the overstatement of IDC. Effect: As a result of this miscalculation, the NMVIC claimed indirect costs in excess of the allowable amount under their approved rate. This raises the risk of disallowed costs and potential repayment requirements and reflects a deficiency in internal controls over financial reporting related to grant compliance. Recommendation: We recommend that the NMVIC implement procedures to ensure indirect costs are calculated accurately and consistently, in accordance with the approved indirect cost rate agreement and applicable federal regulations. Specifically, the NMVIC should establish controls to maintain a properly supported cost base that distinguishes between federal and non-federal expenditures and ensures that unallowable costs, such as rent, are excluded from the calculation. Additionally, management should reconcile indirect cost calculations across internal reports and federal filings to prevent discrepancies. View of Responsible Officials and Corrective Action Plan We acknowledge the findings and appreciate the diligence of the audit team in identifying the discrepancies in our indirect cost calculations and reporting as outlined in the draft findings. The Veterans Integration Center (VIC) is committed to maintaining the highest standards of compliance with all federal regulations and grant requirements. Corrective Action Plan 1. Training and Guidelines: All relevant staff will undergo training to understand and implement the correct procedures for calculating indirect costs. Comprehensive guidelines will be developed and disseminated to ensure consistency across all calculations and reporting. 2. Completion of SF-425 Jointly: The COO, and VIC’s contracted Accountant will confirm the accurate Modified Total Direct Costs (MTDC) which is to be used in completing the SF-425, then prepare the GPD SF-425 jointly to ensure its accuracy. 3. Review and Approval Process: An additional layer of review and approval will be established for all indirect cost calculations before they are reported. This step will involve our Chief Executive Officer (CEO) to ensure accuracy and compliance. Corrective Action Plan Timeline • Staff Training and Guidelines Distribution: Completed by Q4 2025 • Completion of SF-425 Jointly: Starting Q3 2025 with SF-425 revision • Review and Approval Process: Effective immediately, with CEO, reviews starting Q3 2025 Designation of Employee Position Responsible for Meeting Deadline The Chief Operating Officer (COO) will be responsible for the oversight and successful implementation of the corrective action plan. The COO will coordinate with the contracted internal Accountant to ensure all actions are taken within the stipulated timelines and report directly to the Chief Executive Officer on the progress.
.Activities Allowed or Unallowed; Allowable Costs and Cost Principles Program: ACL Centers for Independent Living (ALN 93.432) Federal Agency: U.S. Department of Health and Human Services Federal Award Year: September 30, 2024 Type of Finding: Significant deficiency in internal control over compliance, other matter compliance finding. Criteria 2 CFR 200.403(a) states that costs must "be necessary and reasonable for the performance of the federal award" to be allowable. Condition Three tested transactions were found to be unallowable in nature as they were not necessary or reasonable for the performance of the federal award. Questioned Costs $166 Context A sample of 40 was made from a population of 541 transactions charged to the major program for program expenses. Of the 40 sampled transactions, 3 transactions were found to be unreasonable and unallowable. Effect Charging unallowable costs to the major program results in erroneous charges to the federal award and raises compliance concerns. This can potentially lead to overcharging or undercharging the federal award, which may result in penalties or repayment obligations.Activities Allowed or Unallowed; Allowable Costs and Cost Principles Program: ACL Centers for Independent Living (ALN 93.432) Federal Agency: U.S. Department of Health and Human Services Federal Award Year: September 30, 2024 Type of Finding: Significant deficiency in internal control over compliance, other matter compliance finding. Criteria 2 CFR 200.403(a) states that costs must "be necessary and reasonable for the performance of the federal award" to be allowable. Condition Three tested transactions were found to be unallowable in nature as they were not necessary or reasonable for the performance of the federal award. Questioned Costs $166 Context A sample of 40 was made from a population of 541 transactions charged to the major program for program expenses. Of the 40 sampled transactions, 3 transactions were found to be unreasonable and unallowable. Effect Charging unallowable costs to the major program results in erroneous charges to the federal award and raises compliance concerns. This can potentially lead to overcharging or undercharging the federal award, which may result in penalties or repayment obligations. Cause The Organization had inadequate internal controls over compliance to detect charges that were unallowable prior to requesting reimbursement for the federal award. Repeat Finding No Auditor Recommendation We recommend that the Organization obtains a better understanding of allowable and unallowable costs for federal awards. We also recommend that the Organization implement a system of internal controls that can detect noncompliance prior to charging costs to the federal award. Views of Responsible Officials The Organization has reviewed, and agrees with, the finding and recommendation.
