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.
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.
2024-009: Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Information on Federal Program: United States Department of the Treasury. Federal Assistance Listing Number 21.027 – Coronavirus State and Local Fiscal Recovery Funds. Compliance Requirements: Allowable Costs/Cost Principles Criteria: Per 2 CFR § 200.403(g), costs must be adequately documented. Under 2 CFR § 200.403(a) and § 200.405(a), only costs that are necessary, reasonable, and allocable to the federal program may be charged. Condition: The County overpaid the vendor by $25,170. The full amount of the invoice, including the overpayment, was charged to the federal award. The overpayment was not identified during the normal processing and payment of the invoice. Cause: The overpayment was due to an oversight during invoice processing. Effect: Federal funds were used to pay an amount not allocable to the program, resulting in $25,170 of unallowable costs charged to the federal award. Questioned Costs: $25,170 in Coronavirus State and Local Fiscal Recovery Funds. Context: We randomly selected tested fifteen (15) expenditures charged to the SLFRF program in the amount of $1,241,980 from a population of $1,292,822 and found one (1) instance of noncompliance totaling $25,170. Recommendation: We recommend that the entity seek reimbursement for the $25,170 overpayment and make appropriate adjustments to the Schedule of Expenditures of Federal Awards (SEFA) and the accounting records, as needed. Management should ensure final payment amounts are fully supported by invoice documentation. Views of Responsible Officials and Planned Corrective Actions: We agree with the findings and recommendations. This was an isolated incident whereas the payment amount was mistakenly pulled from the wrong line on a contractor’s pay application. This overpayment was missed in the subject fiscal year as the program was still active. Once the overpayment was identified, the county sought reimbursement from the vendor for the overpayment and has since received the funds. The reimbursement will be included as program revenues in the next audit report. The County will reconcile contract values as each pay application is processed in lieu of awaiting program/project closeout in the future.
Finding 2024-043 - Use of Federal Funds to Satisfy Required Local Match Without Prior Approval Summary: The City of Batesville substituted federal Delta Regional Authority (ORA) and Appalachian Regional Commission (ARC) funds for required local match obligations under two federal grants-ARC (ALN 23.002) and CDBG (ALN 14.228)-without obtaining prior written approval from the awarding agencies. Although CDBG was not selected for audit testing, the questioned costs originally exceeded the $10,000 threshold and are reported in accordance with 2 CFR §200.516(a): Total questioned costs of $800,406 were initially allocated proportionally between the two programs; These costs have since been resolved through formal amendments to both grant agreements. Federal Programs 23.002 _; Appalachian Area Development (ARC) 14.228 - Community Development Block Grants/State's Program and Non-Entitlement Grants in Hawaii· (CDBG) Note: ALN 14.228 was not selected for audit testing under the Uniform Guidance compliance requirements. However, a finding is presented in accordance with 2 CFR §200.516(a) due to the materiality of the issue and its connection to ARC grant MS-20699. Award Numbers ARC: MS-20699 CDBG Subgrant: 1137 ~21-111-PF-01 Federal Agencies U.S. Department of the Treasury (via Appalachian Regional Commission) U.S. Department of Housing and Urban Development Compliance Requirements Matching - 2 CFR §200.306 Allowable Costs/Cost Principles - 2 CFR §200.403 Internal Controls -2 CFR §200.303 Audit Finding Threshold - 2 CFR §200.516(a) Type of Finding Internal Control over Compliance - Material Weakness Compliance - Noncompliance Questioned Costs Based on actual net expenditures and proportional match requirements: (TABLE) These questioned costs have been eliminated following receipt of amended contracts from ARC and CDBG approving the use of ORA and CDBG funds as match. Criteria The following federal regulations and grant conditions establish the requirements violated in this finding: 1. Matching Requirements - 2 CFR §200.306 Federal funds may not be used to meet a required cost share or match unless expressly authorized by the awarding agency. Matching contributions must: Be verifiable from the recipient's records Not be included as contributions for any other federal award Be necessary and reasonable for accomplishing program objectives Be allowable under the cost principles Not be paid by. the federal government under another award, unless authorized 2. Allowable Costs ... 2 CFR §200.403 Costs must be necessary, reasonable, allocable, and conform to limitations in the award terms. Costs must be adequately documented and consistent with policies that apply uniformly to both federally financed and other activities. 3. Internal Controls - 2 CFR §200.303 Recipients must establish and maintain effective internal controls to ensure compliance with feqeral statutes, regulations, and award terms. Controls should provide reasonable assurance that the organization is managing the award in compliance with applicable requirements. 