Assistance Listing, Federal Agency, and Program Name - Research and Development Cluster (R&D) Federal Award Identification Number and Year - R&D - All ALN's Pass through Entity - R&D - Various Finding Type - Significant deficiency Repeat Finding - No Criteria - A non federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass through entity made the federal award that were authorized by the federal awarding agency or pass through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). Condition - Of the 40 samples included in our sample selected for testing in the Research and Development Cluster, the University included two invoices for a total of $2,618 that were incurred prior to the beginning of the grant period. Questioned Costs - $2,618 Identification of How Questioned Costs Were Computed - Question costs were computed using the total costs identified in our sample that were incurred prior to the grant period. Context - The University completed a transfer of costs between two grant awards that were supporting the same overall program. The samples identified were part of one cost transfer, but the invoice date and related expense was incurred one day prior to the beginning of the grant period. Cause and Effect - The University did not have proper procedures over tracking of expenditures in separate grant cost centers for a R&D program. This required a transfer between the grant programs and resulted in the University adjusting costs from a prior period and charging costs to a grant that was outside the period of performance. Recommendation - The University has implemented a new grant financial and billing software that provides improved controls over operational transactions, including an Award Calendar control that recognizes the award end date in the invoice posting process. The costs described in this finding, which occurred before the new system was implemented have been removed from the existing grant and replaced by other allowable costs that were included in the proper award period. Views of Responsible Officials and Planned Corrective Actions - The University has implemented a new grant financial and billing software that provides improved controls over operational transactions, including an award calendar control that recognizes the award end date in the invoice posting process. The costs described in this finding, which occurred before the new system was implemented, have been removed from the existing grant and replaced by other allowable costs that were incurred within the proper award period.
Assistance Listing, Federal Agency, and Program Name - Research and Development Cluster (R&D) Federal Award Identification Number and Year - R&D - All ALN's Pass through Entity - R&D - Various Finding Type - Significant deficiency Repeat Finding - No Criteria - A non federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass through entity made the federal award that were authorized by the federal awarding agency or pass through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). Condition - Of the 40 samples included in our sample selected for testing in the Research and Development Cluster, the University included two invoices for a total of $2,618 that were incurred prior to the beginning of the grant period. Questioned Costs - $2,618 Identification of How Questioned Costs Were Computed - Question costs were computed using the total costs identified in our sample that were incurred prior to the grant period. Context - The University completed a transfer of costs between two grant awards that were supporting the same overall program. The samples identified were part of one cost transfer, but the invoice date and related expense was incurred one day prior to the beginning of the grant period. Cause and Effect - The University did not have proper procedures over tracking of expenditures in separate grant cost centers for a R&D program. This required a transfer between the grant programs and resulted in the University adjusting costs from a prior period and charging costs to a grant that was outside the period of performance. Recommendation - The University has implemented a new grant financial and billing software that provides improved controls over operational transactions, including an Award Calendar control that recognizes the award end date in the invoice posting process. The costs described in this finding, which occurred before the new system was implemented have been removed from the existing grant and replaced by other allowable costs that were included in the proper award period. Views of Responsible Officials and Planned Corrective Actions - The University has implemented a new grant financial and billing software that provides improved controls over operational transactions, including an award calendar control that recognizes the award end date in the invoice posting process. The costs described in this finding, which occurred before the new system was implemented, have been removed from the existing grant and replaced by other allowable costs that were incurred within the proper award period.
Assistance Listing, Federal Agency, and Program Name - Research and Development Cluster (R&D) Federal Award Identification Number and Year - R&D - All ALN's Pass through Entity - R&D - Various Finding Type - Significant deficiency Repeat Finding - No Criteria - A non federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass through entity made the federal award that were authorized by the federal awarding agency or pass through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). Condition - Of the 40 samples included in our sample selected for testing in the Research and Development Cluster, the University included two invoices for a total of $2,618 that were incurred prior to the beginning of the grant period. Questioned Costs - $2,618 Identification of How Questioned Costs Were Computed - Question costs were computed using the total costs identified in our sample that were incurred prior to the grant period. Context - The University completed a transfer of costs between two grant awards that were supporting the same overall program. The samples identified were part of one cost transfer, but the invoice date and related expense was incurred one day prior to the beginning of the grant period. Cause and Effect - The University did not have proper procedures over tracking of expenditures in separate grant cost centers for a R&D program. This required a transfer between the grant programs and resulted in the University adjusting costs from a prior period and charging costs to a grant that was outside the period of performance. Recommendation - The University has implemented a new grant financial and billing software that provides improved controls over operational transactions, including an Award Calendar control that recognizes the award end date in the invoice posting process. The costs described in this finding, which occurred before the new system was implemented have been removed from the existing grant and replaced by other allowable costs that were included in the proper award period. Views of Responsible Officials and Planned Corrective Actions - The University has implemented a new grant financial and billing software that provides improved controls over operational transactions, including an award calendar control that recognizes the award end date in the invoice posting process. The costs described in this finding, which occurred before the new system was implemented, have been removed from the existing grant and replaced by other allowable costs that were incurred within the proper award period.
Assistance Listing, Federal Agency, and Program Name - Research and Development Cluster (R&D) Federal Award Identification Number and Year - R&D - All ALN's Pass through Entity - R&D - Various Finding Type - Significant deficiency Repeat Finding - No Criteria - A non federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass through entity made the federal award that were authorized by the federal awarding agency or pass through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). Condition - Of the 40 samples included in our sample selected for testing in the Research and Development Cluster, the University included two invoices for a total of $2,618 that were incurred prior to the beginning of the grant period. Questioned Costs - $2,618 Identification of How Questioned Costs Were Computed - Question costs were computed using the total costs identified in our sample that were incurred prior to the grant period. Context - The University completed a transfer of costs between two grant awards that were supporting the same overall program. The samples identified were part of one cost transfer, but the invoice date and related expense was incurred one day prior to the beginning of the grant period. Cause and Effect - The University did not have proper procedures over tracking of expenditures in separate grant cost centers for a R&D program. This required a transfer between the grant programs and resulted in the University adjusting costs from a prior period and charging costs to a grant that was outside the period of performance. Recommendation - The University has implemented a new grant financial and billing software that provides improved controls over operational transactions, including an Award Calendar control that recognizes the award end date in the invoice posting process. The costs described in this finding, which occurred before the new system was implemented have been removed from the existing grant and replaced by other allowable costs that were included in the proper award period. Views of Responsible Officials and Planned Corrective Actions - The University has implemented a new grant financial and billing software that provides improved controls over operational transactions, including an award calendar control that recognizes the award end date in the invoice posting process. The costs described in this finding, which occurred before the new system was implemented, have been removed from the existing grant and replaced by other allowable costs that were incurred within the proper award period.
Assistance Listing, Federal Agency, and Program Name - Research and Development Cluster (R&D) Federal Award Identification Number and Year - R&D - All ALN's Pass through Entity - R&D - Various Finding Type - Significant deficiency Repeat Finding - No Criteria - A non federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass through entity made the federal award that were authorized by the federal awarding agency or pass through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). Condition - Of the 40 samples included in our sample selected for testing in the Research and Development Cluster, the University included two invoices for a total of $2,618 that were incurred prior to the beginning of the grant period. Questioned Costs - $2,618 Identification of How Questioned Costs Were Computed - Question costs were computed using the total costs identified in our sample that were incurred prior to the grant period. Context - The University completed a transfer of costs between two grant awards that were supporting the same overall program. The samples identified were part of one cost transfer, but the invoice date and related expense was incurred one day prior to the beginning of the grant period. Cause and Effect - The University did not have proper procedures over tracking of expenditures in separate grant cost centers for a R&D program. This required a transfer between the grant programs and resulted in the University adjusting costs from a prior period and charging costs to a grant that was outside the period of performance. Recommendation - The University has implemented a new grant financial and billing software that provides improved controls over operational transactions, including an Award Calendar control that recognizes the award end date in the invoice posting process. The costs described in this finding, which occurred before the new system was implemented have been removed from the existing grant and replaced by other allowable costs that were included in the proper award period. Views of Responsible Officials and Planned Corrective Actions - The University has implemented a new grant financial and billing software that provides improved controls over operational transactions, including an award calendar control that recognizes the award end date in the invoice posting process. The costs described in this finding, which occurred before the new system was implemented, have been removed from the existing grant and replaced by other allowable costs that were incurred within the proper award period.
Assistance Listing, Federal Agency, and Program Name - Research and Development Cluster (R&D) Federal Award Identification Number and Year - R&D - All ALN's Pass through Entity - R&D - Various Finding Type - Significant deficiency Repeat Finding - No Criteria - A non federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass through entity made the federal award that were authorized by the federal awarding agency or pass through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). Condition - Of the 40 samples included in our sample selected for testing in the Research and Development Cluster, the University included two invoices for a total of $2,618 that were incurred prior to the beginning of the grant period. Questioned Costs - $2,618 Identification of How Questioned Costs Were Computed - Question costs were computed using the total costs identified in our sample that were incurred prior to the grant period. Context - The University completed a transfer of costs between two grant awards that were supporting the same overall program. The samples identified were part of one cost transfer, but the invoice date and related expense was incurred one day prior to the beginning of the grant period. Cause and Effect - The University did not have proper procedures over tracking of expenditures in separate grant cost centers for a R&D program. This required a transfer between the grant programs and resulted in the University adjusting costs from a prior period and charging costs to a grant that was outside the period of performance. Recommendation - The University has implemented a new grant financial and billing software that provides improved controls over operational transactions, including an Award Calendar control that recognizes the award end date in the invoice posting process. The costs described in this finding, which occurred before the new system was implemented have been removed from the existing grant and replaced by other allowable costs that were included in the proper award period. Views of Responsible Officials and Planned Corrective Actions - The University has implemented a new grant financial and billing software that provides improved controls over operational transactions, including an award calendar control that recognizes the award end date in the invoice posting process. The costs described in this finding, which occurred before the new system was implemented, have been removed from the existing grant and replaced by other allowable costs that were incurred within the proper award period.
Assistance Listing, Federal Agency, and Program Name - Research and Development Cluster (R&D) Federal Award Identification Number and Year - R&D - All ALN's Pass through Entity - R&D - Various Finding Type - Significant deficiency Repeat Finding - No Criteria - A non federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass through entity made the federal award that were authorized by the federal awarding agency or pass through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). Condition - Of the 40 samples included in our sample selected for testing in the Research and Development Cluster, the University included two invoices for a total of $2,618 that were incurred prior to the beginning of the grant period. Questioned Costs - $2,618 Identification of How Questioned Costs Were Computed - Question costs were computed using the total costs identified in our sample that were incurred prior to the grant period. Context - The University completed a transfer of costs between two grant awards that were supporting the same overall program. The samples identified were part of one cost transfer, but the invoice date and related expense was incurred one day prior to the beginning of the grant period. Cause and Effect - The University did not have proper procedures over tracking of expenditures in separate grant cost centers for a R&D program. This required a transfer between the grant programs and resulted in the University adjusting costs from a prior period and charging costs to a grant that was outside the period of performance. Recommendation - The University has implemented a new grant financial and billing software that provides improved controls over operational transactions, including an Award Calendar control that recognizes the award end date in the invoice posting process. The costs described in this finding, which occurred before the new system was implemented have been removed from the existing grant and replaced by other allowable costs that were included in the proper award period. Views of Responsible Officials and Planned Corrective Actions - The University has implemented a new grant financial and billing software that provides improved controls over operational transactions, including an award calendar control that recognizes the award end date in the invoice posting process. The costs described in this finding, which occurred before the new system was implemented, have been removed from the existing grant and replaced by other allowable costs that were incurred within the proper award period.
Assistance Listing, Federal Agency, and Program Name - Research and Development Cluster (R&D) Federal Award Identification Number and Year - R&D - All ALN's Pass through Entity - R&D - Various Finding Type - Significant deficiency Repeat Finding - No Criteria - A non federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass through entity made the federal award that were authorized by the federal awarding agency or pass through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). Condition - Of the 40 samples included in our sample selected for testing in the Research and Development Cluster, the University included two invoices for a total of $2,618 that were incurred prior to the beginning of the grant period. Questioned Costs - $2,618 Identification of How Questioned Costs Were Computed - Question costs were computed using the total costs identified in our sample that were incurred prior to the grant period. Context - The University completed a transfer of costs between two grant awards that were supporting the same overall program. The samples identified were part of one cost transfer, but the invoice date and related expense was incurred one day prior to the beginning of the grant period. Cause and Effect - The University did not have proper procedures over tracking of expenditures in separate grant cost centers for a R&D program. This required a transfer between the grant programs and resulted in the University adjusting costs from a prior period and charging costs to a grant that was outside the period of performance. Recommendation - The University has implemented a new grant financial and billing software that provides improved controls over operational transactions, including an Award Calendar control that recognizes the award end date in the invoice posting process. The costs described in this finding, which occurred before the new system was implemented have been removed from the existing grant and replaced by other allowable costs that were included in the proper award period. Views of Responsible Officials and Planned Corrective Actions - The University has implemented a new grant financial and billing software that provides improved controls over operational transactions, including an award calendar control that recognizes the award end date in the invoice posting process. The costs described in this finding, which occurred before the new system was implemented, have been removed from the existing grant and replaced by other allowable costs that were incurred within the proper award period.
Assistance Listing, Federal Agency, and Program Name - Research and Development Cluster (R&D) Federal Award Identification Number and Year - R&D - All ALN's Pass through Entity - R&D - Various Finding Type - Significant deficiency Repeat Finding - No Criteria - A non federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass through entity made the federal award that were authorized by the federal awarding agency or pass through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). Condition - Of the 40 samples included in our sample selected for testing in the Research and Development Cluster, the University included two invoices for a total of $2,618 that were incurred prior to the beginning of the grant period. Questioned Costs - $2,618 Identification of How Questioned Costs Were Computed - Question costs were computed using the total costs identified in our sample that were incurred prior to the grant period. Context - The University completed a transfer of costs between two grant awards that were supporting the same overall program. The samples identified were part of one cost transfer, but the invoice date and related expense was incurred one day prior to the beginning of the grant period. Cause and Effect - The University did not have proper procedures over tracking of expenditures in separate grant cost centers for a R&D program. This required a transfer between the grant programs and resulted in the University adjusting costs from a prior period and charging costs to a grant that was outside the period of performance. Recommendation - The University has implemented a new grant financial and billing software that provides improved controls over operational transactions, including an Award Calendar control that recognizes the award end date in the invoice posting process. The costs described in this finding, which occurred before the new system was implemented have been removed from the existing grant and replaced by other allowable costs that were included in the proper award period. Views of Responsible Officials and Planned Corrective Actions - The University has implemented a new grant financial and billing software that provides improved controls over operational transactions, including an award calendar control that recognizes the award end date in the invoice posting process. The costs described in this finding, which occurred before the new system was implemented, have been removed from the existing grant and replaced by other allowable costs that were incurred within the proper award period.
Assistance Listing, Federal Agency, and Program Name - Research and Development Cluster (R&D) Federal Award Identification Number and Year - R&D - All ALN's Pass through Entity - R&D - Various Finding Type - Significant deficiency Repeat Finding - No Criteria - A non federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass through entity made the federal award that were authorized by the federal awarding agency or pass through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). Condition - Of the 40 samples included in our sample selected for testing in the Research and Development Cluster, the University included two invoices for a total of $2,618 that were incurred prior to the beginning of the grant period. Questioned Costs - $2,618 Identification of How Questioned Costs Were Computed - Question costs were computed using the total costs identified in our sample that were incurred prior to the grant period. Context - The University completed a transfer of costs between two grant awards that were supporting the same overall program. The samples identified were part of one cost transfer, but the invoice date and related expense was incurred one day prior to the beginning of the grant period. Cause and Effect - The University did not have proper procedures over tracking of expenditures in separate grant cost centers for a R&D program. This required a transfer between the grant programs and resulted in the University adjusting costs from a prior period and charging costs to a grant that was outside the period of performance. Recommendation - The University has implemented a new grant financial and billing software that provides improved controls over operational transactions, including an Award Calendar control that recognizes the award end date in the invoice posting process. The costs described in this finding, which occurred before the new system was implemented have been removed from the existing grant and replaced by other allowable costs that were included in the proper award period. Views of Responsible Officials and Planned Corrective Actions - The University has implemented a new grant financial and billing software that provides improved controls over operational transactions, including an award calendar control that recognizes the award end date in the invoice posting process. The costs described in this finding, which occurred before the new system was implemented, have been removed from the existing grant and replaced by other allowable costs that were incurred within the proper award period.
Assistance Listing, Federal Agency, and Program Name - Research and Development Cluster (R&D) Federal Award Identification Number and Year - R&D - All ALN's Pass through Entity - R&D - Various Finding Type - Significant deficiency Repeat Finding - No Criteria - A non federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass through entity made the federal award that were authorized by the federal awarding agency or pass through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). Condition - Of the 40 samples included in our sample selected for testing in the Research and Development Cluster, the University included two invoices for a total of $2,618 that were incurred prior to the beginning of the grant period. Questioned Costs - $2,618 Identification of How Questioned Costs Were Computed - Question costs were computed using the total costs identified in our sample that were incurred prior to the grant period. Context - The University completed a transfer of costs between two grant awards that were supporting the same overall program. The samples identified were part of one cost transfer, but the invoice date and related expense was incurred one day prior to the beginning of the grant period. Cause and Effect - The University did not have proper procedures over tracking of expenditures in separate grant cost centers for a R&D program. This required a transfer between the grant programs and resulted in the University adjusting costs from a prior period and charging costs to a grant that was outside the period of performance. Recommendation - The University has implemented a new grant financial and billing software that provides improved controls over operational transactions, including an Award Calendar control that recognizes the award end date in the invoice posting process. The costs described in this finding, which occurred before the new system was implemented have been removed from the existing grant and replaced by other allowable costs that were included in the proper award period. Views of Responsible Officials and Planned Corrective Actions - The University has implemented a new grant financial and billing software that provides improved controls over operational transactions, including an award calendar control that recognizes the award end date in the invoice posting process. The costs described in this finding, which occurred before the new system was implemented, have been removed from the existing grant and replaced by other allowable costs that were incurred within the proper award period.
Assistance Listing, Federal Agency, and Program Name - Research and Development Cluster (R&D) Federal Award Identification Number and Year - R&D - All ALN's Pass through Entity - R&D - Various Finding Type - Significant deficiency Repeat Finding - No Criteria - A non federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass through entity made the federal award that were authorized by the federal awarding agency or pass through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). Condition - Of the 40 samples included in our sample selected for testing in the Research and Development Cluster, the University included two invoices for a total of $2,618 that were incurred prior to the beginning of the grant period. Questioned Costs - $2,618 Identification of How Questioned Costs Were Computed - Question costs were computed using the total costs identified in our sample that were incurred prior to the grant period. Context - The University completed a transfer of costs between two grant awards that were supporting the same overall program. The samples identified were part of one cost transfer, but the invoice date and related expense was incurred one day prior to the beginning of the grant period. Cause and Effect - The University did not have proper procedures over tracking of expenditures in separate grant cost centers for a R&D program. This required a transfer between the grant programs and resulted in the University adjusting costs from a prior period and charging costs to a grant that was outside the period of performance. Recommendation - The University has implemented a new grant financial and billing software that provides improved controls over operational transactions, including an Award Calendar control that recognizes the award end date in the invoice posting process. The costs described in this finding, which occurred before the new system was implemented have been removed from the existing grant and replaced by other allowable costs that were included in the proper award period. Views of Responsible Officials and Planned Corrective Actions - The University has implemented a new grant financial and billing software that provides improved controls over operational transactions, including an award calendar control that recognizes the award end date in the invoice posting process. The costs described in this finding, which occurred before the new system was implemented, have been removed from the existing grant and replaced by other allowable costs that were incurred within the proper award period.