.Activities Allowed or Unallowed; Allowable Costs and Cost Principles Program: ACL Centers for Independent Living (ALN 93.432) Federal Agency: U.S. Department of Health and Human Services Federal Award Year: September 30, 2024 Type of Finding: Significant deficiency in internal control over compliance, other matter compliance finding. Criteria 2 CFR 200.403(a) states that costs must "be necessary and reasonable for the performance of the federal award" to be allowable. Condition Three tested transactions were found to be unallowable in nature as they were not necessary or reasonable for the performance of the federal award. Questioned Costs $166 Context A sample of 40 was made from a population of 541 transactions charged to the major program for program expenses. Of the 40 sampled transactions, 3 transactions were found to be unreasonable and unallowable. Effect Charging unallowable costs to the major program results in erroneous charges to the federal award and raises compliance concerns. This can potentially lead to overcharging or undercharging the federal award, which may result in penalties or repayment obligations.Activities Allowed or Unallowed; Allowable Costs and Cost Principles Program: ACL Centers for Independent Living (ALN 93.432) Federal Agency: U.S. Department of Health and Human Services Federal Award Year: September 30, 2024 Type of Finding: Significant deficiency in internal control over compliance, other matter compliance finding. Criteria 2 CFR 200.403(a) states that costs must "be necessary and reasonable for the performance of the federal award" to be allowable. Condition Three tested transactions were found to be unallowable in nature as they were not necessary or reasonable for the performance of the federal award. Questioned Costs $166 Context A sample of 40 was made from a population of 541 transactions charged to the major program for program expenses. Of the 40 sampled transactions, 3 transactions were found to be unreasonable and unallowable. Effect Charging unallowable costs to the major program results in erroneous charges to the federal award and raises compliance concerns. This can potentially lead to overcharging or undercharging the federal award, which may result in penalties or repayment obligations. Cause The Organization had inadequate internal controls over compliance to detect charges that were unallowable prior to requesting reimbursement for the federal award. Repeat Finding No Auditor Recommendation We recommend that the Organization obtains a better understanding of allowable and unallowable costs for federal awards. We also recommend that the Organization implement a system of internal controls that can detect noncompliance prior to charging costs to the federal award. Views of Responsible Officials The Organization has reviewed, and agrees with, the finding and recommendation.
Criteria: In accordance with 2 CFR 200.405(a), costs must be allocable to the Federal award in proportion to the benefits received. A cost is allocable to a Federal award if it is incurred specifically for the award, benefits both the award and other work, and can be distributed in proportions that may be approximated using reasonable methods. Condition: During the fiscal year under audit, the auditee hosted two events at the same hotel—one charged to a nonfederal program and the other related to a Federal program. Initially, all event-related costs were charged to the nonfederal program. Subsequently, $28,500 was reclassified to the Federal program. However, only $14,500 of this amount was applicable to the Federal program. As a result, $14,000 was incorrectly charged to the Federal award. Additional review identified further errors in related reclassifications, with total known questioned costs of $18,387. Cause: The auditee did not implement sufficient review controls over cost allocations and reclassifications between programs, resulting in misallocation of shared event costs. Effect: A total of $18,387 in known questioned costs was charged to the Federal program inappropriately. Based on a sample of 40 transactions and one error totaling $14,000. One of 40 sampled transactions contained this error, which represents 2.5% of the sample population. This misallocation could lead to disallowed costs and potential recovery actions by the granting agency. Repeat finding: This is not a repeat finding. Questioned costs: $18,387 Recommendation: We recommend that the Organization implement stronger internal controls over the expenditure process to ensure that all costs charged to the program are allowable under 2 CFR 200.403, provide training to staff on the requirements for allowable costs and importance of proper oversight and conduct regular reviews of expenses charged to the programs to identify and correct any unallowable costs promptly.