4. Audit Finding Threshold-2 CFR §200.516(a) Auditors must report known questioned costs that exceed $10,000 for a federal program, even if the program was not selected for audit testing. Condition During the audit of ARC grant MS-20699 (ALN 23.002), we noted that the City of Batesville substituted $569,600 in federal ORA funds for the originally budgeted local match of $341,784. Additionally, for COBG grant ALN 14.228, the City substituted $569,600 in ORA funds and $553,000 in ARC grant funds for the originally budgeted local match of $901,784. These substitutions were made without prior written approval or executed amendments from the awarding agencies, as required under 2 CFR §200.306 and the respective grant agreements. Resolution Following the audit fieldwork, the City obtained formal amendments to both grant agreements: On October 24, 2025, ARC approved the substitution of ORA and COBG funds as match under ALN 23.002. On November 7, 2025, COBG approved the substitution of ORA and ARC funds as match under ALN 14.228. These approvals eliminate the previously identified questioned costs totaling $800,406. However, the lack of contemporaneous documentation and prior approval reflects a breakdown in internal controls and remains a material compliance issue. Cause The City lacked adequate internal controls to ensure changes to match sources were formally reviewed and approved by the awarding agencies prior to implementation. The substitution of federal funds for required local match was not documented or authorized at the time of expenditure. Effect Although questioned costs have been resolved, the City was in noncompliance with federal matching requirements and allowable cost principles at the time of expenditure. This reflects a broader control deficiency in the City's grant management process and increases the risk of future noncompliance. Recommendation We recommend the City strengthen its internal controls over grant compliance, including: Formal review and documentation of match sources prior to drawdown Written approval from awarding agencies before substituting federal funds for required match Staff training on federal match requirements and Uniform Guidance compliance Views of Responsible Officials Management concurs with the finding. The City acknowledges that federal ORA and ARC funds were applied toward required match obligations without prior approval or amendment to the respective grant agreements. ARC and CDBG representatives have since approved the substitutions through formal amendments. The City will implement procedures requiring written authorization for any future match substitutions and establish a formal review process to verify match sources prior to drawdown.
2024-042 - Misallocation of Expenditures Across Federal Awards Federal Program 14.228 - Community Development Block Grants Program 23.002 - Appalachian Area Development 90.210 - Delta Regional Authority (not subject to audit under Uniform Guidance) Award Numbers ARC-20698 ARC-20699 CDBG Subgrant: 1137-21-111-PF-01 Federal Agencies U.S. Department of Housing and Urban Development (HUD) U.S. Department of the Treasury (via Appalachian Regional Commission) Delta Regional Authority (DRA) Compliance Requirements Allowable Costs/Cost Principles - 2 CFR §200.403 and §200.405 Internal Controls - 2 CFR §200.303 Type of Finding Internal Control over Compliance - Significant Deficiency Compliance '- Noncompliance Questioned Costs (TABLE) Per 2 CFR §200.403, costs must be necessary, reasonable, and allocable to the federal award. Under §200.405, costs must be assigned to the federal award in accordance with the relative benefits received. Additionally, §200.303 requires the non-federal entity to maintain effective internal control over federal awards to ensure compliance. Condition During testing of 13 disbursements totaling $1,541,660 charged to the above federal programs, 11 invoices were not allocated in accordance with the approved budget percentages. This resulted in over-reimbursements across multiple federal awards. Known Over (Under) Reimbursements by Program and Fiscal Year (TABLE) *ALN 90.210 was not subject to audit under Uniform Guidance. Amounts shown are for context only. Cause The City did not consistently apply approved budget allocation percentages when charging expenditures to federal awards. This resulted in misclassification of costs and excess reimbursement from federal sources. Effect The City received federal reimbursements in excess of allowable amounts under ALNs 14.228 and 23.002. These errors may result in repayment obligations and indicate a broader weakness in internal controls over grant accounting and drawdown procedures. Recommendation We recommend the City strengthen its internal controls over grant accounting and reimbursement procedures. This should include: Formal review of allocation schedules prior to submission of reimbursement requests Periodic reconciliation of actual expenditures to approved budget allocations Staff training on federal cost principles and grant compliance requirements Views of Responsible Officials Management concurs with the finding. The City acknowledges that allocation errors occurred across multiple federal programs due to inconsistent application of approved budget percentages. To address this, the City will implement a formal review process for allocation schedules and establish reconciliation procedures to ensure expenditures align with approved budgets. Staff will receive training on federal cost principles and grant compliance requirements. The City will also evaluate prior reimbursements and consult with awarding agencies regarding any necessary adjustments.