Assistance Listing, Federal Agency, and Program Name - Research and Development Cluster (R&D) Federal Award Identification Number and Year - R&D - All ALN's Pass through Entity - R&D - Various Finding Type - Significant deficiency Repeat Finding - No Criteria - A non federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass through entity made the federal award that were authorized by the federal awarding agency or pass through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). Condition - Of the 40 samples included in our sample selected for testing in the Research and Development Cluster, the University included two invoices for a total of $2,618 that were incurred prior to the beginning of the grant period. Questioned Costs - $2,618 Identification of How Questioned Costs Were Computed - Question costs were computed using the total costs identified in our sample that were incurred prior to the grant period. Context - The University completed a transfer of costs between two grant awards that were supporting the same overall program. The samples identified were part of one cost transfer, but the invoice date and related expense was incurred one day prior to the beginning of the grant period. Cause and Effect - The University did not have proper procedures over tracking of expenditures in separate grant cost centers for a R&D program. This required a transfer between the grant programs and resulted in the University adjusting costs from a prior period and charging costs to a grant that was outside the period of performance. Recommendation - The University has implemented a new grant financial and billing software that provides improved controls over operational transactions, including an Award Calendar control that recognizes the award end date in the invoice posting process. The costs described in this finding, which occurred before the new system was implemented have been removed from the existing grant and replaced by other allowable costs that were included in the proper award period. Views of Responsible Officials and Planned Corrective Actions - The University has implemented a new grant financial and billing software that provides improved controls over operational transactions, including an award calendar control that recognizes the award end date in the invoice posting process. The costs described in this finding, which occurred before the new system was implemented, have been removed from the existing grant and replaced by other allowable costs that were incurred within the proper award period.
FINDING 2024-004 Subject: Special Education Cluster (IDEA) - Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listings Number: 84.027A Federal Award Numbers and Years (or Other Identifying Numbers): 22611-026-PN01, 23611-026-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation is a member of the Harrison County Exceptional Learners Cooperative (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. As part of sound management of the federal award, the School Corporation was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The School Corporation had not properly designed or implemented such a system to ensure that the Cooperative complied with the Allowable Costs/Cost Principles compliance requirement. Although one employee prepared the claims, and the School Corporation Director of Business Operations/Treasurer approved the claims, the internal controls were not effective to ensure that expenditures were allowed and in conformance with the cost principles. During the audit period, the Cooperative used $1,662 of the School Corporation's allocated funding to purchase snacks for special education students. Such costs are not directly related to providing special education or related services to children with disabilities, and, accordingly, the Indiana State Board of Accounts considers this amount to be questioned costs. The lack of internal controls and noncompliance were isolated to the award numbers identified above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 23 SOUTH HARRISON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 34 CFR 300.202 states in part: "(a) Amounts provided to the LEA under Part B of the Act. . . . (2) Must be used only to pay the excess costs of providing special education and related services to children with disabilities, consistent with paragraph (b) of this section; . . ." Cause The School Corporation's Director of Business Operations/Treasurer, who was also the fiscal agent for the Cooperative, stated that special education funds had historically been used in this manner and had not been questioned previously and that the School Corporation and Cooperative were unaware that this was not an allowable use of funds. Effect Without a proper system of internal controls in place that operated effectively, noncompliance remained undetected resulting in grant expenditures continuing to be spent for unallowable costs. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funds to the School Corporation. Questioned Costs Questioned costs in the amount of $1,662 were identified as noted in the Condition and Context. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls to ensure that expenditures made by the Cooperative from federal awards are allowable per the terms and conditions of the federal award, as well as the Allowable Costs/Cost Principles compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-005 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027A, 84.027X, 84.173A Federal Award Numbers and Years (or Other Identifying Numbers): 21611-026-PN01, 21619-026-PN01, 22611-026-PN01, 22611-026-ARP, 22619-026-PN01, 23619-026-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation is a member of the Harrison County Exceptional Learners Cooperative (Cooperative). During both fiscal years under audit, the Cooperative operated the special education programs and spent federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 21611-026-PN01, 21619-026-PN01, 22611-026-PN01, 22611-026-ARP, 22619-026-PN01, and 23619-026-PN01 grant awards could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. These were the amounts reported to the IDOE. As such, the Indiana State Board of Accounts was unable to identify if the minimum amount per the grant award was expended and properly reported to the IDOE as required. The 22611-026-PN01, 22611-026-ARP, 22619-026-PN01, and 23619-026-PN01 grant awards ended during the audit period. The School Corporation did not have internal controls in place to ensure that the Cooperative fully spent the required nonpublic proportionate share amounts by the end of the grant award. The following schedule shows the total nonpublic proportionate share approved by the IDOE for all member corporations for each grant award compared with the total expenditures posted to the ledger for nonpublic proportionate share. The remaining difference of $13,595.71 is nonpublic proportionate share money not spent by the Cooperative on behalf of member schools by the end of the grant award for all awards ending during the audit period. INDIANA STATE BOARD OF ACCOUNTS 25 SOUTH HARRISON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Grant Award/ IDOE Approved Non- Total Non-Public Proportionate Project No. Public Proportionate Share Share Spent by Cooperative Difference 22611-026-PN01 $ 47,289.04 $ 40,688.11 $ 6,600.93 22611-026-ARP 10,585.73 5,233.83 5,351.90 22619-026-PN01 1,952.05 1,263.05 689.00 23619-026-PN01 3,949.95 2,996.07 953.88 Total $ 63,776.77 $ 50,181.06 $ 13,595.71 The lack of internal controls and noncompliance were isolated to the 21611-026-PN01, 21619-026- PN01, 22611-026-PN01, 22611-026-ARP, 22619-026-PN01, and 23619-026-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." INDIANA STATE BOARD OF ACCOUNTS 26 SOUTH HARRISON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The School Corporation's Director of Business Operations/Treasurer, who was also the fiscal agent for the Cooperative, stated that the amounts attributed to member corporations for nonpublic proportionate share had been calculated for many years using the methodology noted above. She was unaware that such an allocation was not allowed until the issue was identified for the grants ending in fiscal year 2022-2023 and was not able to correct the issue for the grants ending in 2023-2024. The School Corporation had the option to apply for a waiver to allow the unspent portion of nonpublic proportionate share funds to be used for other grants purposes, but she indicated that the School Corporation was told that it would not matter and that the School Corporation would still have been in noncompliance. Effect Without a proper system of internal controls in place that operated effectively, the School Corporation was unable to ensure that the Cooperative properly tracked nonpublic proportionate share expenditures in a manner that would allow us to verify that the Earmarking requirements of the federal award had been met. Due to the lack of proper oversight from the School Corporation, the Cooperative also did not fully spend the required nonpublic proportionate share amounts on behalf of the School Corporation. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are properly accounted for by the Cooperative based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. We also recommend tracking total nonpublic proportionate share by approved grant amounts from the IDOE to ensure proportionate share is being spent by the end of the grant award. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-005 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027A, 84.027X, 84.173A Federal Award Numbers and Years (or Other Identifying Numbers): 21611-026-PN01, 21619-026-PN01, 22611-026-PN01, 22611-026-ARP, 22619-026-PN01, 23619-026-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation is a member of the Harrison County Exceptional Learners Cooperative (Cooperative). During both fiscal years under audit, the Cooperative operated the special education programs and spent federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 21611-026-PN01, 21619-026-PN01, 22611-026-PN01, 22611-026-ARP, 22619-026-PN01, and 23619-026-PN01 grant awards could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. These were the amounts reported to the IDOE. As such, the Indiana State Board of Accounts was unable to identify if the minimum amount per the grant award was expended and properly reported to the IDOE as required. The 22611-026-PN01, 22611-026-ARP, 22619-026-PN01, and 23619-026-PN01 grant awards ended during the audit period. The School Corporation did not have internal controls in place to ensure that the Cooperative fully spent the required nonpublic proportionate share amounts by the end of the grant award. The following schedule shows the total nonpublic proportionate share approved by the IDOE for all member corporations for each grant award compared with the total expenditures posted to the ledger for nonpublic proportionate share. The remaining difference of $13,595.71 is nonpublic proportionate share money not spent by the Cooperative on behalf of member schools by the end of the grant award for all awards ending during the audit period. INDIANA STATE BOARD OF ACCOUNTS 25 SOUTH HARRISON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Grant Award/ IDOE Approved Non- Total Non-Public Proportionate Project No. Public Proportionate Share Share Spent by Cooperative Difference 22611-026-PN01 $ 47,289.04 $ 40,688.11 $ 6,600.93 22611-026-ARP 10,585.73 5,233.83 5,351.90 22619-026-PN01 1,952.05 1,263.05 689.00 23619-026-PN01 3,949.95 2,996.07 953.88 Total $ 63,776.77 $ 50,181.06 $ 13,595.71 The lack of internal controls and noncompliance were isolated to the 21611-026-PN01, 21619-026- PN01, 22611-026-PN01, 22611-026-ARP, 22619-026-PN01, and 23619-026-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." INDIANA STATE BOARD OF ACCOUNTS 26 SOUTH HARRISON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The School Corporation's Director of Business Operations/Treasurer, who was also the fiscal agent for the Cooperative, stated that the amounts attributed to member corporations for nonpublic proportionate share had been calculated for many years using the methodology noted above. She was unaware that such an allocation was not allowed until the issue was identified for the grants ending in fiscal year 2022-2023 and was not able to correct the issue for the grants ending in 2023-2024. The School Corporation had the option to apply for a waiver to allow the unspent portion of nonpublic proportionate share funds to be used for other grants purposes, but she indicated that the School Corporation was told that it would not matter and that the School Corporation would still have been in noncompliance. Effect Without a proper system of internal controls in place that operated effectively, the School Corporation was unable to ensure that the Cooperative properly tracked nonpublic proportionate share expenditures in a manner that would allow us to verify that the Earmarking requirements of the federal award had been met. Due to the lack of proper oversight from the School Corporation, the Cooperative also did not fully spend the required nonpublic proportionate share amounts on behalf of the School Corporation. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are properly accounted for by the Cooperative based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. We also recommend tracking total nonpublic proportionate share by approved grant amounts from the IDOE to ensure proportionate share is being spent by the end of the grant award. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-005 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027A, 84.027X, 84.173A Federal Award Numbers and Years (or Other Identifying Numbers): 21611-026-PN01, 21619-026-PN01, 22611-026-PN01, 22611-026-ARP, 22619-026-PN01, 23619-026-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation is a member of the Harrison County Exceptional Learners Cooperative (Cooperative). During both fiscal years under audit, the Cooperative operated the special education programs and spent federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 21611-026-PN01, 21619-026-PN01, 22611-026-PN01, 22611-026-ARP, 22619-026-PN01, and 23619-026-PN01 grant awards could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. These were the amounts reported to the IDOE. As such, the Indiana State Board of Accounts was unable to identify if the minimum amount per the grant award was expended and properly reported to the IDOE as required. The 22611-026-PN01, 22611-026-ARP, 22619-026-PN01, and 23619-026-PN01 grant awards ended during the audit period. The School Corporation did not have internal controls in place to ensure that the Cooperative fully spent the required nonpublic proportionate share amounts by the end of the grant award. The following schedule shows the total nonpublic proportionate share approved by the IDOE for all member corporations for each grant award compared with the total expenditures posted to the ledger for nonpublic proportionate share. The remaining difference of $13,595.71 is nonpublic proportionate share money not spent by the Cooperative on behalf of member schools by the end of the grant award for all awards ending during the audit period. INDIANA STATE BOARD OF ACCOUNTS 25 SOUTH HARRISON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Grant Award/ IDOE Approved Non- Total Non-Public Proportionate Project No. Public Proportionate Share Share Spent by Cooperative Difference 22611-026-PN01 $ 47,289.04 $ 40,688.11 $ 6,600.93 22611-026-ARP 10,585.73 5,233.83 5,351.90 22619-026-PN01 1,952.05 1,263.05 689.00 23619-026-PN01 3,949.95 2,996.07 953.88 Total $ 63,776.77 $ 50,181.06 $ 13,595.71 The lack of internal controls and noncompliance were isolated to the 21611-026-PN01, 21619-026- PN01, 22611-026-PN01, 22611-026-ARP, 22619-026-PN01, and 23619-026-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." INDIANA STATE BOARD OF ACCOUNTS 26 SOUTH HARRISON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The School Corporation's Director of Business Operations/Treasurer, who was also the fiscal agent for the Cooperative, stated that the amounts attributed to member corporations for nonpublic proportionate share had been calculated for many years using the methodology noted above. She was unaware that such an allocation was not allowed until the issue was identified for the grants ending in fiscal year 2022-2023 and was not able to correct the issue for the grants ending in 2023-2024. The School Corporation had the option to apply for a waiver to allow the unspent portion of nonpublic proportionate share funds to be used for other grants purposes, but she indicated that the School Corporation was told that it would not matter and that the School Corporation would still have been in noncompliance. Effect Without a proper system of internal controls in place that operated effectively, the School Corporation was unable to ensure that the Cooperative properly tracked nonpublic proportionate share expenditures in a manner that would allow us to verify that the Earmarking requirements of the federal award had been met. Due to the lack of proper oversight from the School Corporation, the Cooperative also did not fully spend the required nonpublic proportionate share amounts on behalf of the School Corporation. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are properly accounted for by the Cooperative based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. We also recommend tracking total nonpublic proportionate share by approved grant amounts from the IDOE to ensure proportionate share is being spent by the end of the grant award. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-005 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027A, 84.027X, 84.173A Federal Award Numbers and Years (or Other Identifying Numbers): 21611-026-PN01, 21619-026-PN01, 22611-026-PN01, 22611-026-ARP, 22619-026-PN01, 23619-026-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation is a member of the Harrison County Exceptional Learners Cooperative (Cooperative). During both fiscal years under audit, the Cooperative operated the special education programs and spent federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 21611-026-PN01, 21619-026-PN01, 22611-026-PN01, 22611-026-ARP, 22619-026-PN01, and 23619-026-PN01 grant awards could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. These were the amounts reported to the IDOE. As such, the Indiana State Board of Accounts was unable to identify if the minimum amount per the grant award was expended and properly reported to the IDOE as required. The 22611-026-PN01, 22611-026-ARP, 22619-026-PN01, and 23619-026-PN01 grant awards ended during the audit period. The School Corporation did not have internal controls in place to ensure that the Cooperative fully spent the required nonpublic proportionate share amounts by the end of the grant award. The following schedule shows the total nonpublic proportionate share approved by the IDOE for all member corporations for each grant award compared with the total expenditures posted to the ledger for nonpublic proportionate share. The remaining difference of $13,595.71 is nonpublic proportionate share money not spent by the Cooperative on behalf of member schools by the end of the grant award for all awards ending during the audit period. INDIANA STATE BOARD OF ACCOUNTS 25 SOUTH HARRISON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Grant Award/ IDOE Approved Non- Total Non-Public Proportionate Project No. Public Proportionate Share Share Spent by Cooperative Difference 22611-026-PN01 $ 47,289.04 $ 40,688.11 $ 6,600.93 22611-026-ARP 10,585.73 5,233.83 5,351.90 22619-026-PN01 1,952.05 1,263.05 689.00 23619-026-PN01 3,949.95 2,996.07 953.88 Total $ 63,776.77 $ 50,181.06 $ 13,595.71 The lack of internal controls and noncompliance were isolated to the 21611-026-PN01, 21619-026- PN01, 22611-026-PN01, 22611-026-ARP, 22619-026-PN01, and 23619-026-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." INDIANA STATE BOARD OF ACCOUNTS 26 SOUTH HARRISON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The School Corporation's Director of Business Operations/Treasurer, who was also the fiscal agent for the Cooperative, stated that the amounts attributed to member corporations for nonpublic proportionate share had been calculated for many years using the methodology noted above. She was unaware that such an allocation was not allowed until the issue was identified for the grants ending in fiscal year 2022-2023 and was not able to correct the issue for the grants ending in 2023-2024. The School Corporation had the option to apply for a waiver to allow the unspent portion of nonpublic proportionate share funds to be used for other grants purposes, but she indicated that the School Corporation was told that it would not matter and that the School Corporation would still have been in noncompliance. Effect Without a proper system of internal controls in place that operated effectively, the School Corporation was unable to ensure that the Cooperative properly tracked nonpublic proportionate share expenditures in a manner that would allow us to verify that the Earmarking requirements of the federal award had been met. Due to the lack of proper oversight from the School Corporation, the Cooperative also did not fully spend the required nonpublic proportionate share amounts on behalf of the School Corporation. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are properly accounted for by the Cooperative based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. We also recommend tracking total nonpublic proportionate share by approved grant amounts from the IDOE to ensure proportionate share is being spent by the end of the grant award. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-005 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027A, 84.027X, 84.173A Federal Award Numbers and Years (or Other Identifying Numbers): 21611-026-PN01, 21619-026-PN01, 22611-026-PN01, 22611-026-ARP, 22619-026-PN01, 23619-026-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation is a member of the Harrison County Exceptional Learners Cooperative (Cooperative). During both fiscal years under audit, the Cooperative operated the special education programs and spent federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 21611-026-PN01, 21619-026-PN01, 22611-026-PN01, 22611-026-ARP, 22619-026-PN01, and 23619-026-PN01 grant awards could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. These were the amounts reported to the IDOE. As such, the Indiana State Board of Accounts was unable to identify if the minimum amount per the grant award was expended and properly reported to the IDOE as required. The 22611-026-PN01, 22611-026-ARP, 22619-026-PN01, and 23619-026-PN01 grant awards ended during the audit period. The School Corporation did not have internal controls in place to ensure that the Cooperative fully spent the required nonpublic proportionate share amounts by the end of the grant award. The following schedule shows the total nonpublic proportionate share approved by the IDOE for all member corporations for each grant award compared with the total expenditures posted to the ledger for nonpublic proportionate share. The remaining difference of $13,595.71 is nonpublic proportionate share money not spent by the Cooperative on behalf of member schools by the end of the grant award for all awards ending during the audit period. INDIANA STATE BOARD OF ACCOUNTS 25 SOUTH HARRISON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Grant Award/ IDOE Approved Non- Total Non-Public Proportionate Project No. Public Proportionate Share Share Spent by Cooperative Difference 22611-026-PN01 $ 47,289.04 $ 40,688.11 $ 6,600.93 22611-026-ARP 10,585.73 5,233.83 5,351.90 22619-026-PN01 1,952.05 1,263.05 689.00 23619-026-PN01 3,949.95 2,996.07 953.88 Total $ 63,776.77 $ 50,181.06 $ 13,595.71 The lack of internal controls and noncompliance were isolated to the 21611-026-PN01, 21619-026- PN01, 22611-026-PN01, 22611-026-ARP, 22619-026-PN01, and 23619-026-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." INDIANA STATE BOARD OF ACCOUNTS 26 SOUTH HARRISON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The School Corporation's Director of Business Operations/Treasurer, who was also the fiscal agent for the Cooperative, stated that the amounts attributed to member corporations for nonpublic proportionate share had been calculated for many years using the methodology noted above. She was unaware that such an allocation was not allowed until the issue was identified for the grants ending in fiscal year 2022-2023 and was not able to correct the issue for the grants ending in 2023-2024. The School Corporation had the option to apply for a waiver to allow the unspent portion of nonpublic proportionate share funds to be used for other grants purposes, but she indicated that the School Corporation was told that it would not matter and that the School Corporation would still have been in noncompliance. Effect Without a proper system of internal controls in place that operated effectively, the School Corporation was unable to ensure that the Cooperative properly tracked nonpublic proportionate share expenditures in a manner that would allow us to verify that the Earmarking requirements of the federal award had been met. Due to the lack of proper oversight from the School Corporation, the Cooperative also did not fully spend the required nonpublic proportionate share amounts on behalf of the School Corporation. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are properly accounted for by the Cooperative based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. We also recommend tracking total nonpublic proportionate share by approved grant amounts from the IDOE to ensure proportionate share is being spent by the end of the grant award. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-005 Subject: Special Education Cluster (IDEA) - Period of Performance Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-047-PN01, 22611-047-ARP, 22619-047-PN01, 22619-047-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Period of Performance Audit Findings: Material Weakness, Other Matters Condition and Context During the audit period, the School Corporation was a member of the Cooperative School Services (Cooperative). The Cooperative operated the special education programs and spent the federal money on behalf of its member schools. As the grant agreement was between the Indiana Department of Education and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. For Special Education Cluster awards, funds must be obligated during the 27 months, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. When testing transactions which occurred in the liquidation period for the 22611-047-PN01, 22611-047-ARP, 22619-047-PN01, and 22619-047-ARP grant awards, two exceptions were identified in the initial sample of five transactions. When expanding the sample, a third exception was noted, and it was concluded that it would not be appropriate to examine the remaining 14 transactions. For the above listed awards, costs must be obligated by September 30, 2023. For the three identified exceptions, an initial purchase order was made in September, but the ultimate transaction was paid to a separate vendor than the original purchase order, and this obligation was incurred in November 2023. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 22 NORTH NEWTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.403(h) states: "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)." 34 CFR 76.707 states in part: ". . . If the obligation is for- . . . (d) Performance of work other than personal services. . . . The obligation is made- On the date on which the State or subgrantee makes a binding written commitment to acquire the property. . . ." 2 CFR 200.1 states in part: ". . . Period of Performance means the total estimated time interval between the start of an initial Federal award and the planned end date . . ." 36 CFR 76.709(a) states: "If a State or a subgrantee does not obligate all of its grant or subgrant funds by the end of the fiscal year for which Congress appropriated the funds, it may obligate the remaining funds during a carryover period of one additional fiscal year." Cause Management had established an initial obligation date that occurred in September of the second fiscal year but modified the final vendor for payment. The new obligation occurred after the period in which the School Corporation was allowed to incur the expense. Effect If funds are not obligated by the end of the specified date, the grantor agency is not obligated to reimburse the School Corporation for costs incurred. This may indicate that the funding that was reimbursed, which incurred outside of the period of performance, will need to be repaid to the grantor agency, and the School Corporation will then need to support the costs with nonfederal funding. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that no costs are incurred after the September 30 deadline and to ensure compliance with the grant agreement and the Period of Performance compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-005 Subject: Special Education Cluster (IDEA) - Period of Performance Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-047-PN01, 22611-047-ARP, 22619-047-PN01, 22619-047-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Period of Performance Audit Findings: Material Weakness, Other Matters Condition and Context During the audit period, the School Corporation was a member of the Cooperative School Services (Cooperative). The Cooperative operated the special education programs and spent the federal money on behalf of its member schools. As the grant agreement was between the Indiana Department of Education and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. For Special Education Cluster awards, funds must be obligated during the 27 months, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. When testing transactions which occurred in the liquidation period for the 22611-047-PN01, 22611-047-ARP, 22619-047-PN01, and 22619-047-ARP grant awards, two exceptions were identified in the initial sample of five transactions. When expanding the sample, a third exception was noted, and it was concluded that it would not be appropriate to examine the remaining 14 transactions. For the above listed awards, costs must be obligated by September 30, 2023. For the three identified exceptions, an initial purchase order was made in September, but the ultimate transaction was paid to a separate vendor than the original purchase order, and this obligation was incurred in November 2023. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 22 NORTH NEWTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.403(h) states: "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)." 34 CFR 76.707 states in part: ". . . If the obligation is for- . . . (d) Performance of work other than personal services. . . . The obligation is made- On the date on which the State or subgrantee makes a binding written commitment to acquire the property. . . ." 2 CFR 200.1 states in part: ". . . Period of Performance means the total estimated time interval between the start of an initial Federal award and the planned end date . . ." 36 CFR 76.709(a) states: "If a State or a subgrantee does not obligate all of its grant or subgrant funds by the end of the fiscal year for which Congress appropriated the funds, it may obligate the remaining funds during a carryover period of one additional fiscal year." Cause Management had established an initial obligation date that occurred in September of the second fiscal year but modified the final vendor for payment. The new obligation occurred after the period in which the School Corporation was allowed to incur the expense. Effect If funds are not obligated by the end of the specified date, the grantor agency is not obligated to reimburse the School Corporation for costs incurred. This may indicate that the funding that was reimbursed, which incurred outside of the period of performance, will need to be repaid to the grantor agency, and the School Corporation will then need to support the costs with nonfederal funding. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that no costs are incurred after the September 30 deadline and to ensure compliance with the grant agreement and the Period of Performance compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-005 Subject: Special Education Cluster (IDEA) - Period of Performance Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-047-PN01, 22611-047-ARP, 22619-047-PN01, 22619-047-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Period of Performance Audit Findings: Material Weakness, Other Matters Condition and Context During the audit period, the School Corporation was a member of the Cooperative School Services (Cooperative). The Cooperative operated the special education programs and spent the federal money on behalf of its member schools. As the grant agreement was between the Indiana Department of Education and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. For Special Education Cluster awards, funds must be obligated during the 27 months, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. When testing transactions which occurred in the liquidation period for the 22611-047-PN01, 22611-047-ARP, 22619-047-PN01, and 22619-047-ARP grant awards, two exceptions were identified in the initial sample of five transactions. When expanding the sample, a third exception was noted, and it was concluded that it would not be appropriate to examine the remaining 14 transactions. For the above listed awards, costs must be obligated by September 30, 2023. For the three identified exceptions, an initial purchase order was made in September, but the ultimate transaction was paid to a separate vendor than the original purchase order, and this obligation was incurred in November 2023. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 22 NORTH NEWTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.403(h) states: "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)." 34 CFR 76.707 states in part: ". . . If the obligation is for- . . . (d) Performance of work other than personal services. . . . The obligation is made- On the date on which the State or subgrantee makes a binding written commitment to acquire the property. . . ." 2 CFR 200.1 states in part: ". . . Period of Performance means the total estimated time interval between the start of an initial Federal award and the planned end date . . ." 36 CFR 76.709(a) states: "If a State or a subgrantee does not obligate all of its grant or subgrant funds by the end of the fiscal year for which Congress appropriated the funds, it may obligate the remaining funds during a carryover period of one additional fiscal year." Cause Management had established an initial obligation date that occurred in September of the second fiscal year but modified the final vendor for payment. The new obligation occurred after the period in which the School Corporation was allowed to incur the expense. Effect If funds are not obligated by the end of the specified date, the grantor agency is not obligated to reimburse the School Corporation for costs incurred. This may indicate that the funding that was reimbursed, which incurred outside of the period of performance, will need to be repaid to the grantor agency, and the School Corporation will then need to support the costs with nonfederal funding. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that no costs are incurred after the September 30 deadline and to ensure compliance with the grant agreement and the Period of Performance compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-005 Subject: Special Education Cluster (IDEA) - Period of Performance Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-047-PN01, 22611-047-ARP, 22619-047-PN01, 22619-047-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Period of Performance Audit Findings: Material Weakness, Other Matters Condition and Context During the audit period, the School Corporation was a member of the Cooperative School Services (Cooperative). The Cooperative operated the special education programs and spent the federal money on behalf of its member schools. As the grant agreement was between the Indiana Department of Education and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. For Special Education Cluster awards, funds must be obligated during the 27 months, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. When testing transactions which occurred in the liquidation period for the 22611-047-PN01, 22611-047-ARP, 22619-047-PN01, and 22619-047-ARP grant awards, two exceptions were identified in the initial sample of five transactions. When expanding the sample, a third exception was noted, and it was concluded that it would not be appropriate to examine the remaining 14 transactions. For the above listed awards, costs must be obligated by September 30, 2023. For the three identified exceptions, an initial purchase order was made in September, but the ultimate transaction was paid to a separate vendor than the original purchase order, and this obligation was incurred in November 2023. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 22 NORTH NEWTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.403(h) states: "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)." 34 CFR 76.707 states in part: ". . . If the obligation is for- . . . (d) Performance of work other than personal services. . . . The obligation is made- On the date on which the State or subgrantee makes a binding written commitment to acquire the property. . . ." 2 CFR 200.1 states in part: ". . . Period of Performance means the total estimated time interval between the start of an initial Federal award and the planned end date . . ." 36 CFR 76.709(a) states: "If a State or a subgrantee does not obligate all of its grant or subgrant funds by the end of the fiscal year for which Congress appropriated the funds, it may obligate the remaining funds during a carryover period of one additional fiscal year." Cause Management had established an initial obligation date that occurred in September of the second fiscal year but modified the final vendor for payment. The new obligation occurred after the period in which the School Corporation was allowed to incur the expense. Effect If funds are not obligated by the end of the specified date, the grantor agency is not obligated to reimburse the School Corporation for costs incurred. This may indicate that the funding that was reimbursed, which incurred outside of the period of performance, will need to be repaid to the grantor agency, and the School Corporation will then need to support the costs with nonfederal funding. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that no costs are incurred after the September 30 deadline and to ensure compliance with the grant agreement and the Period of Performance compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-005 Subject: Special Education Cluster (IDEA) - Period of Performance Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-047-PN01, 22611-047-ARP, 22619-047-PN01, 22619-047-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Period of Performance Audit Findings: Material Weakness, Other Matters Condition and Context During the audit period, the School Corporation was a member of the Cooperative School Services (Cooperative). The Cooperative operated the special education programs and spent the federal money on behalf of its member schools. As the grant agreement was between the Indiana Department of Education and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. For Special Education Cluster awards, funds must be obligated during the 27 months, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. When testing transactions which occurred in the liquidation period for the 22611-047-PN01, 22611-047-ARP, 22619-047-PN01, and 22619-047-ARP grant awards, two exceptions were identified in the initial sample of five transactions. When expanding the sample, a third exception was noted, and it was concluded that it would not be appropriate to examine the remaining 14 transactions. For the above listed awards, costs must be obligated by September 30, 2023. For the three identified exceptions, an initial purchase order was made in September, but the ultimate transaction was paid to a separate vendor than the original purchase order, and this obligation was incurred in November 2023. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 22 NORTH NEWTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.403(h) states: "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)." 34 CFR 76.707 states in part: ". . . If the obligation is for- . . . (d) Performance of work other than personal services. . . . The obligation is made- On the date on which the State or subgrantee makes a binding written commitment to acquire the property. . . ." 2 CFR 200.1 states in part: ". . . Period of Performance means the total estimated time interval between the start of an initial Federal award and the planned end date . . ." 36 CFR 76.709(a) states: "If a State or a subgrantee does not obligate all of its grant or subgrant funds by the end of the fiscal year for which Congress appropriated the funds, it may obligate the remaining funds during a carryover period of one additional fiscal year." Cause Management had established an initial obligation date that occurred in September of the second fiscal year but modified the final vendor for payment. The new obligation occurred after the period in which the School Corporation was allowed to incur the expense. Effect If funds are not obligated by the end of the specified date, the grantor agency is not obligated to reimburse the School Corporation for costs incurred. This may indicate that the funding that was reimbursed, which incurred outside of the period of performance, will need to be repaid to the grantor agency, and the School Corporation will then need to support the costs with nonfederal funding. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that no costs are incurred after the September 30 deadline and to ensure compliance with the grant agreement and the Period of Performance compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-005 Subject: Special Education Cluster (IDEA) - Period of Performance Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-047-PN01, 22611-047-ARP, 22619-047-PN01, 22619-047-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Period of Performance Audit Findings: Material Weakness, Other Matters Condition and Context During the audit period, the School Corporation was a member of the Cooperative School Services (Cooperative). The Cooperative operated the special education programs and spent the federal money on behalf of its member schools. As the grant agreement was between the Indiana Department of Education and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. For Special Education Cluster awards, funds must be obligated during the 27 months, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. When testing transactions which occurred in the liquidation period for the 22611-047-PN01, 22611-047-ARP, 22619-047-PN01, and 22619-047-ARP grant awards, two exceptions were identified in the initial sample of five transactions. When expanding the sample, a third exception was noted, and it was concluded that it would not be appropriate to examine the remaining 14 transactions. For the above listed awards, costs must be obligated by September 30, 2023. For the three identified exceptions, an initial purchase order was made in September, but the ultimate transaction was paid to a separate vendor than the original purchase order, and this obligation was incurred in November 2023. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 22 NORTH NEWTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.403(h) states: "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)." 34 CFR 76.707 states in part: ". . . If the obligation is for- . . . (d) Performance of work other than personal services. . . . The obligation is made- On the date on which the State or subgrantee makes a binding written commitment to acquire the property. . . ." 2 CFR 200.1 states in part: ". . . Period of Performance means the total estimated time interval between the start of an initial Federal award and the planned end date . . ." 36 CFR 76.709(a) states: "If a State or a subgrantee does not obligate all of its grant or subgrant funds by the end of the fiscal year for which Congress appropriated the funds, it may obligate the remaining funds during a carryover period of one additional fiscal year." Cause Management had established an initial obligation date that occurred in September of the second fiscal year but modified the final vendor for payment. The new obligation occurred after the period in which the School Corporation was allowed to incur the expense. Effect If funds are not obligated by the end of the specified date, the grantor agency is not obligated to reimburse the School Corporation for costs incurred. This may indicate that the funding that was reimbursed, which incurred outside of the period of performance, will need to be repaid to the grantor agency, and the School Corporation will then need to support the costs with nonfederal funding. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that no costs are incurred after the September 30 deadline and to ensure compliance with the grant agreement and the Period of Performance compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-005 Subject: Special Education Cluster (IDEA) - Period of Performance Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-047-PN01, 22611-047-ARP, 22619-047-PN01, 22619-047-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Period of Performance Audit Findings: Material Weakness, Other Matters Condition and Context During the audit period, the School Corporation was a member of the Cooperative School Services (Cooperative). The Cooperative operated the special education programs and spent the federal money on behalf of its member schools. As the grant agreement was between the Indiana Department of Education and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. For Special Education Cluster awards, funds must be obligated during the 27 months, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. When testing transactions which occurred in the liquidation period for the 22611-047-PN01, 22611-047-ARP, 22619-047-PN01, and 22619-047-ARP grant awards, two exceptions were identified in the initial sample of five transactions. When expanding the sample, a third exception was noted, and it was concluded that it would not be appropriate to examine the remaining 14 transactions. For the above listed awards, costs must be obligated by September 30, 2023. For the three identified exceptions, an initial purchase order was made in September, but the ultimate transaction was paid to a separate vendor than the original purchase order, and this obligation was incurred in November 2023. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 22 NORTH NEWTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.403(h) states: "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)." 34 CFR 76.707 states in part: ". . . If the obligation is for- . . . (d) Performance of work other than personal services. . . . The obligation is made- On the date on which the State or subgrantee makes a binding written commitment to acquire the property. . . ." 2 CFR 200.1 states in part: ". . . Period of Performance means the total estimated time interval between the start of an initial Federal award and the planned end date . . ." 36 CFR 76.709(a) states: "If a State or a subgrantee does not obligate all of its grant or subgrant funds by the end of the fiscal year for which Congress appropriated the funds, it may obligate the remaining funds during a carryover period of one additional fiscal year." Cause Management had established an initial obligation date that occurred in September of the second fiscal year but modified the final vendor for payment. The new obligation occurred after the period in which the School Corporation was allowed to incur the expense. Effect If funds are not obligated by the end of the specified date, the grantor agency is not obligated to reimburse the School Corporation for costs incurred. This may indicate that the funding that was reimbursed, which incurred outside of the period of performance, will need to be repaid to the grantor agency, and the School Corporation will then need to support the costs with nonfederal funding. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that no costs are incurred after the September 30 deadline and to ensure compliance with the grant agreement and the Period of Performance compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-005 Subject: Special Education Cluster (IDEA) - Period of Performance Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-047-PN01, 22611-047-ARP, 22619-047-PN01, 22619-047-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Period of Performance Audit Findings: Material Weakness, Other Matters Condition and Context During the audit period, the School Corporation was a member of the Cooperative School Services (Cooperative). The Cooperative operated the special education programs and spent the federal money on behalf of its member schools. As the grant agreement was between the Indiana Department of Education and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. For Special Education Cluster awards, funds must be obligated during the 27 months, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. When testing transactions which occurred in the liquidation period for the 22611-047-PN01, 22611-047-ARP, 22619-047-PN01, and 22619-047-ARP grant awards, two exceptions were identified in the initial sample of five transactions. When expanding the sample, a third exception was noted, and it was concluded that it would not be appropriate to examine the remaining 14 transactions. For the above listed awards, costs must be obligated by September 30, 2023. For the three identified exceptions, an initial purchase order was made in September, but the ultimate transaction was paid to a separate vendor than the original purchase order, and this obligation was incurred in November 2023. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 22 NORTH NEWTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.403(h) states: "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)." 34 CFR 76.707 states in part: ". . . If the obligation is for- . . . (d) Performance of work other than personal services. . . . The obligation is made- On the date on which the State or subgrantee makes a binding written commitment to acquire the property. . . ." 2 CFR 200.1 states in part: ". . . Period of Performance means the total estimated time interval between the start of an initial Federal award and the planned end date . . ." 36 CFR 76.709(a) states: "If a State or a subgrantee does not obligate all of its grant or subgrant funds by the end of the fiscal year for which Congress appropriated the funds, it may obligate the remaining funds during a carryover period of one additional fiscal year." Cause Management had established an initial obligation date that occurred in September of the second fiscal year but modified the final vendor for payment. The new obligation occurred after the period in which the School Corporation was allowed to incur the expense. Effect If funds are not obligated by the end of the specified date, the grantor agency is not obligated to reimburse the School Corporation for costs incurred. This may indicate that the funding that was reimbursed, which incurred outside of the period of performance, will need to be repaid to the grantor agency, and the School Corporation will then need to support the costs with nonfederal funding. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that no costs are incurred after the September 30 deadline and to ensure compliance with the grant agreement and the Period of Performance compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-004 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listings Number: 84.027 Federal Award Number and Year (or Other Identifying Number): 22611-048-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation is a member of the Ripley-Ohio-Dearborn Special Education Cooperative (Cooperative). During fiscal year 2022-2023, the Cooperative operated the special education programs and spent the federal money for earmarked expenditures on behalf of four of the six member schools. As the grant agreements were between the Indiana Department of Education (IDOE) and the member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 19 SOUTH DEARBORN COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22611-048-PN01 grant award could not be verified for the individual member schools. The nonpublic school share funds for the participating member schools were allocated based on the yearly budget for certified staff instead of time charged to the nonpublic schools. These allocations were the amounts reported to the IDOE. As such, we were unable to identify which expenditures were for each school in order to verify the minimum amount per the grant award was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance was isolated to the 22611-048-PN01 grant award in fiscal year 2022-2023. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause A proper system of internal controls was not designed by management of the School Corporation to ensure time worked by certified staff for nonpublic schools was properly identified. Internal controls in place did not identify that an improper method was used to identify expenditures for nonpublic students with disabilities. INDIANA STATE BOARD OF ACCOUNTS 20 SOUTH DEARBORN COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation was unable to ensure that the proportionate share required to be expended for nonpublic students was met. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are appropriately allocated to the member school based on expenses charged directly on behalf of the member school. Supporting documentation for these expenses should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-004 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listings Number: 84.027 Federal Award Number and Year (or Other Identifying Number): 22611-048-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation is a member of the Ripley-Ohio-Dearborn Special Education Cooperative (Cooperative). During fiscal year 2022-2023, the Cooperative operated the special education programs and spent the federal money for earmarked expenditures on behalf of four of the six member schools. As the grant agreements were between the Indiana Department of Education (IDOE) and the member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 19 SOUTH DEARBORN COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22611-048-PN01 grant award could not be verified for the individual member schools. The nonpublic school share funds for the participating member schools were allocated based on the yearly budget for certified staff instead of time charged to the nonpublic schools. These allocations were the amounts reported to the IDOE. As such, we were unable to identify which expenditures were for each school in order to verify the minimum amount per the grant award was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance was isolated to the 22611-048-PN01 grant award in fiscal year 2022-2023. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause A proper system of internal controls was not designed by management of the School Corporation to ensure time worked by certified staff for nonpublic schools was properly identified. Internal controls in place did not identify that an improper method was used to identify expenditures for nonpublic students with disabilities. INDIANA STATE BOARD OF ACCOUNTS 20 SOUTH DEARBORN COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation was unable to ensure that the proportionate share required to be expended for nonpublic students was met. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are appropriately allocated to the member school based on expenses charged directly on behalf of the member school. Supporting documentation for these expenses should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FA 2024-001 Strengthen Controls over Transfers Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program 10.555 National School Lunch Program COVID-19 – 10.555 – National School Lunch Program Federal Award Number: 245GA324N1199 (Year: 2024) 225GA324N1099 (Year: 2024) Questioned Costs: $803,845.92 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over transfers of Child Nutrition Cluster funds. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential childcare institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $1,235,161.85 were expended and reported on the Pike County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” In addition, provisions included in the Uniform Guidance, Section 200.404 – Reasonable Costs state that “a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm’s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award… (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award’s cost.” Furthermore, provisions included in the Uniform Guidance, Section 200.1 state “Improper payment means: (1) Any payment that should not have been made or that was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements. (v) The term ‘‘payment’’ in this definition means any disbursement or transfer of Federal funds (including a commitment for future payment, such as cash, securities, loans, loan guarantees, and insurance subsidies) to any non-Federal person, non-Federal entity, or Federal employee, that is made by a Federal agency, a Federal contractor, a Federal grantee, or a governmental or other organization administering a Federal program or activity.” Lastly, provisions included in Title 34 CFR Section 210.14(a) state that “school food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved… FNS, or to construct buildings.” Condition: Auditors performed a review of expenditure activity associated with CNC to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed that funds were transferred from the School Nutrition Fund to the General Fund. Monies included in the General Fund can be used for activities beyond the operation or improvement of the food service program. Therefore, transfers totaling $803,845.92 were not considered to be reasonable and necessary for the performance of the CNC programs and deemed unallowable. Questioned Costs: Known questioned costs of $803,845.92 were identified for the transfer of funds that was not incurred for a necessary and reasonable purpose and is considered to be an improper payment. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: At the end of fiscal year 2019 the School District’s School Nutrition Fund was in a budget deficit. When budget deficits occur at a local school system a board approved corrective action plan, or “Deficit Elimination Plan,” is required to be submitted to GaDOE per the Official Code of Georgia (O.C.G.A) 20-2-67 and Chapter 25 of the Financial Management for Georgia Local Units of Administration (FMGLUA). As a part of their Deficit Elimination Plan, the School District transferred funds from the General Fund to the School Nutrition Fund to cover the budget deficit. The School District, then, transferred the funds back to the General Fund from the School Nutrition Fund in fiscal year 2024. School District personnel misunderstood GaDOE guidance regarding the initial transfer and were unaware that the monies could not be returned to the General Fund in a subsequent fiscal year. Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the CNC programs. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable transfer. Recommendation: The School District should review current internal control procedures related to School Nutrition Fund transfers. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures, including transfers, are used for allowable purposes. In addition, the School District should implement a monitoring process to ensure that all expenditure activity is compliant with the School District’s policies and procedures. Views of Responsible Officials: We concur with this finding.