Allowable Costs/Activities Allowed Material Weakness, Noncompliance 2024-002 Strengthen Controls to Ensure Compliance with Allowable Costs Requirements Agency: U.S. Department of Transportation; Passed-through Mississippi Office of Highway Safety ALN Numbers: 20.600 State and Community Highway Safety 20.616 National Priority Safety Programs Federal Award: M5TR-2024-MD-22-51 Repeat Finding: No Questioned Costs: $1,432.84 Criteria: In accordance with 2 CFR 200.403, costs charged to a federal award must be necessary, reasonable, and allocable. Further, per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal controls over the federal award. Condition: During our evaluation and testing of the grant, we were alerted to improper payments totaling $1,432 made to employees as the result of misrepresentation of reimbursable expenses. The payments were processed and disbursed; however, internal controls subsequently identified and alerted officials to the improper payments. The employees were terminated, and no additional payments were made. Cause: Fraudulent requests for employee expense reimbursement for travel were submitted and not independently verified. Although controls were in place to verify such requests, the fraud attempt bypassed initial detection. The City’s post-disbursement review controls detected the issue, but only after payment had occurred. Effect: The City disbursed $1,432 in federal funds to fraudulent reimbursements. Although no additional losses occurred and corrective actions were taken, the incident reflects a breakdown in the preventative control environment over disbursement verification. Recommendation: We recommend that the City implement additional internal controls to ensure that proper and substantiated travel reimbursement payments are made. Views of Responsible Officials: The City concurs with the finding. While our internal post-payment review control ultimately identified the issue, we acknowledge the breakdown in the preventive stage. We have since revised our procedures to require independent verification. We also reported the incident to proper agencies as required.
Allowable Costs/Activities Allowed Material Weakness, Noncompliance 2024-002 Strengthen Controls to Ensure Compliance with Allowable Costs Requirements Agency: U.S. Department of Transportation; Passed-through Mississippi Office of Highway Safety ALN Numbers: 20.600 State and Community Highway Safety 20.616 National Priority Safety Programs Federal Award: M5TR-2024-MD-22-51 Repeat Finding: No Questioned Costs: $1,432.84 Criteria: In accordance with 2 CFR 200.403, costs charged to a federal award must be necessary, reasonable, and allocable. Further, per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal controls over the federal award. Condition: During our evaluation and testing of the grant, we were alerted to improper payments totaling $1,432 made to employees as the result of misrepresentation of reimbursable expenses. The payments were processed and disbursed; however, internal controls subsequently identified and alerted officials to the improper payments. The employees were terminated, and no additional payments were made. Cause: Fraudulent requests for employee expense reimbursement for travel were submitted and not independently verified. Although controls were in place to verify such requests, the fraud attempt bypassed initial detection. The City’s post-disbursement review controls detected the issue, but only after payment had occurred. Effect: The City disbursed $1,432 in federal funds to fraudulent reimbursements. Although no additional losses occurred and corrective actions were taken, the incident reflects a breakdown in the preventative control environment over disbursement verification. Recommendation: We recommend that the City implement additional internal controls to ensure that proper and substantiated travel reimbursement payments are made. Views of Responsible Officials: The City concurs with the finding. While our internal post-payment review control ultimately identified the issue, we acknowledge the breakdown in the preventive stage. We have since revised our procedures to require independent verification. We also reported the incident to proper agencies as required.
Allowable Costs/Activities Allowed Material Weakness, Noncompliance 2024-002 Strengthen Controls to Ensure Compliance with Allowable Costs Requirements Agency: U.S. Department of Transportation; Passed-through Mississippi Office of Highway Safety ALN Numbers: 20.600 State and Community Highway Safety 20.616 National Priority Safety Programs Federal Award: M5TR-2024-MD-22-51 Repeat Finding: No Questioned Costs: $1,432.84 Criteria: In accordance with 2 CFR 200.403, costs charged to a federal award must be necessary, reasonable, and allocable. Further, per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal controls over the federal award. Condition: During our evaluation and testing of the grant, we were alerted to improper payments totaling $1,432 made to employees as the result of misrepresentation of reimbursable expenses. The payments were processed and disbursed; however, internal controls subsequently identified and alerted officials to the improper payments. The employees were terminated, and no additional payments were made. Cause: Fraudulent requests for employee expense reimbursement for travel were submitted and not independently verified. Although controls were in place to verify such requests, the fraud attempt bypassed initial detection. The City’s post-disbursement review controls detected the issue, but only after payment had occurred. Effect: The City disbursed $1,432 in federal funds to fraudulent reimbursements. Although no additional losses occurred and corrective actions were taken, the incident reflects a breakdown in the preventative control environment over disbursement verification. Recommendation: We recommend that the City implement additional internal controls to ensure that proper and substantiated travel reimbursement payments are made. Views of Responsible Officials: The City concurs with the finding. While our internal post-payment review control ultimately identified the issue, we acknowledge the breakdown in the preventive stage. We have since revised our procedures to require independent verification. We also reported the incident to proper agencies as required.