2024-041 - Unsupported FEMA Reimbursements Federal Program 97.036 - FEMA Disaster Grants - Public Assistance (Presidentially Declared Disasters) Award Numbers PW No. 51 (0) and PW No. 34(0) Federal Agency Department of Homeland Security Compliance requirement Allowable Costs/Cost Principles - 2 CFR §200.403 and §200.405 Type of Finding Internal Control over Compliance - Significant Deficiency Compliance - Noncompliance Questioned Costs: $10,254 Criteria In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and adequately documented. Reimbursen,ents based on estimated costs must be reconciled to actual expenditures, and any unsupported amounts must be excluded from final claims. Condition The City received FEMA reimbursements totaling $99,548 under PW No. 51 (0) and $5,704 under PW No. 34(0). These reimbursements were based on estimated costs submitted to FEMA. However, during the financial statement audit, the following discrepancies were noted: PW No. 51 (0): Claimed: Labor $1,048; Equipment $1.8,811; Materials $76,559; Contract $3;130 - Total $99,548 Documented: Labor $1,048; Equipment $8,874; Materials $78,966; Contract $3, 130-Total $92,018 Unsupported costs: $7,530 PW No. 34(0): Claimed: Labor $2,374; Equipment $3,330 -Total $5,704 Documented: Equipment $2,980 - Total $2,980 Unsupported costs: $2,724 Cause The City did not reconcile estimated FEMA reimbursements to actual expenditures incurred and failed to maintain adequate supporting documentation for all cost categories. Effect The City may have received federal funds in excess of actual eligible expenditures, resulting in potential noncompliance with federal cost principles and risk of disallowed costs. Recommendation The City should implement procedures to ensure all FEMA reimbursements are supported by actual, documented expenditures. Management should review the unsupported amounts and consult with FEMA regarding potential repayment or adjustments. Views of Responsible Officials Management concurs with the finding. The City acknowledges that FEMA reimbursements were based on estimated costs and that documentation for certain categories was incomplete. The City will strengthen its procedures for reconciling estimated reimbursements to actual expenditures and ensure that all future claims are supported by detailed documentation. Staff will receive training on FEMA cost principles and documentation standards, and the City will consult with FEMA regarding resolution of the questioned costs.