FA 2024-001 Strengthen Controls over Transfers Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program 10.555 National School Lunch Program COVID-19 – 10.555 – National School Lunch Program Federal Award Number: 245GA324N1199 (Year: 2024) 225GA324N1099 (Year: 2024) Questioned Costs: $803,845.92 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over transfers of Child Nutrition Cluster funds. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential childcare institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $1,235,161.85 were expended and reported on the Pike County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” In addition, provisions included in the Uniform Guidance, Section 200.404 – Reasonable Costs state that “a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm’s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award… (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award’s cost.” Furthermore, provisions included in the Uniform Guidance, Section 200.1 state “Improper payment means: (1) Any payment that should not have been made or that was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements. (v) The term ‘‘payment’’ in this definition means any disbursement or transfer of Federal funds (including a commitment for future payment, such as cash, securities, loans, loan guarantees, and insurance subsidies) to any non-Federal person, non-Federal entity, or Federal employee, that is made by a Federal agency, a Federal contractor, a Federal grantee, or a governmental or other organization administering a Federal program or activity.” Lastly, provisions included in Title 34 CFR Section 210.14(a) state that “school food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved… FNS, or to construct buildings.” Condition: Auditors performed a review of expenditure activity associated with CNC to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed that funds were transferred from the School Nutrition Fund to the General Fund. Monies included in the General Fund can be used for activities beyond the operation or improvement of the food service program. Therefore, transfers totaling $803,845.92 were not considered to be reasonable and necessary for the performance of the CNC programs and deemed unallowable. Questioned Costs: Known questioned costs of $803,845.92 were identified for the transfer of funds that was not incurred for a necessary and reasonable purpose and is considered to be an improper payment. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: At the end of fiscal year 2019 the School District’s School Nutrition Fund was in a budget deficit. When budget deficits occur at a local school system a board approved corrective action plan, or “Deficit Elimination Plan,” is required to be submitted to GaDOE per the Official Code of Georgia (O.C.G.A) 20-2-67 and Chapter 25 of the Financial Management for Georgia Local Units of Administration (FMGLUA). As a part of their Deficit Elimination Plan, the School District transferred funds from the General Fund to the School Nutrition Fund to cover the budget deficit. The School District, then, transferred the funds back to the General Fund from the School Nutrition Fund in fiscal year 2024. School District personnel misunderstood GaDOE guidance regarding the initial transfer and were unaware that the monies could not be returned to the General Fund in a subsequent fiscal year. Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the CNC programs. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable transfer. Recommendation: The School District should review current internal control procedures related to School Nutrition Fund transfers. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures, including transfers, are used for allowable purposes. In addition, the School District should implement a monitoring process to ensure that all expenditure activity is compliant with the School District’s policies and procedures. Views of Responsible Officials: We concur with this finding.
FA 2024-001 Strengthen Controls over Transfers Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program 10.555 National School Lunch Program COVID-19 – 10.555 – National School Lunch Program Federal Award Number: 245GA324N1199 (Year: 2024) 225GA324N1099 (Year: 2024) Questioned Costs: $803,845.92 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over transfers of Child Nutrition Cluster funds. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential childcare institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $1,235,161.85 were expended and reported on the Pike County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” In addition, provisions included in the Uniform Guidance, Section 200.404 – Reasonable Costs state that “a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm’s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award… (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award’s cost.” Furthermore, provisions included in the Uniform Guidance, Section 200.1 state “Improper payment means: (1) Any payment that should not have been made or that was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements. (v) The term ‘‘payment’’ in this definition means any disbursement or transfer of Federal funds (including a commitment for future payment, such as cash, securities, loans, loan guarantees, and insurance subsidies) to any non-Federal person, non-Federal entity, or Federal employee, that is made by a Federal agency, a Federal contractor, a Federal grantee, or a governmental or other organization administering a Federal program or activity.” Lastly, provisions included in Title 34 CFR Section 210.14(a) state that “school food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved… FNS, or to construct buildings.” Condition: Auditors performed a review of expenditure activity associated with CNC to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed that funds were transferred from the School Nutrition Fund to the General Fund. Monies included in the General Fund can be used for activities beyond the operation or improvement of the food service program. Therefore, transfers totaling $803,845.92 were not considered to be reasonable and necessary for the performance of the CNC programs and deemed unallowable. Questioned Costs: Known questioned costs of $803,845.92 were identified for the transfer of funds that was not incurred for a necessary and reasonable purpose and is considered to be an improper payment. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: At the end of fiscal year 2019 the School District’s School Nutrition Fund was in a budget deficit. When budget deficits occur at a local school system a board approved corrective action plan, or “Deficit Elimination Plan,” is required to be submitted to GaDOE per the Official Code of Georgia (O.C.G.A) 20-2-67 and Chapter 25 of the Financial Management for Georgia Local Units of Administration (FMGLUA). As a part of their Deficit Elimination Plan, the School District transferred funds from the General Fund to the School Nutrition Fund to cover the budget deficit. The School District, then, transferred the funds back to the General Fund from the School Nutrition Fund in fiscal year 2024. School District personnel misunderstood GaDOE guidance regarding the initial transfer and were unaware that the monies could not be returned to the General Fund in a subsequent fiscal year. Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the CNC programs. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable transfer. Recommendation: The School District should review current internal control procedures related to School Nutrition Fund transfers. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures, including transfers, are used for allowable purposes. In addition, the School District should implement a monitoring process to ensure that all expenditure activity is compliant with the School District’s policies and procedures. Views of Responsible Officials: We concur with this finding.
Finding Number: 2024-001 Significant Deficiency – Internal Controls over Compliance and Compliance of: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Award: Aging Cluster, No. 93.045, Special Programs for the Aging, Title III, Part C, Nutrition Services, and No 93.053, Nutrition Services Incentive Program Federal Agency: Department of Health and Human Services Pass-Through Entity: Monterey County Area Agency on Aging Criteria or Specific Requirement: CFR section 200.403, Factors Affecting Allowability of Costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable Costs, states this standard is met if the cost is incurred specifically for the Federal award and can be distributed in proportions that may be approximated using reasonable methods. Further, if costs benefit two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined, the costs must be allocated on any reasonable documented basis. 2 CFR section 200.430(i), Standards for Documentation of Personnel Expenses, states charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. The method for allocation of non-payroll expenditures between federally funded programs and other programs was based on percentages that had not been updated to reflect current funding sources. Payroll expenditures were allocated based on budget estimates and not upon the actual work performed on various Federal awards and non-federal activities. Cause: The Organization received new funding subject to Uniform Guidance and did not have written internal control policies as required by Uniform Guidance. Processes and procedures were not updated to be in accordance with Uniform Guidance. Effect or Potential Effect: Potential for unallowable activities and unallowable costs. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem. Recommendation: We recommend the Organization document all methods used to allocate expenditures and ensure adequate support is maintained to substantiate allocation calculations. Management should design and implement policies and procedures to ensure payroll expenditures are based on actual time spent on the federal funded programs. View of Responsible Officials: In response to finding number 2024-001, there is no disagreement with the audit finding. As this was a known finding at the beginning of the audit, management has drafted new policies and procedures to ensure payroll expenditures are based on actual time spent of the federal funded programs. Managers will allocate employees’ time based on tasks performed and the amount of time worked on federal award activities. The allocation of non-payroll expenses will be based on percentages of current funding sources. These new policies and procedures will be in full effect throughout fiscal year 2025 and beyond.
Finding Number: 2024-001 Significant Deficiency – Internal Controls over Compliance and Compliance of: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Award: Aging Cluster, No. 93.045, Special Programs for the Aging, Title III, Part C, Nutrition Services, and No 93.053, Nutrition Services Incentive Program Federal Agency: Department of Health and Human Services Pass-Through Entity: Monterey County Area Agency on Aging Criteria or Specific Requirement: CFR section 200.403, Factors Affecting Allowability of Costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable Costs, states this standard is met if the cost is incurred specifically for the Federal award and can be distributed in proportions that may be approximated using reasonable methods. Further, if costs benefit two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined, the costs must be allocated on any reasonable documented basis. 2 CFR section 200.430(i), Standards for Documentation of Personnel Expenses, states charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. The method for allocation of non-payroll expenditures between federally funded programs and other programs was based on percentages that had not been updated to reflect current funding sources. Payroll expenditures were allocated based on budget estimates and not upon the actual work performed on various Federal awards and non-federal activities. Cause: The Organization received new funding subject to Uniform Guidance and did not have written internal control policies as required by Uniform Guidance. Processes and procedures were not updated to be in accordance with Uniform Guidance. Effect or Potential Effect: Potential for unallowable activities and unallowable costs. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem. Recommendation: We recommend the Organization document all methods used to allocate expenditures and ensure adequate support is maintained to substantiate allocation calculations. Management should design and implement policies and procedures to ensure payroll expenditures are based on actual time spent on the federal funded programs. View of Responsible Officials: In response to finding number 2024-001, there is no disagreement with the audit finding. As this was a known finding at the beginning of the audit, management has drafted new policies and procedures to ensure payroll expenditures are based on actual time spent of the federal funded programs. Managers will allocate employees’ time based on tasks performed and the amount of time worked on federal award activities. The allocation of non-payroll expenses will be based on percentages of current funding sources. These new policies and procedures will be in full effect throughout fiscal year 2025 and beyond.
Finding Number: 2024-001 Significant Deficiency – Internal Controls over Compliance and Compliance of: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Award: Aging Cluster, No. 93.045, Special Programs for the Aging, Title III, Part C, Nutrition Services, and No 93.053, Nutrition Services Incentive Program Federal Agency: Department of Health and Human Services Pass-Through Entity: Monterey County Area Agency on Aging Criteria or Specific Requirement: CFR section 200.403, Factors Affecting Allowability of Costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable Costs, states this standard is met if the cost is incurred specifically for the Federal award and can be distributed in proportions that may be approximated using reasonable methods. Further, if costs benefit two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined, the costs must be allocated on any reasonable documented basis. 2 CFR section 200.430(i), Standards for Documentation of Personnel Expenses, states charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. The method for allocation of non-payroll expenditures between federally funded programs and other programs was based on percentages that had not been updated to reflect current funding sources. Payroll expenditures were allocated based on budget estimates and not upon the actual work performed on various Federal awards and non-federal activities. Cause: The Organization received new funding subject to Uniform Guidance and did not have written internal control policies as required by Uniform Guidance. Processes and procedures were not updated to be in accordance with Uniform Guidance. Effect or Potential Effect: Potential for unallowable activities and unallowable costs. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem. Recommendation: We recommend the Organization document all methods used to allocate expenditures and ensure adequate support is maintained to substantiate allocation calculations. Management should design and implement policies and procedures to ensure payroll expenditures are based on actual time spent on the federal funded programs. View of Responsible Officials: In response to finding number 2024-001, there is no disagreement with the audit finding. As this was a known finding at the beginning of the audit, management has drafted new policies and procedures to ensure payroll expenditures are based on actual time spent of the federal funded programs. Managers will allocate employees’ time based on tasks performed and the amount of time worked on federal award activities. The allocation of non-payroll expenses will be based on percentages of current funding sources. These new policies and procedures will be in full effect throughout fiscal year 2025 and beyond.
Finding Number: 2024-001 Significant Deficiency – Internal Controls over Compliance and Compliance of: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Award: Aging Cluster, No. 93.045, Special Programs for the Aging, Title III, Part C, Nutrition Services, and No 93.053, Nutrition Services Incentive Program Federal Agency: Department of Health and Human Services Pass-Through Entity: Monterey County Area Agency on Aging Criteria or Specific Requirement: CFR section 200.403, Factors Affecting Allowability of Costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable Costs, states this standard is met if the cost is incurred specifically for the Federal award and can be distributed in proportions that may be approximated using reasonable methods. Further, if costs benefit two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined, the costs must be allocated on any reasonable documented basis. 2 CFR section 200.430(i), Standards for Documentation of Personnel Expenses, states charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. The method for allocation of non-payroll expenditures between federally funded programs and other programs was based on percentages that had not been updated to reflect current funding sources. Payroll expenditures were allocated based on budget estimates and not upon the actual work performed on various Federal awards and non-federal activities. Cause: The Organization received new funding subject to Uniform Guidance and did not have written internal control policies as required by Uniform Guidance. Processes and procedures were not updated to be in accordance with Uniform Guidance. Effect or Potential Effect: Potential for unallowable activities and unallowable costs. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem. Recommendation: We recommend the Organization document all methods used to allocate expenditures and ensure adequate support is maintained to substantiate allocation calculations. Management should design and implement policies and procedures to ensure payroll expenditures are based on actual time spent on the federal funded programs. View of Responsible Officials: In response to finding number 2024-001, there is no disagreement with the audit finding. As this was a known finding at the beginning of the audit, management has drafted new policies and procedures to ensure payroll expenditures are based on actual time spent of the federal funded programs. Managers will allocate employees’ time based on tasks performed and the amount of time worked on federal award activities. The allocation of non-payroll expenses will be based on percentages of current funding sources. These new policies and procedures will be in full effect throughout fiscal year 2025 and beyond.
Finding Number: 2024-001 Significant Deficiency – Internal Controls over Compliance and Compliance of: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Award: Aging Cluster, No. 93.045, Special Programs for the Aging, Title III, Part C, Nutrition Services, and No 93.053, Nutrition Services Incentive Program Federal Agency: Department of Health and Human Services Pass-Through Entity: Monterey County Area Agency on Aging Criteria or Specific Requirement: CFR section 200.403, Factors Affecting Allowability of Costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable Costs, states this standard is met if the cost is incurred specifically for the Federal award and can be distributed in proportions that may be approximated using reasonable methods. Further, if costs benefit two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined, the costs must be allocated on any reasonable documented basis. 2 CFR section 200.430(i), Standards for Documentation of Personnel Expenses, states charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. The method for allocation of non-payroll expenditures between federally funded programs and other programs was based on percentages that had not been updated to reflect current funding sources. Payroll expenditures were allocated based on budget estimates and not upon the actual work performed on various Federal awards and non-federal activities. Cause: The Organization received new funding subject to Uniform Guidance and did not have written internal control policies as required by Uniform Guidance. Processes and procedures were not updated to be in accordance with Uniform Guidance. Effect or Potential Effect: Potential for unallowable activities and unallowable costs. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem. Recommendation: We recommend the Organization document all methods used to allocate expenditures and ensure adequate support is maintained to substantiate allocation calculations. Management should design and implement policies and procedures to ensure payroll expenditures are based on actual time spent on the federal funded programs. View of Responsible Officials: In response to finding number 2024-001, there is no disagreement with the audit finding. As this was a known finding at the beginning of the audit, management has drafted new policies and procedures to ensure payroll expenditures are based on actual time spent of the federal funded programs. Managers will allocate employees’ time based on tasks performed and the amount of time worked on federal award activities. The allocation of non-payroll expenses will be based on percentages of current funding sources. These new policies and procedures will be in full effect throughout fiscal year 2025 and beyond.