Condition: HOPE has elected to use the de minimis indirect cost rate of 10%. While billing the federal grantor on a monthly basis, HOPE applied this 10% rate to the direct costs. However, there was no clear documentation demonstrating how this application related to the organization's actual indirect costs incurred to support the federal program, beyond simply adding the percentage to the direct cost billing. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Subpart E, § 200.403, states that costs charged to Federal awards must be allowable, allocable, and reasonable. While § 200.414(f) permits the use of a de minimis indirect cost rate of 10%, its application should serve as a mechanism to recover a portion of the organization's actual indirect costs. Cause and effect: HOPE experienced turnover in the CFO position during the year. In prior years, HOPE recorded all costs, including indirect costs, in the cost center (“class”) assigned to the funding source. During the year under audit, this practice wasn’t consistently followed. Recommendation: I recommend that HOPE continue to use “classes” consistently in the accounting software to capture program expenditures by funding source, including indirect costs. Views of Responsible Officials: This discrepancy resulted from a lack of understanding by the CFO in processing grant related funding. Grant policies have been updated, and personnel trained to direct and understand the role of independent accounting by funding sources through class codes.
Condition: HOPE has elected to use the de minimis indirect cost rate of 10%. While billing the federal grantor on a monthly basis, HOPE applied this 10% rate to the direct costs. However, there was no clear documentation demonstrating how this application related to the organization's actual indirect costs incurred to support the federal program, beyond simply adding the percentage to the direct cost billing. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Subpart E, § 200.403, states that costs charged to Federal awards must be allowable, allocable, and reasonable. While § 200.414(f) permits the use of a de minimis indirect cost rate of 10%, its application should serve as a mechanism to recover a portion of the organization's actual indirect costs. Cause and effect: HOPE experienced turnover in the CFO position during the year. In prior years, HOPE recorded all costs, including indirect costs, in the cost center (“class”) assigned to the funding source. During the year under audit, this practice wasn’t consistently followed. Recommendation: I recommend that HOPE continue to use “classes” consistently in the accounting software to capture program expenditures by funding source, including indirect costs. Views of Responsible Officials: This discrepancy resulted from a lack of understanding by the CFO in processing grant related funding. Grant policies have been updated, and personnel trained to direct and understand the role of independent accounting by funding sources through class codes.
Condition: HOPE has elected to use the de minimis indirect cost rate of 10%. While billing the federal grantor on a monthly basis, HOPE applied this 10% rate to the direct costs. However, there was no clear documentation demonstrating how this application related to the organization's actual indirect costs incurred to support the federal program, beyond simply adding the percentage to the direct cost billing. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Subpart E, § 200.403, states that costs charged to Federal awards must be allowable, allocable, and reasonable. While § 200.414(f) permits the use of a de minimis indirect cost rate of 10%, its application should serve as a mechanism to recover a portion of the organization's actual indirect costs. Cause and effect: HOPE experienced turnover in the CFO position during the year. In prior years, HOPE recorded all costs, including indirect costs, in the cost center (“class”) assigned to the funding source. During the year under audit, this practice wasn’t consistently followed. Recommendation: I recommend that HOPE continue to use “classes” consistently in the accounting software to capture program expenditures by funding source, including indirect costs. Views of Responsible Officials: This discrepancy resulted from a lack of understanding by the CFO in processing grant related funding. Grant policies have been updated, and personnel trained to direct and understand the role of independent accounting by funding sources through class codes.