2024-001 – Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs/Cost Principles Information on Federal Program(s) - Department of Education Assistance Listing Number: 84.351 Assistance Listing Name: Arts in Education National Program Grant Award Number: S351A220007 Award Period: October 1, 2023 to September 30, 2024 Criteria or Specific Requirement – 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. In addition, 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). (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3).” Condition – In evaluating the Center’s compliance with the requirements of Activities Allowed or Unallowed and Allowable Costs Cost Principles, our test work identified one instance out of a sample of sixty payroll transactions, totaling $66,904.92, in which an employee was not paid according to his (her) contract. For the one exception, the employee was underpaid a total of $0.24. Cause – The Center did not adhere to their internal process to ensure approved salary information was accurately applied. Effect or Potential Effect – Without adequate internal controls in place to ensure costs are properly verified and applied, the Center could inaccurately charge expenditures to the federal program. Questioned Costs – N/A Context – This is a condition based on testing of the Center’s compliance. Based on tested samples, we noted a total underpayment of $0.24. The prevalence of the finding is detailed in the condition section above. The samples were selected using a non-statistical method. Repeat Finding – This is a repeat finding from prior year. This was reported as finding 2023-001 in the 2023 report. Recommendation - We recommend management of the Center strengthen their internal process to ensure that employee salary information recorded in the payroll system is approved, supported by salary documentation in the personnel files, and accurately applied. Views of Responsible Officials – After performing a detailed analysis, the Center’s management identified that the likely net underpayment amounted to $1.32. The likely underpayment was determined by management through examination of the total salary charged to the federal program. The Center’s management agrees with the finding and will strengthen the internal process surrounding the activities allowed or unallowed and allowable costs and will ensure adequate documentation is in place and approved salary rates are consistently and properly applied. See the Center’s corrective action for more details.
2024-001 – Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs/Cost Principles Information on Federal Program(s) - Department of Education Assistance Listing Number: 84.351 Assistance Listing Name: Arts in Education National Program Grant Award Number: S351A220007 Award Period: October 1, 2023 to September 30, 2024 Criteria or Specific Requirement – 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. In addition, 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). (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3).” Condition – In evaluating the Center’s compliance with the requirements of Activities Allowed or Unallowed and Allowable Costs Cost Principles, our test work identified one instance out of a sample of sixty payroll transactions, totaling $66,904.92, in which an employee was not paid according to his (her) contract. For the one exception, the employee was underpaid a total of $0.24. Cause – The Center did not adhere to their internal process to ensure approved salary information was accurately applied. Effect or Potential Effect – Without adequate internal controls in place to ensure costs are properly verified and applied, the Center could inaccurately charge expenditures to the federal program. Questioned Costs – N/A Context – This is a condition based on testing of the Center’s compliance. Based on tested samples, we noted a total underpayment of $0.24. The prevalence of the finding is detailed in the condition section above. The samples were selected using a non-statistical method. Repeat Finding – This is a repeat finding from prior year. This was reported as finding 2023-001 in the 2023 report. Recommendation - We recommend management of the Center strengthen their internal process to ensure that employee salary information recorded in the payroll system is approved, supported by salary documentation in the personnel files, and accurately applied. Views of Responsible Officials – After performing a detailed analysis, the Center’s management identified that the likely net underpayment amounted to $1.32. The likely underpayment was determined by management through examination of the total salary charged to the federal program. The Center’s management agrees with the finding and will strengthen the internal process surrounding the activities allowed or unallowed and allowable costs and will ensure adequate documentation is in place and approved salary rates are consistently and properly applied. See the Center’s corrective action for more details.
Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Social Services Block Grant Block Grants for Community Mental Health Services ALN: 93.667 93.958 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: Social Services Block Grant 2401TXSOSR October 1, 2023 – September 30, 2025 Block Grants for Community Mental Health Services 1B09SM085994, 6B09SM085994 October 1, 2021 – September 30, 2023 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), Health and Human Services Commission (HHSC) must establish and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403(h) cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Condition: For awards with period of performance beginning dates during the fiscal year, audit procedures included testing transactions posted to the general ledger during the first month of the award. For awards with period of performance end dates during the fiscal year, audit procedures included testing transactions posted to the general ledger during the last month and after the period of performance end date. We noted the following instances of noncompliance: Social Services Block Grant (SSBG) – Audit procedures included testing 40 sampled transactions from projects with period of performance beginning dates during the fiscal year totaling $5,034. Two of the expenditures, totaling $486, were related to costs incurred prior to the period of performance begin date. The Project Period Start Date per the grant award was October 1, 2023, however costs were incurred on September 6, 2023 and September 11, 2023. Block Grants for Community Mental Health Services (MHBG) – Audit procedures included testing 40 sampled transactions, totaling $1,695,512, from projects with period of performance end dates during the fiscal year for which the obligation had not been paid as of the end of the period of performance. Twelve of the expenditures, totaling $312,929, were not paid within 120 days of the period of performance end date, which is the allowed time period to liquidate obligations. The required liquidation date was December 29, 2023; however, these obligations were paid between January 2, 2024 and April 11, 2024. Questioned costs: Social Services Block Grant: $486 Block Grants for Community Mental Health Services: $312,929 Context: See “Condition.” Cause: The two exceptions for SSBG were related to travel costs where the employee’s supervisor approved the transaction, which was coded to the incorrect grant. For the exceptions noted in the liquidation period testing for MHBG, the late payments are due to the HHSC’s reconciliation and closeout process not being performed in a timely manner. Effect: Ineffective internal controls may result in questioned costs and noncompliance with the terms of the grant. In addition, costs paid with non-federal sources remain in the population which is being included on the schedule of federal expenditures (SEFA) for the current fiscal year. Repeat Finding: 2023-016 Recommendation: HHSC should provide additional training over its review process to ensure that reviewers are verifying that transactions are posted to the proper grant. Additionally, HHSC should verify that all obligations incurred are liquidated during the closeout process and adjustments are not made subsequent to closeout. Views of responsible officials: HHSC concurs with the finding.
Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Social Services Block Grant Block Grants for Community Mental Health Services ALN: 93.667 93.958 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: Social Services Block Grant 2401TXSOSR October 1, 2023 – September 30, 2025 Block Grants for Community Mental Health Services 1B09SM085994, 6B09SM085994 October 1, 2021 – September 30, 2023 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), Health and Human Services Commission (HHSC) must establish and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403(h) cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Condition: For awards with period of performance beginning dates during the fiscal year, audit procedures included testing transactions posted to the general ledger during the first month of the award. For awards with period of performance end dates during the fiscal year, audit procedures included testing transactions posted to the general ledger during the last month and after the period of performance end date. We noted the following instances of noncompliance: Social Services Block Grant (SSBG) – Audit procedures included testing 40 sampled transactions from projects with period of performance beginning dates during the fiscal year totaling $5,034. Two of the expenditures, totaling $486, were related to costs incurred prior to the period of performance begin date. The Project Period Start Date per the grant award was October 1, 2023, however costs were incurred on September 6, 2023 and September 11, 2023. Block Grants for Community Mental Health Services (MHBG) – Audit procedures included testing 40 sampled transactions, totaling $1,695,512, from projects with period of performance end dates during the fiscal year for which the obligation had not been paid as of the end of the period of performance. Twelve of the expenditures, totaling $312,929, were not paid within 120 days of the period of performance end date, which is the allowed time period to liquidate obligations. The required liquidation date was December 29, 2023; however, these obligations were paid between January 2, 2024 and April 11, 2024. Questioned costs: Social Services Block Grant: $486 Block Grants for Community Mental Health Services: $312,929 Context: See “Condition.” Cause: The two exceptions for SSBG were related to travel costs where the employee’s supervisor approved the transaction, which was coded to the incorrect grant. For the exceptions noted in the liquidation period testing for MHBG, the late payments are due to the HHSC’s reconciliation and closeout process not being performed in a timely manner. Effect: Ineffective internal controls may result in questioned costs and noncompliance with the terms of the grant. In addition, costs paid with non-federal sources remain in the population which is being included on the schedule of federal expenditures (SEFA) for the current fiscal year. Repeat Finding: 2023-016 Recommendation: HHSC should provide additional training over its review process to ensure that reviewers are verifying that transactions are posted to the proper grant. Additionally, HHSC should verify that all obligations incurred are liquidated during the closeout process and adjustments are not made subsequent to closeout. Views of responsible officials: HHSC concurs with the finding.
Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Social Services Block Grant Block Grants for Community Mental Health Services ALN: 93.667 93.958 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: Social Services Block Grant 2401TXSOSR October 1, 2023 – September 30, 2025 Block Grants for Community Mental Health Services 1B09SM085994, 6B09SM085994 October 1, 2021 – September 30, 2023 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), Health and Human Services Commission (HHSC) must establish and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403(h) cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Condition: For awards with period of performance beginning dates during the fiscal year, audit procedures included testing transactions posted to the general ledger during the first month of the award. For awards with period of performance end dates during the fiscal year, audit procedures included testing transactions posted to the general ledger during the last month and after the period of performance end date. We noted the following instances of noncompliance: Social Services Block Grant (SSBG) – Audit procedures included testing 40 sampled transactions from projects with period of performance beginning dates during the fiscal year totaling $5,034. Two of the expenditures, totaling $486, were related to costs incurred prior to the period of performance begin date. The Project Period Start Date per the grant award was October 1, 2023, however costs were incurred on September 6, 2023 and September 11, 2023. Block Grants for Community Mental Health Services (MHBG) – Audit procedures included testing 40 sampled transactions, totaling $1,695,512, from projects with period of performance end dates during the fiscal year for which the obligation had not been paid as of the end of the period of performance. Twelve of the expenditures, totaling $312,929, were not paid within 120 days of the period of performance end date, which is the allowed time period to liquidate obligations. The required liquidation date was December 29, 2023; however, these obligations were paid between January 2, 2024 and April 11, 2024. Questioned costs: Social Services Block Grant: $486 Block Grants for Community Mental Health Services: $312,929 Context: See “Condition.” Cause: The two exceptions for SSBG were related to travel costs where the employee’s supervisor approved the transaction, which was coded to the incorrect grant. For the exceptions noted in the liquidation period testing for MHBG, the late payments are due to the HHSC’s reconciliation and closeout process not being performed in a timely manner. Effect: Ineffective internal controls may result in questioned costs and noncompliance with the terms of the grant. In addition, costs paid with non-federal sources remain in the population which is being included on the schedule of federal expenditures (SEFA) for the current fiscal year. Repeat Finding: 2023-016 Recommendation: HHSC should provide additional training over its review process to ensure that reviewers are verifying that transactions are posted to the proper grant. Additionally, HHSC should verify that all obligations incurred are liquidated during the closeout process and adjustments are not made subsequent to closeout. Views of responsible officials: HHSC concurs with the finding.
Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Social Services Block Grant Block Grants for Community Mental Health Services ALN: 93.667 93.958 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: Social Services Block Grant 2401TXSOSR October 1, 2023 – September 30, 2025 Block Grants for Community Mental Health Services 1B09SM085994, 6B09SM085994 October 1, 2021 – September 30, 2023 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), Health and Human Services Commission (HHSC) must establish and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403(h) cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Condition: For awards with period of performance beginning dates during the fiscal year, audit procedures included testing transactions posted to the general ledger during the first month of the award. For awards with period of performance end dates during the fiscal year, audit procedures included testing transactions posted to the general ledger during the last month and after the period of performance end date. We noted the following instances of noncompliance: Social Services Block Grant (SSBG) – Audit procedures included testing 40 sampled transactions from projects with period of performance beginning dates during the fiscal year totaling $5,034. Two of the expenditures, totaling $486, were related to costs incurred prior to the period of performance begin date. The Project Period Start Date per the grant award was October 1, 2023, however costs were incurred on September 6, 2023 and September 11, 2023. Block Grants for Community Mental Health Services (MHBG) – Audit procedures included testing 40 sampled transactions, totaling $1,695,512, from projects with period of performance end dates during the fiscal year for which the obligation had not been paid as of the end of the period of performance. Twelve of the expenditures, totaling $312,929, were not paid within 120 days of the period of performance end date, which is the allowed time period to liquidate obligations. The required liquidation date was December 29, 2023; however, these obligations were paid between January 2, 2024 and April 11, 2024. Questioned costs: Social Services Block Grant: $486 Block Grants for Community Mental Health Services: $312,929 Context: See “Condition.” Cause: The two exceptions for SSBG were related to travel costs where the employee’s supervisor approved the transaction, which was coded to the incorrect grant. For the exceptions noted in the liquidation period testing for MHBG, the late payments are due to the HHSC’s reconciliation and closeout process not being performed in a timely manner. Effect: Ineffective internal controls may result in questioned costs and noncompliance with the terms of the grant. In addition, costs paid with non-federal sources remain in the population which is being included on the schedule of federal expenditures (SEFA) for the current fiscal year. Repeat Finding: 2023-016 Recommendation: HHSC should provide additional training over its review process to ensure that reviewers are verifying that transactions are posted to the proper grant. Additionally, HHSC should verify that all obligations incurred are liquidated during the closeout process and adjustments are not made subsequent to closeout. Views of responsible officials: HHSC concurs with the finding.
Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: U.S. Department of Transportation Federal Program Title: Airport Improvement Program ALN: 20.106 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 3–48–SBGP–148–2022 September 14, 2022 – September 13, 2026 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR section 200.303(a), Texas Department of Transportation (TxDOT) must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403, except where otherwise authorized by statute, costs must meet the following criteria 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 recipient or subrecipient. (d) Be accorded consistent treatment. (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 requirements of any other federally – financed program in either the current or a prior period. (g) Be adequately documented. Condition: Audit procedures included a sample of 40 expenditures, totaling $9,426,808, to test allowability with grant awards. We noted that for one of the 40 samples, TxDOT overpaid an invoice to a vendor by $70,000. Upon detection by the vendor, TxDOT corrected the overpayment by reducing a subsequent payment to the vendor by the $70,000. Questioned costs: None Context: See “Condition.” Cause: The amount requested to be reimbursed was manually entered incorrectly in eGrants. TxDOT did not detect the discrepancy during the review and approval process prior to the payment. Effect: Failure to thoroughly review invoices prior to payment may lead to overpayment or underpayment of funds to vendors and potential questioned costs. Repeat Finding: No Recommendation: We recommend that TxDOT provide additional training to individuals performing reviews of expenditures. We also recommend TxDOT establish internal controls to monitor that reviews of expenditures are being completed to the level of detail required by internal policies and procedures. Views of responsible officials: TxDOT AVN agrees with the finding.
Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: U.S. Department of Transportation Federal Program Title: Airport Improvement Program ALN: 20.106 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 3–48–SBGP–148–2022 September 14, 2022 – September 13, 2026 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR section 200.303(a), Texas Department of Transportation (TxDOT) must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403, except where otherwise authorized by statute, costs must meet the following criteria 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 recipient or subrecipient. (d) Be accorded consistent treatment. (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 requirements of any other federally – financed program in either the current or a prior period. (g) Be adequately documented. Condition: Audit procedures included a sample of 40 expenditures, totaling $9,426,808, to test allowability with grant awards. We noted that for one of the 40 samples, TxDOT overpaid an invoice to a vendor by $70,000. Upon detection by the vendor, TxDOT corrected the overpayment by reducing a subsequent payment to the vendor by the $70,000. Questioned costs: None Context: See “Condition.” Cause: The amount requested to be reimbursed was manually entered incorrectly in eGrants. TxDOT did not detect the discrepancy during the review and approval process prior to the payment. Effect: Failure to thoroughly review invoices prior to payment may lead to overpayment or underpayment of funds to vendors and potential questioned costs. Repeat Finding: No Recommendation: We recommend that TxDOT provide additional training to individuals performing reviews of expenditures. We also recommend TxDOT establish internal controls to monitor that reviews of expenditures are being completed to the level of detail required by internal policies and procedures. Views of responsible officials: TxDOT AVN agrees with the finding.
Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: U.S. Department of Transportation Federal Program Title: Airport Improvement Program ALN: 20.106 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 3–48–SBGP–148–2022 September 14, 2022 – September 13, 2026 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR section 200.303(a), Texas Department of Transportation (TxDOT) must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403, except where otherwise authorized by statute, costs must meet the following criteria 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 recipient or subrecipient. (d) Be accorded consistent treatment. (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 requirements of any other federally – financed program in either the current or a prior period. (g) Be adequately documented. Condition: Audit procedures included a sample of 40 expenditures, totaling $9,426,808, to test allowability with grant awards. We noted that for one of the 40 samples, TxDOT overpaid an invoice to a vendor by $70,000. Upon detection by the vendor, TxDOT corrected the overpayment by reducing a subsequent payment to the vendor by the $70,000. Questioned costs: None Context: See “Condition.” Cause: The amount requested to be reimbursed was manually entered incorrectly in eGrants. TxDOT did not detect the discrepancy during the review and approval process prior to the payment. Effect: Failure to thoroughly review invoices prior to payment may lead to overpayment or underpayment of funds to vendors and potential questioned costs. Repeat Finding: No Recommendation: We recommend that TxDOT provide additional training to individuals performing reviews of expenditures. We also recommend TxDOT establish internal controls to monitor that reviews of expenditures are being completed to the level of detail required by internal policies and procedures. Views of responsible officials: TxDOT AVN agrees with the finding.
Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: U.S. Department of Transportation Federal Program Title: Airport Improvement Program ALN: 20.106 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 3–48–SBGP–148–2022 September 14, 2022 – September 13, 2026 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR section 200.303(a), Texas Department of Transportation (TxDOT) must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403, except where otherwise authorized by statute, costs must meet the following criteria 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 recipient or subrecipient. (d) Be accorded consistent treatment. (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 requirements of any other federally – financed program in either the current or a prior period. (g) Be adequately documented. Condition: Audit procedures included a sample of 40 expenditures, totaling $9,426,808, to test allowability with grant awards. We noted that for one of the 40 samples, TxDOT overpaid an invoice to a vendor by $70,000. Upon detection by the vendor, TxDOT corrected the overpayment by reducing a subsequent payment to the vendor by the $70,000. Questioned costs: None Context: See “Condition.” Cause: The amount requested to be reimbursed was manually entered incorrectly in eGrants. TxDOT did not detect the discrepancy during the review and approval process prior to the payment. Effect: Failure to thoroughly review invoices prior to payment may lead to overpayment or underpayment of funds to vendors and potential questioned costs. Repeat Finding: No Recommendation: We recommend that TxDOT provide additional training to individuals performing reviews of expenditures. We also recommend TxDOT establish internal controls to monitor that reviews of expenditures are being completed to the level of detail required by internal policies and procedures. Views of responsible officials: TxDOT AVN agrees with the finding.
Activities Allowed and Unallowed, Allowable Costs/Cost Principles – Indirect Costs Federal Agency: U.S. Department of Labor Federal Program Title: Employment Service Cluster ALN: 17.207, 17.801 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 23555DV000036 – 01, 24555DV000076 – 01 October 1, 2022 – December 31, 2024, October 1, 2023 – December 31, 2025 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR section 200.303(a), Texas Veterans Commission (TVC) must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.403, except where otherwise authorized by statute, costs must meet the following criteria 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 recipient or subrecipient. (d) Be accorded consistent treatment. (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 requirements of any other federally – financed program in either the current or a prior period. (g) Be adequately documented. Condition: Audit procedures included a sample of five indirect cost expenditures, totaling $1,248,175, incurred during the fiscal year to verify that the rates used were in accordance with the terms and conditions of the award and the amounts claimed were applied to the appropriate base. During our testing, we noted one sample in which an incorrect rate was applied to the base, resulting in $69,481 of unallowed indirect costs. In addition, there was no evidence of review and approval for three of the five expenditures selected for testing, including the expenditure noted in the preceding paragraph. Questioned costs: $69,481 Context: See “Condition.” Cause: Management failed to retain documentation that would support the review and approval of the indirect cost amounts. The exceptions were caused due to high turnover within the agency. Employees who were responsible for the approvals are no longer employed through TVC. Effect: Lack of formal documentation of reviews may result in questioned costs. In addition, failure to maintain adequate documentation pertinent to a federal award may result in noncompliance with grant terms and conditions. Repeat Finding: No Recommendation: We recommend TVC enforce establish document retention processes to ensure it has access to documentation for review in the event of management turnover. In addition, we recommend TVC strengthen its controls over the review of the indirect cost calculations to ensure accuracy of costs being calculated. Views of responsible officials: TVC agrees to the recommendation of improved record retention in the event of management turnover. TVC also agrees to the recommendation of strengthening its internal controls over the review of VES’s grant costs associated with the indirect revenues being calculated.