Finding Number: 2024-001 Significant Deficiency – Internal Controls over Compliance and Compliance of: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Award: Aging Cluster, No. 93.045, Special Programs for the Aging, Title III, Part C, Nutrition Services, and No 93.053, Nutrition Services Incentive Program Federal Agency: Department of Health and Human Services Pass-Through Entity: Monterey County Area Agency on Aging Criteria or Specific Requirement: CFR section 200.403, Factors Affecting Allowability of Costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable Costs, states this standard is met if the cost is incurred specifically for the Federal award and can be distributed in proportions that may be approximated using reasonable methods. Further, if costs benefit two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined, the costs must be allocated on any reasonable documented basis. 2 CFR section 200.430(i), Standards for Documentation of Personnel Expenses, states charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. The method for allocation of non-payroll expenditures between federally funded programs and other programs was based on percentages that had not been updated to reflect current funding sources. Payroll expenditures were allocated based on budget estimates and not upon the actual work performed on various Federal awards and non-federal activities. Cause: The Organization received new funding subject to Uniform Guidance and did not have written internal control policies as required by Uniform Guidance. Processes and procedures were not updated to be in accordance with Uniform Guidance. Effect or Potential Effect: Potential for unallowable activities and unallowable costs. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem. Recommendation: We recommend the Organization document all methods used to allocate expenditures and ensure adequate support is maintained to substantiate allocation calculations. Management should design and implement policies and procedures to ensure payroll expenditures are based on actual time spent on the federal funded programs. View of Responsible Officials: In response to finding number 2024-001, there is no disagreement with the audit finding. As this was a known finding at the beginning of the audit, management has drafted new policies and procedures to ensure payroll expenditures are based on actual time spent of the federal funded programs. Managers will allocate employees’ time based on tasks performed and the amount of time worked on federal award activities. The allocation of non-payroll expenses will be based on percentages of current funding sources. These new policies and procedures will be in full effect throughout fiscal year 2025 and beyond.
(2024-022) Title: Internal control over SNAP eligibility determinations and benefit calculations needs improvement Prior Year Findings: See schedule of Findings and Questioned costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Eligibility Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.551 $12,335 Likely Questioned Costs: Undeterminable; incorrectly calculated Supplemental Nutrition Assistance Program (SNAP) benefits may result in overpayments or underpayments to clients. Since there are known overpayments and underpayments in our sample, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.10; 7 CFR 273.2 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. All State agencies must sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing and transmitting information concerning SNAP. A SNAP application form must be signed to establish a filing date and to determine the State agency’s deadline for acting on the form. The State agency shall not certify a household without a signed form. Condition: SNAP is administered by the Office for Family Independence (OFI) and provides monthly benefits to eligible households to purchase nutritious foods. OFI is required by Federal program regulations to utilize an automated information system for SNAP. The information system must maintain all case file information necessary to properly process eligibility determinations and benefit calculations. The Automated Client Eligibility System (ACES) is the information system used by OFI to automate SNAP operations. ACES relies on the maintenance of a complex framework of system results to make eligibility determinations and related benefit calculations. The Office of the State Auditor (OSA) tested 60 household monthly benefit payments to verify the accuracy of SNAP operations utilizing ACES, and identified the following: • Nine overpayments of monthly SNAP benefits, including: o four benefit overpayments totaling $5,806; the Department was unable to provide documentation to support the maximum income limit requirement. o two benefit overpayments totaling $2,714 where the clients’ application for benefit renewal did not include SNAP; however, the households were open to SNAP benefits. o two benefit overpayments totaling $2,349 due to manual processing errors. o one benefit overpayment totaling $1,041; the client’s signature on their application was missing, which makes them ineligible for SNAP benefits. • One $395 underpayment of a monthly SNAP benefit due to manual processing errors • One household with an overpayment of $425 and an underpayment of $69 due to manual processing errors • Three households received accurate monthly benefit payments; however, asset and expense information were not accurately reflected within ACES. OSA selected a non-statistical random sample. The Department does not have adequate policies and procedures in place to ensure that ACES case file modifications, whether manual or system interfaced, that result in adjustments to previously issued monthly SNAP benefits are appropriately processed. This includes a recalculation of previously issued benefits when case file modifications are processed, establishment of corresponding overpayments or underpayments, and related follow-up actions with households. Context: In fiscal year 2024, the State provided approximately 129,000 SNAP clients with $371.4 million in Federal benefits. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Known questioned costs • Potential future questioned costs and disallowances • Benefits may be incorrectly calculated, resulting in households being underpaid and/or overpaid. • Noncompliance with Federal regulations Recommendation: We recommend that the Department implement additional policies and procedures to ensure that: • case information entered into ACES is accurate; • automated eligibility determinations and benefit calculations are processed in accordance with Federal regulations; and • recalculations of previously issued benefits and related follow-up actions occur when case file modifications are retroactive. Corrective Action Plan: See F-13 Management’s Response: The Department partially agrees with this finding. Of the 60 cases reviewed, 13 (21.67%) had errors in calculations or documentation. The Department is confident that the staff followed correct procedures in providing the TANF funded resource guide in the first four cases cited. The errors in these cases were merely a lack of documentation. The Department agrees with the calculation errors in the following 7 cases (11.67% of the 60 reviewed). The Department has developed a corrective action plan to ensure compliance moving forward. Contact: Michael E. Downs, Senior Program Manager, SNAP, DHHS, 207-592-4850 Auditor’s Concluding Remarks: The Department states that they are “confident that the staff followed correct procedures” for the four benefit overpayments totaling $5,806 and that “errors in these cases were merely a lack of documentation;” however, the Department cannot substantiate that staff followed established procedures if there is a lack of documentation to support adherence to procedures. The finding remains as stated. (State Number: 24-1108-04)
(2024-022) Title: Internal control over SNAP eligibility determinations and benefit calculations needs improvement Prior Year Findings: See schedule of Findings and Questioned costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Eligibility Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.551 $12,335 Likely Questioned Costs: Undeterminable; incorrectly calculated Supplemental Nutrition Assistance Program (SNAP) benefits may result in overpayments or underpayments to clients. Since there are known overpayments and underpayments in our sample, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.10; 7 CFR 273.2 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. All State agencies must sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing and transmitting information concerning SNAP. A SNAP application form must be signed to establish a filing date and to determine the State agency’s deadline for acting on the form. The State agency shall not certify a household without a signed form. Condition: SNAP is administered by the Office for Family Independence (OFI) and provides monthly benefits to eligible households to purchase nutritious foods. OFI is required by Federal program regulations to utilize an automated information system for SNAP. The information system must maintain all case file information necessary to properly process eligibility determinations and benefit calculations. The Automated Client Eligibility System (ACES) is the information system used by OFI to automate SNAP operations. ACES relies on the maintenance of a complex framework of system results to make eligibility determinations and related benefit calculations. The Office of the State Auditor (OSA) tested 60 household monthly benefit payments to verify the accuracy of SNAP operations utilizing ACES, and identified the following: • Nine overpayments of monthly SNAP benefits, including: o four benefit overpayments totaling $5,806; the Department was unable to provide documentation to support the maximum income limit requirement. o two benefit overpayments totaling $2,714 where the clients’ application for benefit renewal did not include SNAP; however, the households were open to SNAP benefits. o two benefit overpayments totaling $2,349 due to manual processing errors. o one benefit overpayment totaling $1,041; the client’s signature on their application was missing, which makes them ineligible for SNAP benefits. • One $395 underpayment of a monthly SNAP benefit due to manual processing errors • One household with an overpayment of $425 and an underpayment of $69 due to manual processing errors • Three households received accurate monthly benefit payments; however, asset and expense information were not accurately reflected within ACES. OSA selected a non-statistical random sample. The Department does not have adequate policies and procedures in place to ensure that ACES case file modifications, whether manual or system interfaced, that result in adjustments to previously issued monthly SNAP benefits are appropriately processed. This includes a recalculation of previously issued benefits when case file modifications are processed, establishment of corresponding overpayments or underpayments, and related follow-up actions with households. Context: In fiscal year 2024, the State provided approximately 129,000 SNAP clients with $371.4 million in Federal benefits. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Known questioned costs • Potential future questioned costs and disallowances • Benefits may be incorrectly calculated, resulting in households being underpaid and/or overpaid. • Noncompliance with Federal regulations Recommendation: We recommend that the Department implement additional policies and procedures to ensure that: • case information entered into ACES is accurate; • automated eligibility determinations and benefit calculations are processed in accordance with Federal regulations; and • recalculations of previously issued benefits and related follow-up actions occur when case file modifications are retroactive. Corrective Action Plan: See F-13 Management’s Response: The Department partially agrees with this finding. Of the 60 cases reviewed, 13 (21.67%) had errors in calculations or documentation. The Department is confident that the staff followed correct procedures in providing the TANF funded resource guide in the first four cases cited. The errors in these cases were merely a lack of documentation. The Department agrees with the calculation errors in the following 7 cases (11.67% of the 60 reviewed). The Department has developed a corrective action plan to ensure compliance moving forward. Contact: Michael E. Downs, Senior Program Manager, SNAP, DHHS, 207-592-4850 Auditor’s Concluding Remarks: The Department states that they are “confident that the staff followed correct procedures” for the four benefit overpayments totaling $5,806 and that “errors in these cases were merely a lack of documentation;” however, the Department cannot substantiate that staff followed established procedures if there is a lack of documentation to support adherence to procedures. The finding remains as stated. (State Number: 24-1108-04)
(2024-023) Title: Internal control over SNAP deceased client cases needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.551 $11,080 Likely Questioned Costs: Undeterminable; the Office of the State Auditor (OSA) tested a sample of cases where Supplemental Nutrition Assistance Program (SNAP) benefits were issued after the client’s date of death (DOD). Issuance of benefits to a deceased client does not necessarily result in unallowable program costs, as the issued benefits may not be expended; therefore, an error rate cannot be applied to the population and a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.8 and .14 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. State agency action on information items about recipient households shall include review of information and comparison of it to case record information. State agencies must initiate and pursue actions on recipient households within 45 days of the receipt of the information items. States shall establish a system to verify and ensure that benefits are not issued to individuals who are deceased. Condition: The Office for Family Independence (OFI) manages the Automated Client Eligibility System (ACES) used to determine eligibility for Federal assistance programs, including SNAP. Information maintained in ACES is relied upon by OFI for determining monthly SNAP benefits issued to client Electronic Benefit Transaction (EBT) cards. OFI relies on numerous data sources for identifying and providing client DOD information for input into ACES, including monthly data exchanges with the Maine Center for Disease Control & Prevention (MeCDC) Vital Records, which includes Social Security Administration data. Federal program regulations require OFI to act on client cases within 45 days of receipt of DOD information. This includes review and comparison of DOD information to ACES case file information, and suspension of program participation and related benefits as warranted. OFI policies for SNAP require deactivation of the client’s EBT card as well as expungement of authorized benefits from the EBT card. If activity occurred on the client’s EBT card subsequent to the DOD, the case must be reported as potential fraud and referred for investigation. OSA obtained DOD information from MeCDC Vital Records and compared it to clients who received SNAP benefits during fiscal year 2024. OSA identified 214 cases where SNAP benefits were issued more than 75 days following the client’s DOD; this benchmark was applied to denote the 45-day Federal program regulation related to monthly receipt of DOD information. OSA tested 43 of these SNAP cases and identified the following: • 16 single member household clients had EBT card purchase activity after DOD. Of these 16 clients: o 14 clients had transaction activity after DOD that occurred in fiscal year 2024, resulting in unallowable costs totaling $11,080. Additional issues were noted for six of the 14 clients, as follows: • Two clients were not identified as potential fraud in the ACES case file. As a result, they were not referred for investigation as required by OFI policies. • One client’s EBT card was not deactivated upon receipt of DOD information. • Two clients’ benefits were not expunged upon receipt of DOD information as required by OFI policies; benefits were only expunged by the system-automated process based on inactivity after 274 days. • One client’s case remained open 91 days after OFI was notified of the client’s DOD, resulting in three months of unauthorized SNAP benefit issuances. o two clients had transaction activity that occurred subsequent to fiscal year 2024. Of the two clients, one client was not identified as potential fraud in the ACES case file. As a result, they were not referred for investigation as required by OFI policies. • Eight clients with no EBT card purchase activity after DOD had additional issues noted, as follows: o For six clients, the EBT card was never deactivated; therefore, benefits remained open and available for use 83 to 112 days after DOD. o One client’s benefits were not expunged upon receipt of DOD information as required by OFI policies; benefits were only expunged by the system-automated process based on inactivity after 274 days. o One client’s EBT card was never deactivated and benefits were not expunged upon receipt of DOD information as required by OFI policies. OSA selected a non-statistical random sample. Context: In fiscal year 2024, the State provided approximately 129,000 SNAP clients with $371.4 million in Federal benefits. Of the 129,000 SNAP clients, 1,789 had a DOD in fiscal year 2024. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Benefits issued to deceased clients may result in unauthorized EBT card purchase activity. • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure that DOD information is received, reviewed, and updated in ACES on a more frequent basis to prevent unauthorized SNAP benefit issuances and EBT card purchase activity. In addition, we recommend that the Department review all client cases noted in the Condition of this finding to ensure that: • ACES case file DOD information is accurate; • SNAP benefits are expunged and EBT cards are deactivated in accordance with existing policies; • cases are identified as potential fraud and referred for investigation as warranted; and • unallowable costs are identified and reported to Federal oversight agencies and required recoupment activities are pursued. Corrective Action Plan: See F-13 Management’s Response: The Department partially agrees with this finding. In most cases cited the Department took appropriate action within the 45 days required by federal regulation related to IEVS information or within the 10-12-10 standard required for community complaints depending on the source of the information. The Department recognizes that some actions were lacking or could have been taken more quickly. A dedicated MaineCare Program Integrity Team is now working on the IEVS reports related to deceased members and has detailed SOPs for death matches. Based on the data improvements, this finding may continue to a small degree in the SFY 2025 audit and should be cleaned up in the SFY 2026 audit. Contact: Michael E. Downs, Senior Program Manager, SNAP, DHHS, 207-592-4850 Auditor’s Concluding Remarks: The exceptions noted in the Condition were identified within a sample of SNAP cases where benefits were issued more than 75 days following the client’s DOD. The 75-day benchmark was applied to include considerations of the monthly (30 day) receipt and the Federal program regulation (45 day). These cases demonstrate that the Department did not take appropriate action as required by Federal regulations in all exceptions identified. The finding remains as stated. (State Number: 24-1108-03)
(2024-023) Title: Internal control over SNAP deceased client cases needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.551 $11,080 Likely Questioned Costs: Undeterminable; the Office of the State Auditor (OSA) tested a sample of cases where Supplemental Nutrition Assistance Program (SNAP) benefits were issued after the client’s date of death (DOD). Issuance of benefits to a deceased client does not necessarily result in unallowable program costs, as the issued benefits may not be expended; therefore, an error rate cannot be applied to the population and a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.8 and .14 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. State agency action on information items about recipient households shall include review of information and comparison of it to case record information. State agencies must initiate and pursue actions on recipient households within 45 days of the receipt of the information items. States shall establish a system to verify and ensure that benefits are not issued to individuals who are deceased. Condition: The Office for Family Independence (OFI) manages the Automated Client Eligibility System (ACES) used to determine eligibility for Federal assistance programs, including SNAP. Information maintained in ACES is relied upon by OFI for determining monthly SNAP benefits issued to client Electronic Benefit Transaction (EBT) cards. OFI relies on numerous data sources for identifying and providing client DOD information for input into ACES, including monthly data exchanges with the Maine Center for Disease Control & Prevention (MeCDC) Vital Records, which includes Social Security Administration data. Federal program regulations require OFI to act on client cases within 45 days of receipt of DOD information. This includes review and comparison of DOD information to ACES case file information, and suspension of program participation and related benefits as warranted. OFI policies for SNAP require deactivation of the client’s EBT card as well as expungement of authorized benefits from the EBT card. If activity occurred on the client’s EBT card subsequent to the DOD, the case must be reported as potential fraud and referred for investigation. OSA obtained DOD information from MeCDC Vital Records and compared it to clients who received SNAP benefits during fiscal year 2024. OSA identified 214 cases where SNAP benefits were issued more than 75 days following the client’s DOD; this benchmark was applied to denote the 45-day Federal program regulation related to monthly receipt of DOD information. OSA tested 43 of these SNAP cases and identified the following: • 16 single member household clients had EBT card purchase activity after DOD. Of these 16 clients: o 14 clients had transaction activity after DOD that occurred in fiscal year 2024, resulting in unallowable costs totaling $11,080. Additional issues were noted for six of the 14 clients, as follows: • Two clients were not identified as potential fraud in the ACES case file. As a result, they were not referred for investigation as required by OFI policies. • One client’s EBT card was not deactivated upon receipt of DOD information. • Two clients’ benefits were not expunged upon receipt of DOD information as required by OFI policies; benefits were only expunged by the system-automated process based on inactivity after 274 days. • One client’s case remained open 91 days after OFI was notified of the client’s DOD, resulting in three months of unauthorized SNAP benefit issuances. o two clients had transaction activity that occurred subsequent to fiscal year 2024. Of the two clients, one client was not identified as potential fraud in the ACES case file. As a result, they were not referred for investigation as required by OFI policies. • Eight clients with no EBT card purchase activity after DOD had additional issues noted, as follows: o For six clients, the EBT card was never deactivated; therefore, benefits remained open and available for use 83 to 112 days after DOD. o One client’s benefits were not expunged upon receipt of DOD information as required by OFI policies; benefits were only expunged by the system-automated process based on inactivity after 274 days. o One client’s EBT card was never deactivated and benefits were not expunged upon receipt of DOD information as required by OFI policies. OSA selected a non-statistical random sample. Context: In fiscal year 2024, the State provided approximately 129,000 SNAP clients with $371.4 million in Federal benefits. Of the 129,000 SNAP clients, 1,789 had a DOD in fiscal year 2024. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Benefits issued to deceased clients may result in unauthorized EBT card purchase activity. • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure that DOD information is received, reviewed, and updated in ACES on a more frequent basis to prevent unauthorized SNAP benefit issuances and EBT card purchase activity. In addition, we recommend that the Department review all client cases noted in the Condition of this finding to ensure that: • ACES case file DOD information is accurate; • SNAP benefits are expunged and EBT cards are deactivated in accordance with existing policies; • cases are identified as potential fraud and referred for investigation as warranted; and • unallowable costs are identified and reported to Federal oversight agencies and required recoupment activities are pursued. Corrective Action Plan: See F-13 Management’s Response: The Department partially agrees with this finding. In most cases cited the Department took appropriate action within the 45 days required by federal regulation related to IEVS information or within the 10-12-10 standard required for community complaints depending on the source of the information. The Department recognizes that some actions were lacking or could have been taken more quickly. A dedicated MaineCare Program Integrity Team is now working on the IEVS reports related to deceased members and has detailed SOPs for death matches. Based on the data improvements, this finding may continue to a small degree in the SFY 2025 audit and should be cleaned up in the SFY 2026 audit. Contact: Michael E. Downs, Senior Program Manager, SNAP, DHHS, 207-592-4850 Auditor’s Concluding Remarks: The exceptions noted in the Condition were identified within a sample of SNAP cases where benefits were issued more than 75 days following the client’s DOD. The 75-day benchmark was applied to include considerations of the monthly (30 day) receipt and the Federal program regulation (45 day). These cases demonstrate that the Department did not take appropriate action as required by Federal regulations in all exceptions identified. The finding remains as stated. (State Number: 24-1108-03)