Criteria – The Agency is required to follow OMB Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards contained in 2CFR Chapter I and Chapter II. One of the general criteria contained in §200.403, costs must be “necessary and reasonable for the performance of the Federal Award and be allocable thereto under these principles”. Condition – The Agency has a contract to purchase bulk cable services and is required to pass these costs to the tenants who are the users of the service. During our audit we noted the Agency did not have the fees charged to the tenants high enough to cover the cost incurred for the service. The amount of costs not recovered was $4,503 for the year ended September 30, 2024. Cause – This finding was repeated from the prior year. The Agency did not increase the amount charged to tenants during the year ended September 30, 2024. Effect or Potential Effect - The cost of the cable service does not meet the “necessary and reasonable” criteria and resulted in questioned costs of $4,503. Subsequent the fiscal year end, the Agency has increased the fees charged. Recommendation - We recommend in the future that the Agency consider the basic criteria of being “necessary and reasonable” before incurring costs in a Federal Award program. The costs of the cable services need to be paid fully by the tenants and should be monitored by management to ensure the Public Housing Program does not incur any of these costs. View of Responsible Official: Management agrees with the Finding.
Capital Fund Program Grants Draws Condition: During our audit procedures over revenue recognition for the Capital Fund Program (CFP), we identified drawdowns of federal funds for which the client was unable to provide adequate supporting documentation. Specifically, the expenditures associated with the draw requests lacked invoices, contracts, or other substantiating records to demonstrate that the costs were allowable, allocable, and incurred in accordance with applicable federal requirements. Criteria: Per 2 CFR §200.403 and §200.302, costs charged to federal awards must be adequately documented and supported by source documentation. Additionally, 2 CFR §200.516(a)(3) requires auditors to report known questioned costs exceeding $25,000 for any federal program, even if not selected as a major program. Cause: The deficiency appears to result from inadequate internal controls over documentation retention and grant compliance monitoring for the CFP. Effect: The lack of documentation impairs the auditor’s ability to verify the allowability of expenditures, resulting in known questioned costs exceeding $25,000. Questioned Cost: $90,149 Recommendations: We recommend that management implement procedures to ensure that all draw requests under the CFP are supported by complete and accurate documentation. This includes maintaining invoices, contracts, and payment records that clearly link expenditures to the approved scope of work under the grant. Management Response: Today’s Marlboro County Housing Authority management acknowledges the auditor’s finding that documentation to support certain CFP drawdowns was incomplete or missing and concurs that this represents a failure to comply with Uniform Guidance documentation requirements under 2 CFR §200.302 and §200.403. The Authority recognizes the importance of maintaining complete and accurate supporting records—such as invoices, contracts, and payment documentation—to substantiate costs charged to federal programs and ensure allowability and allocability under the Capital Fund Program. Effective October 1st, 2024, all draw requests under the Capital Fund Program ARE supported by: Approved contracts or purchase orders Invoices or other source documents Proof of payment (e.g., canceled checks, ACH confirmations) Documentation clearly linking each expense to an approved activity in the CFP Annual Statement
Finding Number: 2024-009 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: U.S. Department of the Treasury COVID-19 – Coronavirus Capital Projects Fund ALN: 21.029 Award #: CPFFN0167 Award Year: 02/09/2022 – 12/31/2026 Government Department/Agency: Office of the Deputy Mayor for Planning and Economic Development (DMPED) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.403, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented.” In addition, the U.S. Department of Treasury, Guidance for the Coronavirus Capital Projects Fund For States, Territories & Freely Associated States (CPF), Section D. Eligible and Ineligible Cost: states that “Allowable costs are determined in accordance with the cost principles identified in 2 CFR Part 200, Subpart E. Federal funds committed to an award may only be used to cover allowable costs incurred during the period of performance and for allowable closeout costs incurred during the grant closeout process. Cost sharing is not a requirement for the use of these funds” Section C. Project Eligibility: also states the following, “Capital Project or Project means the construction, purchase, and installation of, and/or improvements to capital assets where the costs of such assets are capitalized or depreciated, including ancillary costs necessary to put the capital asset to use. Examples of capital assets include buildings, towers, digital devices and equipment, fiber-optic lines, and broadband networks. Examples of ancillary costs include project costs related to project planning and feasibility, broadband installation, and community engagement, broadband adoption, digital literacy, and training associated with a planned or completed Project funded by the Capital Projects Fund program.” Condition – During our examination of Activities Allowed or Unallowed and Allowable Costs/Cost Principles, we