(2024-024) Title: Internal control over automated SNAP eligibility certification periods needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Eligibility Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.551 $3,973 Likely Questioned Costs: Undeterminable; incorrectly suspending Supplemental Nutrition Assistance Program (SNAP) benefits may result in overpayments or underpayments to households. Since there are known overpayments and underpayments in our sample, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.10; 7 CFR 273.10 and .12 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. All State agencies must sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing and transmitting information concerning SNAP, which includes automatic cutoff of participation for households which have not been recertified at the end of their certification period. SNAP households must be assigned eligibility certification periods of at least six months unless the household is classified as exempt based on program regulations. The State agency must have at least one contact with each SNAP household every 12 months. Submission of periodic eligibility reports is required by non-exempt households. Non-exempt households that are certified for longer than six months must file a periodic report between four months and six months, as required by the State agency. In addition, the State agency must not require the submission of periodic reports by households certified for 12 months or less in which all adult members are elderly or have a disability and no earned income. Condition: SNAP is administered by the Office for Family Independence (OFI) and provides monthly benefits to eligible households to purchase nutritious foods. OFI is required by Federal program regulations to utilize an automated information system for SNAP. The information system must maintain all case file information necessary to properly process eligibility determinations and benefit computations. The Automated Client Eligibility System (ACES) is the information system used by OFI to automate SNAP operations. ACES relies on the maintenance of a complex framework of system rules to make eligibility determinations, including notification letters to clients when 6-month reports and 12-month redeterminations of eligibility are required. All SNAP households, except for elderly and disabled cases with no earned income, are required to submit 6-month reports. In addition, all SNAP households must undergo an annual redetermination of eligibility. Each household’s recertification requirements are indicated by date fields in the ACES case file. If a required report or redetermination is not completed by the date indicated in the applicable field, the case’s monthly SNAP benefit is automatically suspended by the system. The Office of the State Auditor (OSA) tested a sample of 20 cases automatically suspended for failure to complete a required review in fiscal year 2024 to verify the accuracy of automated SNAP operations utilizing ACES. In 14 of the 20 cases tested, OSA identified that ACES incorrectly suspended benefits, as follows: • One case was suspended four months after the 6-month reporting requirement, resulting in a known overpayment of $92. • One case was suspended one month after the annual redetermination requirement, resulting in a known overpayment of $535. • Six cases were underpaid SNAP benefits totaling $4,424 because of incorrect benefit suspensions, ranging from one to five months prior to the applicable 6-month reporting requirement. • Five cases were underpaid SNAP benefits totaling $4,206 because of incorrect benefit suspensions, ranging from five to ten months prior to the annual redetermination requirement. • One case was never required to submit 6-month reports or annual redeterminations since commencement of SNAP benefits in July 2022. This resulted in overpayments for the entirety of fiscal year 2024 totaling $3,346. The Department identified the overpayment in July 2024 but has not recouped it yet, thus OSA is questioning costs totaling $3,346. OSA selected a non-statistical random sample. Context: In fiscal year 2024, the State provided approximately 129,000 SNAP clients with $371.4 million in Federal benefits. 213 clients were automatically suspended by ACES during fiscal year 2024 due to recertification or redetermination requirements. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight • Automated SNAP eligibility system recertification and suspension criteria was not configured in accordance with Federal regulations. Effect: • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations • Benefits may be incorrectly suspended, resulting in households being underpaid or overpaid. Recommendation: We recommend that the Department enhance policies and procedures to ensure that automated SNAP eligibility certification periods and related ACES case file fields are properly configured to process benefits in accordance with Federal regulations. In addition, we recommend that the Department identify underpayments and/or overpayments resulting from recertification period errors and take action as warranted. Corrective Action Plan: See F-14 Management’s Response: The Department agrees with the factual conclusions and calculations. The Department believes the necessary corrective action has been taken and will be reflected in the SFY25 audit. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 (State Number: 24-1108-02)
(2024-024) Title: Internal control over automated SNAP eligibility certification periods needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Eligibility Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.551 $3,973 Likely Questioned Costs: Undeterminable; incorrectly suspending Supplemental Nutrition Assistance Program (SNAP) benefits may result in overpayments or underpayments to households. Since there are known overpayments and underpayments in our sample, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.10; 7 CFR 273.10 and .12 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. All State agencies must sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing and transmitting information concerning SNAP, which includes automatic cutoff of participation for households which have not been recertified at the end of their certification period. SNAP households must be assigned eligibility certification periods of at least six months unless the household is classified as exempt based on program regulations. The State agency must have at least one contact with each SNAP household every 12 months. Submission of periodic eligibility reports is required by non-exempt households. Non-exempt households that are certified for longer than six months must file a periodic report between four months and six months, as required by the State agency. In addition, the State agency must not require the submission of periodic reports by households certified for 12 months or less in which all adult members are elderly or have a disability and no earned income. Condition: SNAP is administered by the Office for Family Independence (OFI) and provides monthly benefits to eligible households to purchase nutritious foods. OFI is required by Federal program regulations to utilize an automated information system for SNAP. The information system must maintain all case file information necessary to properly process eligibility determinations and benefit computations. The Automated Client Eligibility System (ACES) is the information system used by OFI to automate SNAP operations. ACES relies on the maintenance of a complex framework of system rules to make eligibility determinations, including notification letters to clients when 6-month reports and 12-month redeterminations of eligibility are required. All SNAP households, except for elderly and disabled cases with no earned income, are required to submit 6-month reports. In addition, all SNAP households must undergo an annual redetermination of eligibility. Each household’s recertification requirements are indicated by date fields in the ACES case file. If a required report or redetermination is not completed by the date indicated in the applicable field, the case’s monthly SNAP benefit is automatically suspended by the system. The Office of the State Auditor (OSA) tested a sample of 20 cases automatically suspended for failure to complete a required review in fiscal year 2024 to verify the accuracy of automated SNAP operations utilizing ACES. In 14 of the 20 cases tested, OSA identified that ACES incorrectly suspended benefits, as follows: • One case was suspended four months after the 6-month reporting requirement, resulting in a known overpayment of $92. • One case was suspended one month after the annual redetermination requirement, resulting in a known overpayment of $535. • Six cases were underpaid SNAP benefits totaling $4,424 because of incorrect benefit suspensions, ranging from one to five months prior to the applicable 6-month reporting requirement. • Five cases were underpaid SNAP benefits totaling $4,206 because of incorrect benefit suspensions, ranging from five to ten months prior to the annual redetermination requirement. • One case was never required to submit 6-month reports or annual redeterminations since commencement of SNAP benefits in July 2022. This resulted in overpayments for the entirety of fiscal year 2024 totaling $3,346. The Department identified the overpayment in July 2024 but has not recouped it yet, thus OSA is questioning costs totaling $3,346. OSA selected a non-statistical random sample. Context: In fiscal year 2024, the State provided approximately 129,000 SNAP clients with $371.4 million in Federal benefits. 213 clients were automatically suspended by ACES during fiscal year 2024 due to recertification or redetermination requirements. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight • Automated SNAP eligibility system recertification and suspension criteria was not configured in accordance with Federal regulations. Effect: • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations • Benefits may be incorrectly suspended, resulting in households being underpaid or overpaid. Recommendation: We recommend that the Department enhance policies and procedures to ensure that automated SNAP eligibility certification periods and related ACES case file fields are properly configured to process benefits in accordance with Federal regulations. In addition, we recommend that the Department identify underpayments and/or overpayments resulting from recertification period errors and take action as warranted. Corrective Action Plan: See F-14 Management’s Response: The Department agrees with the factual conclusions and calculations. The Department believes the necessary corrective action has been taken and will be reflected in the SFY25 audit. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 (State Number: 24-1108-02)
(2024-031) Title: Internal control over CNC claim reimbursements needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Reporting Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.555 $1,605 ALN 10.582 $9,535 ALN 10.559 $117,259 Likely Questioned Costs: Undeterminable; due to the variety of site types in the test population and varied meal claim counts, an error rate cannot be applied to the population and a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 210.7 and .8; 7 CFR 225.6, .9, and .16; Richard B. Russell National School Lunch Act, Section 19; U.S. Department of Agriculture Fresh Fruit and Vegetable Handbook The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. 7 CFR 210.7 National School Lunch Program (NSLP) claims for reimbursement (CFRs) must be based on lunch counts taken daily at the point of service (POS), which correctly identify the number of free, reduced price, and paid lunches served to eligible children. 7 CFR 210.8 (NSLP) on a monthly basis, the State agency shall, at a minimum, compare the number of free and reduced price lunches claimed to the number of children approved for free and reduced price lunches enrolled in the School Food Authority (SFA) for the month of October, and multiply that number by the days of operation and the attendance factor employed by the SFA. At its discretion, the State agency may conduct this comparison against data which reflects the number of children approved for free and reduced price lunches for a more current month(s). 7 CFR 225.6 Summer Food Service Program (SFSP) required information must be on a site information sheet that the State agency must provide to the sponsor for approval by the State agency prior to participation in SFSP, including estimated meal counts, types of meals, meal service times, and procedures to ensure duplicate meals are not distributed at non-congregate sites. In order to approve a site, the area where the site proposes to serve is not or will not be served in whole or in part by another site. 7 CFR 225.9 (SFSP) outlines that payments to a sponsor must equal the amount derived by multiplying the number of eligible meals, by type, actually served under the sponsor's program to eligible children by the current applicable reimbursement rate for each meal type. Sponsors must be eligible to receive additional reimbursement for each meal served to participating children at rural or self-preparation sites. 7 CFR 225.16 (SFSP) meals served outside of the meal time listed on the sponsor’s application are not eligible for reimbursement. Sponsors agree in writing to claim reimbursement only for the types of meals specified in the agreement that are served. Section 19 of the Richard B. Russell National School Lunch Act (NSLA) states that the per-pupil grant provided to a school under the Fresh Fruit and Vegetable Program (FFVP) shall be not less than $50, nor more than $75. U.S. Department of Agriculture’s (USDA) FFVP Handbook, referenced as guidance in Policy Memo SP 17-2023, states that all nonfood costs must be carefully reviewed and deemed reasonable. Condition: The Child Nutrition Cluster (CNC) includes the School Breakfast Program, NSLP, Special Milk Program for Children, SFSP and FFVP. The objectives of the programs are to provide nutritious meals to eligible children in schools, residential childcare institutions and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage the consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of child nutrition programs for the State. DOE provides benefits to each SFA or sponsor on a reimbursement basis. SFAs and sponsors must submit claims for reimbursement based on actual meals served for the month and permissible fresh fruits and vegetables utilizing the Child Nutrition Program (CNPWeb) system. The Department is required to review each SFA’s or sponsor’s CFR to ensure that monthly claims are limited to the number of meals served to eligible children and that the cost of the fresh fruits and vegetables are allowable. Once the claims are approved, claims are reimbursed based on the rates that are programmed in the CNPWeb system. The Office of the State Auditor (OSA) tested CFRs for the CNC and found instances that did not align with program regulations for NSLP, FFVP, and SFSP, as follows: National School Lunch Program CNS must perform procedures as outlined in Federal regulations, including a review of CFRs on a monthly basis through analysis utilizing a product of the enrollment information from the month of October multiplied by the days of operation and the attendance factor employed by the SFA. OSA procedures identified that CNS did not review or perform analysis on CFRs on a monthly basis as required. OSA tested 60 CFRs and identified nine CFRs from five SFAs where eligibility information entered on the CFR varied significantly from the information provided and verified by the SFA in October 2023. In order to verify the allowability of the claims identified, OSA requested supporting documentation from those five SFAs. OSA compared the eligibility counts from the CFR, the SFA’s POS reports, the SFA’s October data provided to CNS, and the SFA’s master list of eligible students for the month of the CFR and found: • five POS reports with eligibility counts that conflicted with the master eligibility list provided by the SFA for that month, and with the number of eligible children reported on the CFR, resulting in questioned costs totaling $897; • one POS report from October with eligibility counts that matched the site CFR, but did not match the master eligibility list provided by the SFA, or the data reported to CNS by the SFA for the same month, resulting in questioned costs totaling $708; and • documentation for three CFRs could not be provided. OSA selected a non-statistical random sample. Fresh Fruit and Vegetable Program CNS ensures compliance with Federal regulations through the annual administrative review process. OSA tested 17 FFVP CFRs from the nine SFAs who had an administrative review in fiscal year 2024 and found: • nine claims from five SFAs had sites with nonfood costs that were not reviewed during the administrative review process. • for six of the nine SFAs, portions of the administrative review process were erroneously omitted; therefore, CNS did not review or examine the allowability for any FFVP CFRs for those six SFAs. OSA selected a non-statistical random sample. The FFVP fiscal year is October 1 to September 30; therefore, though schools may begin the school year with unspent funds from the prior school year, these funds must be spent by September 30. OSA tested 19 FFVP SFAs that participated in both fiscal year 2023 and 2024 and found that three SFAs exceeded their fiscal year 2023 allocation in September 2023. CNS did not detect or correct this allocation issue until OSA inquired in September 2024. OSA selected a non-statistical random sample. Section 19 of the Richard B. Russell NSLA requires that FFVP allocations made by CNS result in a per-pupil grant not less than $50, nor more than $75 to participating SFAs. OSA tested 19 SFAs that participated in FFVP in fiscal year 2024 and found that 14 SFAs had manual allocation adjustments which resulted in ten per-pupil allocations that were not between $50 and $75 per pupil, ranging from $24 per pupil to $109 per pupil. The allocation of funds over $75 per pupil resulted in questioned costs of $9,535. OSA selected a non-statistical random sample. Summer Food Service Program CNS requires applications from sponsors that include individual site sheets. The information on the sheet must include the estimated number of meals, types of meals to be served, and meal service times. Meal service times must align with the approved application at the time the meals are served. Non-congregate sites must provide enough detail to ensure the area where the site proposes to serve meets certain criteria, including verification that the site: • is rural; • is not or will not be served in whole or in part by another site; • serves an area in which poor economic conditions exist or is approved for reimbursement only for meals served free to enrolled children who meet income standards; and • has procedures to ensure that duplicate meals are not served to any child. Residential and non-residential camps must include in their site sheets the number of children enrolled in each session who meet income standards prior to filing the camp’s CFR for each session. OSA tested 39 SFSP CFRs and found: • nine residential or non-residential camp CFRs that did not include the number of children enrolled in each session who met income standards prior to filing their CFR, resulting in questioned costs totaling $95,902. • two CFRs to non-congregate sites not located in an area where poor economic conditions exist per USDA data. The ineligible sites resulted in questioned costs totaling $15,536. • four CFRs included revised information from the site sheet that did not reflect the conditions at the time the meals were served. The revisions submitted between the meal service and submission of the CFR included an increase in capacity, an addition of meal types, and an addition of operating days, resulting in questioned costs totaling $5,821. • five CFRs to non-congregate sites that did not have documented procedures to prevent duplicate meal service on the site sheet. OSA selected a non-statistical random sample. Additionally, SFSP has two tiers of administrative rates for reimbursement, self-prep and vended. Sites classified as rural are all reimbursed at the highest rate, but sites classified as urban can either be reimbursed at the higher rate if they serve self-prep meals, or at the lower rate if their meals are vended. CNS previously determined that the field on the application for the sponsor to select whether the meal served is vended or self-prep is not required in the CNPWeb system. At that time, CNS submitted a ticket to request a change to the CNPWeb system to require the sponsor to select a meal type in that field on future applications; however, because that information was not required previously, CNS does not have assurance that urban sites that did not select self-prep or vended are being reimbursed at the correct rate. Furthermore, for each month of operation, CNS must report the number of meals served by meal type and sponsor type to USDA Food Nutrition Services (FNS) on the FNS-418 report. CNS does not have assurance that their default classification of urban sites as self-prep when the field was left blank is accurate for FNS-418 reporting. Context: In fiscal year 2024, CNS processed CFRs totaling: • $55.8 million under NSLP; • $2.8 million under FFVP; and • $2.8 million under SFSP. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Noncompliance with Federal regulations • Known questioned costs • Potential future questioned costs and disallowances • Potential incorrect rates of reimbursement paid to SFAs and sponsors • Inaccurate FNS-418 reports submitted to FNS Recommendation: We recommend that CNS enhance policies and procedures to: • require a review of CFRs on a monthly basis in accordance with Federal regulations; • ensure all required information is included in the applications and approved prior to participation; • review and approve area eligibility for non-congregate sites; • require inclusion of self-prep or vended meal types and non-congregate plans on site information sheets that document procedures to prevent duplicate meal service; • ensure session-specific eligibility information is received prior to claim approval for camp sites; and • ensure that site information sheet revisions prohibit the sponsor from using the revised information in a claim for the prior month. In addition, we recommend that CNS enhance oversight over FFVP to ensure: • claims with nonfood costs are reasonable; • allocation amounts remain within $50 to $75 per pupil; and • administrative reviews conducted by CNS include FFVP allowability reviews. Corrective Action Plan: See F-16 Management’s Response: The Department partially agrees with this finding. These findings come from various programs and are correctly outlined in the Condition. However, the Department disagrees with the first bullet in the Recommendation regarding the review of CFRs monthly and has contacted the Northeast Regional Office of the USDA for clarification. Additionally, we disagree with the first bullet point regarding non-food costs in the FFVP program, as it’s addressed in the Administrative Review process. The Department has developed a corrective action plan to address the remaining recommendations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 Auditor’s Concluding Remarks: 7 CFR 210.8(b)(2) provides detailed requirements outlining the minimum CFR monthly claim review procedures that CNS must perform. CNS has not implemented required procedures, and erroneous CFRs are not detected or corrected, resulting in questioned costs and potential disallowances. In addition, CNS asserts that FFVP nonfood costs are addressed as part of the Administrative Review process; however, OSA identified a material weakness and material noncompliance as issued in finding 2024-032 Internal control over CNC subrecipient monitoring procedures needs improvement. The finding reports that six of the nine Administrative Reviews tested for FFVP inappropriately omitted Federally required steps and that a cost analysis over nonfood costs was not performed. The finding remains as stated. (State Number: 24-1203-02)