observed that the agency used federal funds to reimburse their subrecipient for lease rent of $3,242,953 invoiced from August 2023 through May 2024. This amount was reported to the Federal agency as ancillary costs. However, upon reviewing the supporting documentation, it was found that the rent charged to the grant pertained to the period following the substantial completion of the capital project's construction. Additionally, the leased rent does not appear to align with the definition of ancillary costs as outlined by the CFP guidance mentioned earlier. Furthermore, the agency was unable to provide documentation from the U.S. Treasury approving the leased rent or indicating its knowledge that it was included as part of ancillary costs. Based on the procedures performed and the review of relevant guidance, BDO notes that these costs do not meet the requirements to be considered allowable under the program. Questioned Costs – Known amount $3,242,953. Context – This is a condition identified per review of DMPED’s compliance with specified requirements using a statistically valid sample. Total subrecipient expenditures reported as allowable costs were $14,400,000. Effect – DMPED was unable to demonstrate that the rent charged was approved by the Department of Treasury and was an allowable cost under the guidance. Cause – DMPED did not have proper internal controls and policies and procedures in place to identify allowable costs and activities. Recommendation – We recommend that DMPED evaluate its procedures to ensure only allowable expenses are charged to the program as required under 2 CFR Section 200.403. Related Noncompliance – Material noncompliance. Views of Responsible Officials and Planned Corrective Actions – DMPED does not concur with the auditor’s finding regarding the allowability of rent per the CPF guidance. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section. BDO’s Response – We have reviewed management’s response and our finding remains as indicated.
Finding Number: 2024-028 Prior Year Finding Number: 2023-033 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: U.S. Department of Health and Human Services Opioid STR ALN: 93.788 Award #: Various Award Year: 09/30/2020 – 09/29/2024 Government Department/Agency: Department of Behavioral Health (DBH) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.403, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented.” Condition – During our testwork over nonpayroll transactions for the Activities Allowed or Unallowed and Allowable Costs/Cost Principles, we noted that for one (1) out of sixty-two (62) samples, the transaction was charged twice to the program. Total amount of nonpayroll transactions is $19,095,189, and the amount of exception is $122,311. Questioned Costs – Known amount is $122,311. Context – This is a condition identified per review of DBH’s compliance with specified requirements using a statistically valid sample. Total amount of samples selected for testing amounted to $5,633,513. Effect – Lack of proper review of expenditures could result to unallowable costs charged to the program. Cause – DBH does not have adequate controls in place to ensure that only allowable costs are charged to the program. Recommendation – We recommend that DBH strengthen internal control procedures to ensure that expenditures are allowable, and that sufficient documentation is retained to support that allowability. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – DBH concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
2024-002 – Material Weakness in Internal Control over Compliance and Noncompliance – Allowable Costs/Cost Principles: Indirect Costs Identification of federal program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Criteria: Uniform Guidance 2 C.F.R. § 200.414(f): Any non-federal entity that does not have a current negotiated cost rate may elect to charge a de minimis rate of 10% of modified total direct costs (MTDC) which may be used indefinitely. As described in § 200.403, costs must be consistently charged as either indirect or direct costs, but may not be double charged or inconsistently charged as both. If chosen, this methodology once elected must be used consistently for all federal awards until such time as a nonfederal entity chooses to negotiate for a rate, which the non-federal entity may apply to do at any time. Condition: As defined by the Uniform Guidance, the determination of MTDC excludes equipment and capital expenditures, in addition to various other categories of expenditures. The Council properly elected to utilize the 10% de minimis rate, however, improperly included amounts related to capital expenditures in their determination of the MTDC base. Cause: The Council was aware of the proper method to be used in calculations but the inclusion of capital expenditures was overlooked in error. Effect or potential effect: The Council charged indirect costs to the federal program that exceeded 10% of the MTDC. The overage that was charged to the federal program does not exceed 5% of the total program expenditures over the lifetime of the award. Questioned Costs: $121,838 Context: Over the lifetime of the award, the Council had various capital expenditure purchases totaling approximately $1,350,520 that were improperly included in the calculation of the MTDC. Identification of Repeat Finding: Not applicable. Recommendations: We recommend that the Council works to improve processes and controls over the calculation of, and monitoring of, indirect costs charged to federal programs. We also recommend that training be provided to ensure that all parties are aware of the proper methodology and processes. Views of Responsible Officials: See Corrective Action Plan.
Federal Program: AL 20.237 – High Priority Commercial Motor Vehicle Grant Program, Federal Motor Carrier Safety Administration (FMCSA) Cluster. Compliance Requirements: Period of Performance. Type of Finding: Material Noncompliance and Internal Control Over Noncompliance. Criteria: Per guidance provided by Section 7.5 of the Motor Carrier Safety Assistance Program – Grant Comprehensive Policy, 49 U.S. Code § 31104(f)(2), and 200 Code of Federal Regulations (“CFR”) Section 200.309, only allowable costs incurred during the period of performance specified in the Notice of Grant Award may be charged to the related federal award. Condition and Context: On September 30, 2023, IRP prepaid $174,465 for data repository hosting and maintenance services that were not incurred until the quarter ended December 31, 2023. IRP reported this expenditure in Reports SF-425 and requested its reimbursement on form SF-270, for the quarter ended September 30, 2023, and charged the amount to federal award FM-MP- 0580-21. As expenditure occurred during the fiscal year ending September 30, 2024, it should be charged to federal award FM-MHP-0762-23, which has a period of performance from September 1, 2023, to September 30, 2025 per review of the notice of grant award. Questioned Costs: $174,465. Cause: Management lacked the appropriate knowledge of the period of performance requirements specified by the federal awarding agency and Uniform Guidance. Effect or Potential Effect: This error resulted in a $174,465 charge to award FM-MP-0580-21 for services that were incurred outside of the period of performance. Recommendation: We recommend management implement pre-submission controls, such as requiring date validation for all expenses against the award's period of performance and providing training to educate staff on 2 CFR requirements and period-of-performance limitations. We understand management has alerted FMCSA to the error and intends to work with them to correct the reporting of these expenditures, upon submission to the Federal Audit Clearinghouse of the data collection form and single audit reporting package for the year ended September 30, 2024. Views of Responsible Officials: Management acknowledges the finding and concurs with the recommendation. Grant management procedures have been revised to verify that services are received and costs incurred within the authorized period of performance in accordance with 2 CFR § 200.403 before the costs are charged to a federal award. Staff involved in grant management will receive targeted training on 2 CFR requirements related to period-ofperformance compliance and allowable cost timing.
Finding 2024-003: Unsupported Payroll Charges and Improper Drawdown of Federal Funds Compliance Requirements: Allowable Costs/Cost Principles; Cash Management; Reporting Type: Material Weakness in Internal Control over Compliance and Material Noncompliance Federal Agency: U.S. Department of Health and Human Services (Centers for Disease Control and Prevention) AL Numbers and Titles: 93.809 – National Organizations for Chronic Disease Prevention and Health Promotion Federal Award Number: NU58DP007562 Questioned Costs: $423,094 Repeat Finding: No Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to a federal award must be necessary, reasonable, and allocable, and must conform to the terms and conditions of the award. Per 2 CFR §200.430(i), charges for salaries and wages must be supported by records that accurately reflect the work performed and be supported by a system of internal control. Furthermore, 2 CFR §200.305(b) requires that non-federal entities minimize the time between federal fund drawdown and disbursement, and limits advances to amounts needed for the immediate cash requirements of the program. Condition: During our testing of payroll-related transactions charged to the 93.809 federal program, we identified a significant reallocation of personnel costs from unrestricted funds to the federal grant that occurred late in the audit period. These charges related to multiple employees whose compensation was not included in the originally approved budget for the federal program. At the time of our testing, no formal budget revision had been submitted to the awarding agency, and the names of these staff had not been recorded in the federal grant reporting system as required by the award terms. Additionally, the auditee was unable to provide any documentation, such as certifications, labor distribution reports, calendars, or other records, to support that these employees worked on activities allocable to the federal program. We further noted that the auditee drew down federal funds prior to the recording of these payroll charges, at a time when the costs in question had neither been incurred nor documented. This resulted in federal funds being drawn in advance of need, contrary to federal cash management requirements. Cause: The auditee did not have adequate internal controls to ensure that only appropriately budgeted and documented payroll costs were charged to the federal award. In addition, the organization lacked procedures to confirm that