(2024-031) Title: Internal control over CNC claim reimbursements needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Reporting Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.555 $1,605 ALN 10.582 $9,535 ALN 10.559 $117,259 Likely Questioned Costs: Undeterminable; due to the variety of site types in the test population and varied meal claim counts, an error rate cannot be applied to the population and a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 210.7 and .8; 7 CFR 225.6, .9, and .16; Richard B. Russell National School Lunch Act, Section 19; U.S. Department of Agriculture Fresh Fruit and Vegetable Handbook The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. 7 CFR 210.7 National School Lunch Program (NSLP) claims for reimbursement (CFRs) must be based on lunch counts taken daily at the point of service (POS), which correctly identify the number of free, reduced price, and paid lunches served to eligible children. 7 CFR 210.8 (NSLP) on a monthly basis, the State agency shall, at a minimum, compare the number of free and reduced price lunches claimed to the number of children approved for free and reduced price lunches enrolled in the School Food Authority (SFA) for the month of October, and multiply that number by the days of operation and the attendance factor employed by the SFA. At its discretion, the State agency may conduct this comparison against data which reflects the number of children approved for free and reduced price lunches for a more current month(s). 7 CFR 225.6 Summer Food Service Program (SFSP) required information must be on a site information sheet that the State agency must provide to the sponsor for approval by the State agency prior to participation in SFSP, including estimated meal counts, types of meals, meal service times, and procedures to ensure duplicate meals are not distributed at non-congregate sites. In order to approve a site, the area where the site proposes to serve is not or will not be served in whole or in part by another site. 7 CFR 225.9 (SFSP) outlines that payments to a sponsor must equal the amount derived by multiplying the number of eligible meals, by type, actually served under the sponsor's program to eligible children by the current applicable reimbursement rate for each meal type. Sponsors must be eligible to receive additional reimbursement for each meal served to participating children at rural or self-preparation sites. 7 CFR 225.16 (SFSP) meals served outside of the meal time listed on the sponsor’s application are not eligible for reimbursement. Sponsors agree in writing to claim reimbursement only for the types of meals specified in the agreement that are served. Section 19 of the Richard B. Russell National School Lunch Act (NSLA) states that the per-pupil grant provided to a school under the Fresh Fruit and Vegetable Program (FFVP) shall be not less than $50, nor more than $75. U.S. Department of Agriculture’s (USDA) FFVP Handbook, referenced as guidance in Policy Memo SP 17-2023, states that all nonfood costs must be carefully reviewed and deemed reasonable. Condition: The Child Nutrition Cluster (CNC) includes the School Breakfast Program, NSLP, Special Milk Program for Children, SFSP and FFVP. The objectives of the programs are to provide nutritious meals to eligible children in schools, residential childcare institutions and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage the consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of child nutrition programs for the State. DOE provides benefits to each SFA or sponsor on a reimbursement basis. SFAs and sponsors must submit claims for reimbursement based on actual meals served for the month and permissible fresh fruits and vegetables utilizing the Child Nutrition Program (CNPWeb) system. The Department is required to review each SFA’s or sponsor’s CFR to ensure that monthly claims are limited to the number of meals served to eligible children and that the cost of the fresh fruits and vegetables are allowable. Once the claims are approved, claims are reimbursed based on the rates that are programmed in the CNPWeb system. The Office of the State Auditor (OSA) tested CFRs for the CNC and found instances that did not align with program regulations for NSLP, FFVP, and SFSP, as follows: National School Lunch Program CNS must perform procedures as outlined in Federal regulations, including a review of CFRs on a monthly basis through analysis utilizing a product of the enrollment information from the month of October multiplied by the days of operation and the attendance factor employed by the SFA. OSA procedures identified that CNS did not review or perform analysis on CFRs on a monthly basis as required. OSA tested 60 CFRs and identified nine CFRs from five SFAs where eligibility information entered on the CFR varied significantly from the information provided and verified by the SFA in October 2023. In order to verify the allowability of the claims identified, OSA requested supporting documentation from those five SFAs. OSA compared the eligibility counts from the CFR, the SFA’s POS reports, the SFA’s October data provided to CNS, and the SFA’s master list of eligible students for the month of the CFR and found: • five POS reports with eligibility counts that conflicted with the master eligibility list provided by the SFA for that month, and with the number of eligible children reported on the CFR, resulting in questioned costs totaling $897; • one POS report from October with eligibility counts that matched the site CFR, but did not match the master eligibility list provided by the SFA, or the data reported to CNS by the SFA for the same month, resulting in questioned costs totaling $708; and • documentation for three CFRs could not be provided. OSA selected a non-statistical random sample. Fresh Fruit and Vegetable Program CNS ensures compliance with Federal regulations through the annual administrative review process. OSA tested 17 FFVP CFRs from the nine SFAs who had an administrative review in fiscal year 2024 and found: • nine claims from five SFAs had sites with nonfood costs that were not reviewed during the administrative review process. • for six of the nine SFAs, portions of the administrative review process were erroneously omitted; therefore, CNS did not review or examine the allowability for any FFVP CFRs for those six SFAs. OSA selected a non-statistical random sample. The FFVP fiscal year is October 1 to September 30; therefore, though schools may begin the school year with unspent funds from the prior school year, these funds must be spent by September 30. OSA tested 19 FFVP SFAs that participated in both fiscal year 2023 and 2024 and found that three SFAs exceeded their fiscal year 2023 allocation in September 2023. CNS did not detect or correct this allocation issue until OSA inquired in September 2024. OSA selected a non-statistical random sample. Section 19 of the Richard B. Russell NSLA requires that FFVP allocations made by CNS result in a per-pupil grant not less than $50, nor more than $75 to participating SFAs. OSA tested 19 SFAs that participated in FFVP in fiscal year 2024 and found that 14 SFAs had manual allocation adjustments which resulted in ten per-pupil allocations that were not between $50 and $75 per pupil, ranging from $24 per pupil to $109 per pupil. The allocation of funds over $75 per pupil resulted in questioned costs of $9,535. OSA selected a non-statistical random sample. Summer Food Service Program CNS requires applications from sponsors that include individual site sheets. The information on the sheet must include the estimated number of meals, types of meals to be served, and meal service times. Meal service times must align with the approved application at the time the meals are served. Non-congregate sites must provide enough detail to ensure the area where the site proposes to serve meets certain criteria, including verification that the site: • is rural; • is not or will not be served in whole or in part by another site; • serves an area in which poor economic conditions exist or is approved for reimbursement only for meals served free to enrolled children who meet income standards; and • has procedures to ensure that duplicate meals are not served to any child. Residential and non-residential camps must include in their site sheets the number of children enrolled in each session who meet income standards prior to filing the camp’s CFR for each session. OSA tested 39 SFSP CFRs and found: • nine residential or non-residential camp CFRs that did not include the number of children enrolled in each session who met income standards prior to filing their CFR, resulting in questioned costs totaling $95,902. • two CFRs to non-congregate sites not located in an area where poor economic conditions exist per USDA data. The ineligible sites resulted in questioned costs totaling $15,536. • four CFRs included revised information from the site sheet that did not reflect the conditions at the time the meals were served. The revisions submitted between the meal service and submission of the CFR included an increase in capacity, an addition of meal types, and an addition of operating days, resulting in questioned costs totaling $5,821. • five CFRs to non-congregate sites that did not have documented procedures to prevent duplicate meal service on the site sheet. OSA selected a non-statistical random sample. Additionally, SFSP has two tiers of administrative rates for reimbursement, self-prep and vended. Sites classified as rural are all reimbursed at the highest rate, but sites classified as urban can either be reimbursed at the higher rate if they serve self-prep meals, or at the lower rate if their meals are vended. CNS previously determined that the field on the application for the sponsor to select whether the meal served is vended or self-prep is not required in the CNPWeb system. At that time, CNS submitted a ticket to request a change to the CNPWeb system to require the sponsor to select a meal type in that field on future applications; however, because that information was not required previously, CNS does not have assurance that urban sites that did not select self-prep or vended are being reimbursed at the correct rate. Furthermore, for each month of operation, CNS must report the number of meals served by meal type and sponsor type to USDA Food Nutrition Services (FNS) on the FNS-418 report. CNS does not have assurance that their default classification of urban sites as self-prep when the field was left blank is accurate for FNS-418 reporting. Context: In fiscal year 2024, CNS processed CFRs totaling: • $55.8 million under NSLP; • $2.8 million under FFVP; and • $2.8 million under SFSP. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Noncompliance with Federal regulations • Known questioned costs • Potential future questioned costs and disallowances • Potential incorrect rates of reimbursement paid to SFAs and sponsors • Inaccurate FNS-418 reports submitted to FNS Recommendation: We recommend that CNS enhance policies and procedures to: • require a review of CFRs on a monthly basis in accordance with Federal regulations; • ensure all required information is included in the applications and approved prior to participation; • review and approve area eligibility for non-congregate sites; • require inclusion of self-prep or vended meal types and non-congregate plans on site information sheets that document procedures to prevent duplicate meal service; • ensure session-specific eligibility information is received prior to claim approval for camp sites; and • ensure that site information sheet revisions prohibit the sponsor from using the revised information in a claim for the prior month. In addition, we recommend that CNS enhance oversight over FFVP to ensure: • claims with nonfood costs are reasonable; • allocation amounts remain within $50 to $75 per pupil; and • administrative reviews conducted by CNS include FFVP allowability reviews. Corrective Action Plan: See F-16 Management’s Response: The Department partially agrees with this finding. These findings come from various programs and are correctly outlined in the Condition. However, the Department disagrees with the first bullet in the Recommendation regarding the review of CFRs monthly and has contacted the Northeast Regional Office of the USDA for clarification. Additionally, we disagree with the first bullet point regarding non-food costs in the FFVP program, as it’s addressed in the Administrative Review process. The Department has developed a corrective action plan to address the remaining recommendations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 Auditor’s Concluding Remarks: 7 CFR 210.8(b)(2) provides detailed requirements outlining the minimum CFR monthly claim review procedures that CNS must perform. CNS has not implemented required procedures, and erroneous CFRs are not detected or corrected, resulting in questioned costs and potential disallowances. In addition, CNS asserts that FFVP nonfood costs are addressed as part of the Administrative Review process; however, OSA identified a material weakness and material noncompliance as issued in finding 2024-032 Internal control over CNC subrecipient monitoring procedures needs improvement. The finding reports that six of the nine Administrative Reviews tested for FFVP inappropriately omitted Federally required steps and that a cost analysis over nonfood costs was not performed. The finding remains as stated. (State Number: 24-1203-02)
(2024-031) Title: Internal control over CNC claim reimbursements needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Reporting Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.555 $1,605 ALN 10.582 $9,535 ALN 10.559 $117,259 Likely Questioned Costs: Undeterminable; due to the variety of site types in the test population and varied meal claim counts, an error rate cannot be applied to the population and a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 210.7 and .8; 7 CFR 225.6, .9, and .16; Richard B. Russell National School Lunch Act, Section 19; U.S. Department of Agriculture Fresh Fruit and Vegetable Handbook The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. 7 CFR 210.7 National School Lunch Program (NSLP) claims for reimbursement (CFRs) must be based on lunch counts taken daily at the point of service (POS), which correctly identify the number of free, reduced price, and paid lunches served to eligible children. 7 CFR 210.8 (NSLP) on a monthly basis, the State agency shall, at a minimum, compare the number of free and reduced price lunches claimed to the number of children approved for free and reduced price lunches enrolled in the School Food Authority (SFA) for the month of October, and multiply that number by the days of operation and the attendance factor employed by the SFA. At its discretion, the State agency may conduct this comparison against data which reflects the number of children approved for free and reduced price lunches for a more current month(s). 7 CFR 225.6 Summer Food Service Program (SFSP) required information must be on a site information sheet that the State agency must provide to the sponsor for approval by the State agency prior to participation in SFSP, including estimated meal counts, types of meals, meal service times, and procedures to ensure duplicate meals are not distributed at non-congregate sites. In order to approve a site, the area where the site proposes to serve is not or will not be served in whole or in part by another site. 7 CFR 225.9 (SFSP) outlines that payments to a sponsor must equal the amount derived by multiplying the number of eligible meals, by type, actually served under the sponsor's program to eligible children by the current applicable reimbursement rate for each meal type. Sponsors must be eligible to receive additional reimbursement for each meal served to participating children at rural or self-preparation sites. 7 CFR 225.16 (SFSP) meals served outside of the meal time listed on the sponsor’s application are not eligible for reimbursement. Sponsors agree in writing to claim reimbursement only for the types of meals specified in the agreement that are served. Section 19 of the Richard B. Russell National School Lunch Act (NSLA) states that the per-pupil grant provided to a school under the Fresh Fruit and Vegetable Program (FFVP) shall be not less than $50, nor more than $75. U.S. Department of Agriculture’s (USDA) FFVP Handbook, referenced as guidance in Policy Memo SP 17-2023, states that all nonfood costs must be carefully reviewed and deemed reasonable. Condition: The Child Nutrition Cluster (CNC) includes the School Breakfast Program, NSLP, Special Milk Program for Children, SFSP and FFVP. The objectives of the programs are to provide nutritious meals to eligible children in schools, residential childcare institutions and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage the consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of child nutrition programs for the State. DOE provides benefits to each SFA or sponsor on a reimbursement basis. SFAs and sponsors must submit claims for reimbursement based on actual meals served for the month and permissible fresh fruits and vegetables utilizing the Child Nutrition Program (CNPWeb) system. The Department is required to review each SFA’s or sponsor’s CFR to ensure that monthly claims are limited to the number of meals served to eligible children and that the cost of the fresh fruits and vegetables are allowable. Once the claims are approved, claims are reimbursed based on the rates that are programmed in the CNPWeb system. The Office of the State Auditor (OSA) tested CFRs for the CNC and found instances that did not align with program regulations for NSLP, FFVP, and SFSP, as follows: National School Lunch Program CNS must perform procedures as outlined in Federal regulations, including a review of CFRs on a monthly basis through analysis utilizing a product of the enrollment information from the month of October multiplied by the days of operation and the attendance factor employed by the SFA. OSA procedures identified that CNS did not review or perform analysis on CFRs on a monthly basis as required. OSA tested 60 CFRs and identified nine CFRs from five SFAs where eligibility information entered on the CFR varied significantly from the information provided and verified by the SFA in October 2023. In order to verify the allowability of the claims identified, OSA requested supporting documentation from those five SFAs. OSA compared the eligibility counts from the CFR, the SFA’s POS reports, the SFA’s October data provided to CNS, and the SFA’s master list of eligible students for the month of the CFR and found: • five POS reports with eligibility counts that conflicted with the master eligibility list provided by the SFA for that month, and with the number of eligible children reported on the CFR, resulting in questioned costs totaling $897; • one POS report from October with eligibility counts that matched the site CFR, but did not match the master eligibility list provided by the SFA, or the data reported to CNS by the SFA for the same month, resulting in questioned costs totaling $708; and • documentation for three CFRs could not be provided. OSA selected a non-statistical random sample. Fresh Fruit and Vegetable Program CNS ensures compliance with Federal regulations through the annual administrative review process. OSA tested 17 FFVP CFRs from the nine SFAs who had an administrative review in fiscal year 2024 and found: • nine claims from five SFAs had sites with nonfood costs that were not reviewed during the administrative review process. • for six of the nine SFAs, portions of the administrative review process were erroneously omitted; therefore, CNS did not review or examine the allowability for any FFVP CFRs for those six SFAs. OSA selected a non-statistical random sample. The FFVP fiscal year is October 1 to September 30; therefore, though schools may begin the school year with unspent funds from the prior school year, these funds must be spent by September 30. OSA tested 19 FFVP SFAs that participated in both fiscal year 2023 and 2024 and found that three SFAs exceeded their fiscal year 2023 allocation in September 2023. CNS did not detect or correct this allocation issue until OSA inquired in September 2024. OSA selected a non-statistical random sample. Section 19 of the Richard B. Russell NSLA requires that FFVP allocations made by CNS result in a per-pupil grant not less than $50, nor more than $75 to participating SFAs. OSA tested 19 SFAs that participated in FFVP in fiscal year 2024 and found that 14 SFAs had manual allocation adjustments which resulted in ten per-pupil allocations that were not between $50 and $75 per pupil, ranging from $24 per pupil to $109 per pupil. The allocation of funds over $75 per pupil resulted in questioned costs of $9,535. OSA selected a non-statistical random sample. Summer Food Service Program CNS requires applications from sponsors that include individual site sheets. The information on the sheet must include the estimated number of meals, types of meals to be served, and meal service times. Meal service times must align with the approved application at the time the meals are served. Non-congregate sites must provide enough detail to ensure the area where the site proposes to serve meets certain criteria, including verification that the site: • is rural; • is not or will not be served in whole or in part by another site; • serves an area in which poor economic conditions exist or is approved for reimbursement only for meals served free to enrolled children who meet income standards; and • has procedures to ensure that duplicate meals are not served to any child. Residential and non-residential camps must include in their site sheets the number of children enrolled in each session who meet income standards prior to filing the camp’s CFR for each session. OSA tested 39 SFSP CFRs and found: • nine residential or non-residential camp CFRs that did not include the number of children enrolled in each session who met income standards prior to filing their CFR, resulting in questioned costs totaling $95,902. • two CFRs to non-congregate sites not located in an area where poor economic conditions exist per USDA data. The ineligible sites resulted in questioned costs totaling $15,536. • four CFRs included revised information from the site sheet that did not reflect the conditions at the time the meals were served. The revisions submitted between the meal service and submission of the CFR included an increase in capacity, an addition of meal types, and an addition of operating days, resulting in questioned costs totaling $5,821. • five CFRs to non-congregate sites that did not have documented procedures to prevent duplicate meal service on the site sheet. OSA selected a non-statistical random sample. Additionally, SFSP has two tiers of administrative rates for reimbursement, self-prep and vended. Sites classified as rural are all reimbursed at the highest rate, but sites classified as urban can either be reimbursed at the higher rate if they serve self-prep meals, or at the lower rate if their meals are vended. CNS previously determined that the field on the application for the sponsor to select whether the meal served is vended or self-prep is not required in the CNPWeb system. At that time, CNS submitted a ticket to request a change to the CNPWeb system to require the sponsor to select a meal type in that field on future applications; however, because that information was not required previously, CNS does not have assurance that urban sites that did not select self-prep or vended are being reimbursed at the correct rate. Furthermore, for each month of operation, CNS must report the number of meals served by meal type and sponsor type to USDA Food Nutrition Services (FNS) on the FNS-418 report. CNS does not have assurance that their default classification of urban sites as self-prep when the field was left blank is accurate for FNS-418 reporting. Context: In fiscal year 2024, CNS processed CFRs totaling: • $55.8 million under NSLP; • $2.8 million under FFVP; and • $2.8 million under SFSP. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Noncompliance with Federal regulations • Known questioned costs • Potential future questioned costs and disallowances • Potential incorrect rates of reimbursement paid to SFAs and sponsors • Inaccurate FNS-418 reports submitted to FNS Recommendation: We recommend that CNS enhance policies and procedures to: • require a review of CFRs on a monthly basis in accordance with Federal regulations; • ensure all required information is included in the applications and approved prior to participation; • review and approve area eligibility for non-congregate sites; • require inclusion of self-prep or vended meal types and non-congregate plans on site information sheets that document procedures to prevent duplicate meal service; • ensure session-specific eligibility information is received prior to claim approval for camp sites; and • ensure that site information sheet revisions prohibit the sponsor from using the revised information in a claim for the prior month. In addition, we recommend that CNS enhance oversight over FFVP to ensure: • claims with nonfood costs are reasonable; • allocation amounts remain within $50 to $75 per pupil; and • administrative reviews conducted by CNS include FFVP allowability reviews. Corrective Action Plan: See F-16 Management’s Response: The Department partially agrees with this finding. These findings come from various programs and are correctly outlined in the Condition. However, the Department disagrees with the first bullet in the Recommendation regarding the review of CFRs monthly and has contacted the Northeast Regional Office of the USDA for clarification. Additionally, we disagree with the first bullet point regarding non-food costs in the FFVP program, as it’s addressed in the Administrative Review process. The Department has developed a corrective action plan to address the remaining recommendations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 Auditor’s Concluding Remarks: 7 CFR 210.8(b)(2) provides detailed requirements outlining the minimum CFR monthly claim review procedures that CNS must perform. CNS has not implemented required procedures, and erroneous CFRs are not detected or corrected, resulting in questioned costs and potential disallowances. In addition, CNS asserts that FFVP nonfood costs are addressed as part of the Administrative Review process; however, OSA identified a material weakness and material noncompliance as issued in finding 2024-032 Internal control over CNC subrecipient monitoring procedures needs improvement. The finding reports that six of the nine Administrative Reviews tested for FFVP inappropriately omitted Federally required steps and that a cost analysis over nonfood costs was not performed. The finding remains as stated. (State Number: 24-1203-02)