federal funds were drawn only for costs that were allowable, incurred, and supported at the time of drawdown. These weaknesses allowed significant payroll reallocations to be processed retroactively without timely budget amendments or sufficient documentation of allocability. Effect: As a result of these control deficiencies, a total of $423,094 in personnel-related costs, including direct salaries, fringe benefits, and associated indirect costs, was charged to the federal program without appropriate budget authorization or time and effort support. These unsupported costs were also used as the basis for a drawdown of federal funds that occurred before the expenditures were recorded or substantiated. This resulted in noncompliance with both cost principles and cash management requirements and exposes the auditee to potential disallowance or repayment of federal funds. Recommendation: We recommend that the auditee enhance internal controls related to grant budgeting, payroll allocations, and cash management. These controls should ensure that payroll costs charged to federal awards are included in the approved budget or are formally revised and submitted to the grantor, are supported by accurate time and effort documentation, and that federal funds are drawn only when actual, allowable costs have been incurred and documented. We further recommend that the auditee consult with the awarding agency to determine whether any retroactive budget revision or corrective action is available or whether repayment of questioned costs will be required. Views of Responsible Officials Corrective Actions: Management agrees with this finding. Please refer to the Corrective Action Plan.
U.S. Department of Health and Human Services - 93.432 Center for Independent Living 2024-005 Lack of Written Allocation Plan for Shared Costs Criteria: In accordance with 2 CFR §200.405(d), any cost allocated to a federal award must be allocable, reasonable, and based on a method that is supported and consistently applied. In addition, 2 CFR §200.403(g) requires that costs be adequately documented. A written allocation plan is essential to demonstrate that the allocation of shared costs is equitable and in compliance with Uniform Guidance. Condition: During our audit of federal award expenditures, we found that the Organization did not maintain a written cost allocation plan to support how shared costs, such as payroll, health insurance, and retirement, were distributed across programs, including federal awards. While costs were charged to various funding sources, no formal documentation existed to describe the basis or methodology for those allocations. Cause: The League relied on informal practices, but did not document or formalize the methodology in a written plan. As a result, there was no consistent or verifiable support for how shared costs were distributed. Effect: Without a written allocation plan, there is an increased risk that shared costs may be allocated inconsistently or inappropriately to federal awards, potentially resulting in noncompliance with federal costs principles and questioned costs. Questioned Costs: None noted. Recommendation: We recommend that the League develop and implement a written cost allocation plan that outlines the basis for distributing shared costs, including the allocation methodology, the types of costs involved, and the programs affected. The plan should be reviewed periodically and updated as necessary to reflect changes in funding or operations. Supporting documentation for allocations should be maintained and readily available for audit purposes. Views of Responsible Officials and Planned Corrective Actions: See corrective action plan on page 50.
Federal Agency: U.S. Department of the Interior - BOR Federal Program Name: Providing Water to At-Risk Natural Desert Terminal Lakes Assistance Listing Number: 15.508 Federal Award Identification Year: 2024 Pass-Through Agency: National Fish and Wildlife Foundation Award Period: 7/1/19-9/30/24 Type of Finding: Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.403(a) - When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: For eight procured vendors that were selected, verification of subrecipient's suspension or debarment status was not performed. Context: A nonstatistical sample of 21 out of 173 procured vendors were selected for testing for the above program. The condition noted above was identified during our procedures over WBC's procured vendors. Effect: WBC did not verify suspension or debarment status timely, which could result in procuring a vendor which is potentially suspended or debarred. Cause: WBC did not consistently ensure that Suspension or Debarment status was verified timely before naming procuring the vendor. Repeat Finding: The finding is not a repeat finding. Recommendation: We recommend that WBC strengthen its current policies and procedures to ensure that Suspension and Debarment Status is verified for each vendor subject to verification of suspension and debarment verification according to WBC's Procurement policy. Management’s Views: See separate corrective action plan.