(2024-031) Title: Internal control over CNC claim reimbursements needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Reporting Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.555 $1,605 ALN 10.582 $9,535 ALN 10.559 $117,259 Likely Questioned Costs: Undeterminable; due to the variety of site types in the test population and varied meal claim counts, an error rate cannot be applied to the population and a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 210.7 and .8; 7 CFR 225.6, .9, and .16; Richard B. Russell National School Lunch Act, Section 19; U.S. Department of Agriculture Fresh Fruit and Vegetable Handbook The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. 7 CFR 210.7 National School Lunch Program (NSLP) claims for reimbursement (CFRs) must be based on lunch counts taken daily at the point of service (POS), which correctly identify the number of free, reduced price, and paid lunches served to eligible children. 7 CFR 210.8 (NSLP) on a monthly basis, the State agency shall, at a minimum, compare the number of free and reduced price lunches claimed to the number of children approved for free and reduced price lunches enrolled in the School Food Authority (SFA) for the month of October, and multiply that number by the days of operation and the attendance factor employed by the SFA. At its discretion, the State agency may conduct this comparison against data which reflects the number of children approved for free and reduced price lunches for a more current month(s). 7 CFR 225.6 Summer Food Service Program (SFSP) required information must be on a site information sheet that the State agency must provide to the sponsor for approval by the State agency prior to participation in SFSP, including estimated meal counts, types of meals, meal service times, and procedures to ensure duplicate meals are not distributed at non-congregate sites. In order to approve a site, the area where the site proposes to serve is not or will not be served in whole or in part by another site. 7 CFR 225.9 (SFSP) outlines that payments to a sponsor must equal the amount derived by multiplying the number of eligible meals, by type, actually served under the sponsor's program to eligible children by the current applicable reimbursement rate for each meal type. Sponsors must be eligible to receive additional reimbursement for each meal served to participating children at rural or self-preparation sites. 7 CFR 225.16 (SFSP) meals served outside of the meal time listed on the sponsor’s application are not eligible for reimbursement. Sponsors agree in writing to claim reimbursement only for the types of meals specified in the agreement that are served. Section 19 of the Richard B. Russell National School Lunch Act (NSLA) states that the per-pupil grant provided to a school under the Fresh Fruit and Vegetable Program (FFVP) shall be not less than $50, nor more than $75. U.S. Department of Agriculture’s (USDA) FFVP Handbook, referenced as guidance in Policy Memo SP 17-2023, states that all nonfood costs must be carefully reviewed and deemed reasonable. Condition: The Child Nutrition Cluster (CNC) includes the School Breakfast Program, NSLP, Special Milk Program for Children, SFSP and FFVP. The objectives of the programs are to provide nutritious meals to eligible children in schools, residential childcare institutions and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage the consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of child nutrition programs for the State. DOE provides benefits to each SFA or sponsor on a reimbursement basis. SFAs and sponsors must submit claims for reimbursement based on actual meals served for the month and permissible fresh fruits and vegetables utilizing the Child Nutrition Program (CNPWeb) system. The Department is required to review each SFA’s or sponsor’s CFR to ensure that monthly claims are limited to the number of meals served to eligible children and that the cost of the fresh fruits and vegetables are allowable. Once the claims are approved, claims are reimbursed based on the rates that are programmed in the CNPWeb system. The Office of the State Auditor (OSA) tested CFRs for the CNC and found instances that did not align with program regulations for NSLP, FFVP, and SFSP, as follows: National School Lunch Program CNS must perform procedures as outlined in Federal regulations, including a review of CFRs on a monthly basis through analysis utilizing a product of the enrollment information from the month of October multiplied by the days of operation and the attendance factor employed by the SFA. OSA procedures identified that CNS did not review or perform analysis on CFRs on a monthly basis as required. OSA tested 60 CFRs and identified nine CFRs from five SFAs where eligibility information entered on the CFR varied significantly from the information provided and verified by the SFA in October 2023. In order to verify the allowability of the claims identified, OSA requested supporting documentation from those five SFAs. OSA compared the eligibility counts from the CFR, the SFA’s POS reports, the SFA’s October data provided to CNS, and the SFA’s master list of eligible students for the month of the CFR and found: • five POS reports with eligibility counts that conflicted with the master eligibility list provided by the SFA for that month, and with the number of eligible children reported on the CFR, resulting in questioned costs totaling $897; • one POS report from October with eligibility counts that matched the site CFR, but did not match the master eligibility list provided by the SFA, or the data reported to CNS by the SFA for the same month, resulting in questioned costs totaling $708; and • documentation for three CFRs could not be provided. OSA selected a non-statistical random sample. Fresh Fruit and Vegetable Program CNS ensures compliance with Federal regulations through the annual administrative review process. OSA tested 17 FFVP CFRs from the nine SFAs who had an administrative review in fiscal year 2024 and found: • nine claims from five SFAs had sites with nonfood costs that were not reviewed during the administrative review process. • for six of the nine SFAs, portions of the administrative review process were erroneously omitted; therefore, CNS did not review or examine the allowability for any FFVP CFRs for those six SFAs. OSA selected a non-statistical random sample. The FFVP fiscal year is October 1 to September 30; therefore, though schools may begin the school year with unspent funds from the prior school year, these funds must be spent by September 30. OSA tested 19 FFVP SFAs that participated in both fiscal year 2023 and 2024 and found that three SFAs exceeded their fiscal year 2023 allocation in September 2023. CNS did not detect or correct this allocation issue until OSA inquired in September 2024. OSA selected a non-statistical random sample. Section 19 of the Richard B. Russell NSLA requires that FFVP allocations made by CNS result in a per-pupil grant not less than $50, nor more than $75 to participating SFAs. OSA tested 19 SFAs that participated in FFVP in fiscal year 2024 and found that 14 SFAs had manual allocation adjustments which resulted in ten per-pupil allocations that were not between $50 and $75 per pupil, ranging from $24 per pupil to $109 per pupil. The allocation of funds over $75 per pupil resulted in questioned costs of $9,535. OSA selected a non-statistical random sample. Summer Food Service Program CNS requires applications from sponsors that include individual site sheets. The information on the sheet must include the estimated number of meals, types of meals to be served, and meal service times. Meal service times must align with the approved application at the time the meals are served. Non-congregate sites must provide enough detail to ensure the area where the site proposes to serve meets certain criteria, including verification that the site: • is rural; • is not or will not be served in whole or in part by another site; • serves an area in which poor economic conditions exist or is approved for reimbursement only for meals served free to enrolled children who meet income standards; and • has procedures to ensure that duplicate meals are not served to any child. Residential and non-residential camps must include in their site sheets the number of children enrolled in each session who meet income standards prior to filing the camp’s CFR for each session. OSA tested 39 SFSP CFRs and found: • nine residential or non-residential camp CFRs that did not include the number of children enrolled in each session who met income standards prior to filing their CFR, resulting in questioned costs totaling $95,902. • two CFRs to non-congregate sites not located in an area where poor economic conditions exist per USDA data. The ineligible sites resulted in questioned costs totaling $15,536. • four CFRs included revised information from the site sheet that did not reflect the conditions at the time the meals were served. The revisions submitted between the meal service and submission of the CFR included an increase in capacity, an addition of meal types, and an addition of operating days, resulting in questioned costs totaling $5,821. • five CFRs to non-congregate sites that did not have documented procedures to prevent duplicate meal service on the site sheet. OSA selected a non-statistical random sample. Additionally, SFSP has two tiers of administrative rates for reimbursement, self-prep and vended. Sites classified as rural are all reimbursed at the highest rate, but sites classified as urban can either be reimbursed at the higher rate if they serve self-prep meals, or at the lower rate if their meals are vended. CNS previously determined that the field on the application for the sponsor to select whether the meal served is vended or self-prep is not required in the CNPWeb system. At that time, CNS submitted a ticket to request a change to the CNPWeb system to require the sponsor to select a meal type in that field on future applications; however, because that information was not required previously, CNS does not have assurance that urban sites that did not select self-prep or vended are being reimbursed at the correct rate. Furthermore, for each month of operation, CNS must report the number of meals served by meal type and sponsor type to USDA Food Nutrition Services (FNS) on the FNS-418 report. CNS does not have assurance that their default classification of urban sites as self-prep when the field was left blank is accurate for FNS-418 reporting. Context: In fiscal year 2024, CNS processed CFRs totaling: • $55.8 million under NSLP; • $2.8 million under FFVP; and • $2.8 million under SFSP. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Noncompliance with Federal regulations • Known questioned costs • Potential future questioned costs and disallowances • Potential incorrect rates of reimbursement paid to SFAs and sponsors • Inaccurate FNS-418 reports submitted to FNS Recommendation: We recommend that CNS enhance policies and procedures to: • require a review of CFRs on a monthly basis in accordance with Federal regulations; • ensure all required information is included in the applications and approved prior to participation; • review and approve area eligibility for non-congregate sites; • require inclusion of self-prep or vended meal types and non-congregate plans on site information sheets that document procedures to prevent duplicate meal service; • ensure session-specific eligibility information is received prior to claim approval for camp sites; and • ensure that site information sheet revisions prohibit the sponsor from using the revised information in a claim for the prior month. In addition, we recommend that CNS enhance oversight over FFVP to ensure: • claims with nonfood costs are reasonable; • allocation amounts remain within $50 to $75 per pupil; and • administrative reviews conducted by CNS include FFVP allowability reviews. Corrective Action Plan: See F-16 Management’s Response: The Department partially agrees with this finding. These findings come from various programs and are correctly outlined in the Condition. However, the Department disagrees with the first bullet in the Recommendation regarding the review of CFRs monthly and has contacted the Northeast Regional Office of the USDA for clarification. Additionally, we disagree with the first bullet point regarding non-food costs in the FFVP program, as it’s addressed in the Administrative Review process. The Department has developed a corrective action plan to address the remaining recommendations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 Auditor’s Concluding Remarks: 7 CFR 210.8(b)(2) provides detailed requirements outlining the minimum CFR monthly claim review procedures that CNS must perform. CNS has not implemented required procedures, and erroneous CFRs are not detected or corrected, resulting in questioned costs and potential disallowances. In addition, CNS asserts that FFVP nonfood costs are addressed as part of the Administrative Review process; however, OSA identified a material weakness and material noncompliance as issued in finding 2024-032 Internal control over CNC subrecipient monitoring procedures needs improvement. The finding reports that six of the nine Administrative Reviews tested for FFVP inappropriately omitted Federally required steps and that a cost analysis over nonfood costs was not performed. The finding remains as stated. (State Number: 24-1203-02)
(2024-031) Title: Internal control over CNC claim reimbursements needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Reporting Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.555 $1,605 ALN 10.582 $9,535 ALN 10.559 $117,259 Likely Questioned Costs: Undeterminable; due to the variety of site types in the test population and varied meal claim counts, an error rate cannot be applied to the population and a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 210.7 and .8; 7 CFR 225.6, .9, and .16; Richard B. Russell National School Lunch Act, Section 19; U.S. Department of Agriculture Fresh Fruit and Vegetable Handbook The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. 7 CFR 210.7 National School Lunch Program (NSLP) claims for reimbursement (CFRs) must be based on lunch counts taken daily at the point of service (POS), which correctly identify the number of free, reduced price, and paid lunches served to eligible children. 7 CFR 210.8 (NSLP) on a monthly basis, the State agency shall, at a minimum, compare the number of free and reduced price lunches claimed to the number of children approved for free and reduced price lunches enrolled in the School Food Authority (SFA) for the month of October, and multiply that number by the days of operation and the attendance factor employed by the SFA. At its discretion, the State agency may conduct this comparison against data which reflects the number of children approved for free and reduced price lunches for a more current month(s). 7 CFR 225.6 Summer Food Service Program (SFSP) required information must be on a site information sheet that the State agency must provide to the sponsor for approval by the State agency prior to participation in SFSP, including estimated meal counts, types of meals, meal service times, and procedures to ensure duplicate meals are not distributed at non-congregate sites. In order to approve a site, the area where the site proposes to serve is not or will not be served in whole or in part by another site. 7 CFR 225.9 (SFSP) outlines that payments to a sponsor must equal the amount derived by multiplying the number of eligible meals, by type, actually served under the sponsor's program to eligible children by the current applicable reimbursement rate for each meal type. Sponsors must be eligible to receive additional reimbursement for each meal served to participating children at rural or self-preparation sites. 7 CFR 225.16 (SFSP) meals served outside of the meal time listed on the sponsor’s application are not eligible for reimbursement. Sponsors agree in writing to claim reimbursement only for the types of meals specified in the agreement that are served. Section 19 of the Richard B. Russell National School Lunch Act (NSLA) states that the per-pupil grant provided to a school under the Fresh Fruit and Vegetable Program (FFVP) shall be not less than $50, nor more than $75. U.S. Department of Agriculture’s (USDA) FFVP Handbook, referenced as guidance in Policy Memo SP 17-2023, states that all nonfood costs must be carefully reviewed and deemed reasonable. Condition: The Child Nutrition Cluster (CNC) includes the School Breakfast Program, NSLP, Special Milk Program for Children, SFSP and FFVP. The objectives of the programs are to provide nutritious meals to eligible children in schools, residential childcare institutions and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage the consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of child nutrition programs for the State. DOE provides benefits to each SFA or sponsor on a reimbursement basis. SFAs and sponsors must submit claims for reimbursement based on actual meals served for the month and permissible fresh fruits and vegetables utilizing the Child Nutrition Program (CNPWeb) system. The Department is required to review each SFA’s or sponsor’s CFR to ensure that monthly claims are limited to the number of meals served to eligible children and that the cost of the fresh fruits and vegetables are allowable. Once the claims are approved, claims are reimbursed based on the rates that are programmed in the CNPWeb system. The Office of the State Auditor (OSA) tested CFRs for the CNC and found instances that did not align with program regulations for NSLP, FFVP, and SFSP, as follows: National School Lunch Program CNS must perform procedures as outlined in Federal regulations, including a review of CFRs on a monthly basis through analysis utilizing a product of the enrollment information from the month of October multiplied by the days of operation and the attendance factor employed by the SFA. OSA procedures identified that CNS did not review or perform analysis on CFRs on a monthly basis as required. OSA tested 60 CFRs and identified nine CFRs from five SFAs where eligibility information entered on the CFR varied significantly from the information provided and verified by the SFA in October 2023. In order to verify the allowability of the claims identified, OSA requested supporting documentation from those five SFAs. OSA compared the eligibility counts from the CFR, the SFA’s POS reports, the SFA’s October data provided to CNS, and the SFA’s master list of eligible students for the month of the CFR and found: • five POS reports with eligibility counts that conflicted with the master eligibility list provided by the SFA for that month, and with the number of eligible children reported on the CFR, resulting in questioned costs totaling $897; • one POS report from October with eligibility counts that matched the site CFR, but did not match the master eligibility list provided by the SFA, or the data reported to CNS by the SFA for the same month, resulting in questioned costs totaling $708; and • documentation for three CFRs could not be provided. OSA selected a non-statistical random sample. Fresh Fruit and Vegetable Program CNS ensures compliance with Federal regulations through the annual administrative review process. OSA tested 17 FFVP CFRs from the nine SFAs who had an administrative review in fiscal year 2024 and found: • nine claims from five SFAs had sites with nonfood costs that were not reviewed during the administrative review process. • for six of the nine SFAs, portions of the administrative review process were erroneously omitted; therefore, CNS did not review or examine the allowability for any FFVP CFRs for those six SFAs. OSA selected a non-statistical random sample. The FFVP fiscal year is October 1 to September 30; therefore, though schools may begin the school year with unspent funds from the prior school year, these funds must be spent by September 30. OSA tested 19 FFVP SFAs that participated in both fiscal year 2023 and 2024 and found that three SFAs exceeded their fiscal year 2023 allocation in September 2023. CNS did not detect or correct this allocation issue until OSA inquired in September 2024. OSA selected a non-statistical random sample. Section 19 of the Richard B. Russell NSLA requires that FFVP allocations made by CNS result in a per-pupil grant not less than $50, nor more than $75 to participating SFAs. OSA tested 19 SFAs that participated in FFVP in fiscal year 2024 and found that 14 SFAs had manual allocation adjustments which resulted in ten per-pupil allocations that were not between $50 and $75 per pupil, ranging from $24 per pupil to $109 per pupil. The allocation of funds over $75 per pupil resulted in questioned costs of $9,535. OSA selected a non-statistical random sample. Summer Food Service Program CNS requires applications from sponsors that include individual site sheets. The information on the sheet must include the estimated number of meals, types of meals to be served, and meal service times. Meal service times must align with the approved application at the time the meals are served. Non-congregate sites must provide enough detail to ensure the area where the site proposes to serve meets certain criteria, including verification that the site: • is rural; • is not or will not be served in whole or in part by another site; • serves an area in which poor economic conditions exist or is approved for reimbursement only for meals served free to enrolled children who meet income standards; and • has procedures to ensure that duplicate meals are not served to any child. Residential and non-residential camps must include in their site sheets the number of children enrolled in each session who meet income standards prior to filing the camp’s CFR for each session. OSA tested 39 SFSP CFRs and found: • nine residential or non-residential camp CFRs that did not include the number of children enrolled in each session who met income standards prior to filing their CFR, resulting in questioned costs totaling $95,902. • two CFRs to non-congregate sites not located in an area where poor economic conditions exist per USDA data. The ineligible sites resulted in questioned costs totaling $15,536. • four CFRs included revised information from the site sheet that did not reflect the conditions at the time the meals were served. The revisions submitted between the meal service and submission of the CFR included an increase in capacity, an addition of meal types, and an addition of operating days, resulting in questioned costs totaling $5,821. • five CFRs to non-congregate sites that did not have documented procedures to prevent duplicate meal service on the site sheet. OSA selected a non-statistical random sample. Additionally, SFSP has two tiers of administrative rates for reimbursement, self-prep and vended. Sites classified as rural are all reimbursed at the highest rate, but sites classified as urban can either be reimbursed at the higher rate if they serve self-prep meals, or at the lower rate if their meals are vended. CNS previously determined that the field on the application for the sponsor to select whether the meal served is vended or self-prep is not required in the CNPWeb system. At that time, CNS submitted a ticket to request a change to the CNPWeb system to require the sponsor to select a meal type in that field on future applications; however, because that information was not required previously, CNS does not have assurance that urban sites that did not select self-prep or vended are being reimbursed at the correct rate. Furthermore, for each month of operation, CNS must report the number of meals served by meal type and sponsor type to USDA Food Nutrition Services (FNS) on the FNS-418 report. CNS does not have assurance that their default classification of urban sites as self-prep when the field was left blank is accurate for FNS-418 reporting. Context: In fiscal year 2024, CNS processed CFRs totaling: • $55.8 million under NSLP; • $2.8 million under FFVP; and • $2.8 million under SFSP. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Noncompliance with Federal regulations • Known questioned costs • Potential future questioned costs and disallowances • Potential incorrect rates of reimbursement paid to SFAs and sponsors • Inaccurate FNS-418 reports submitted to FNS Recommendation: We recommend that CNS enhance policies and procedures to: • require a review of CFRs on a monthly basis in accordance with Federal regulations; • ensure all required information is included in the applications and approved prior to participation; • review and approve area eligibility for non-congregate sites; • require inclusion of self-prep or vended meal types and non-congregate plans on site information sheets that document procedures to prevent duplicate meal service; • ensure session-specific eligibility information is received prior to claim approval for camp sites; and • ensure that site information sheet revisions prohibit the sponsor from using the revised information in a claim for the prior month. In addition, we recommend that CNS enhance oversight over FFVP to ensure: • claims with nonfood costs are reasonable; • allocation amounts remain within $50 to $75 per pupil; and • administrative reviews conducted by CNS include FFVP allowability reviews. Corrective Action Plan: See F-16 Management’s Response: The Department partially agrees with this finding. These findings come from various programs and are correctly outlined in the Condition. However, the Department disagrees with the first bullet in the Recommendation regarding the review of CFRs monthly and has contacted the Northeast Regional Office of the USDA for clarification. Additionally, we disagree with the first bullet point regarding non-food costs in the FFVP program, as it’s addressed in the Administrative Review process. The Department has developed a corrective action plan to address the remaining recommendations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 Auditor’s Concluding Remarks: 7 CFR 210.8(b)(2) provides detailed requirements outlining the minimum CFR monthly claim review procedures that CNS must perform. CNS has not implemented required procedures, and erroneous CFRs are not detected or corrected, resulting in questioned costs and potential disallowances. In addition, CNS asserts that FFVP nonfood costs are addressed as part of the Administrative Review process; however, OSA identified a material weakness and material noncompliance as issued in finding 2024-032 Internal control over CNC subrecipient monitoring procedures needs improvement. The finding reports that six of the nine Administrative Reviews tested for FFVP inappropriately omitted Federally required steps and that a cost analysis over nonfood costs was not performed. The finding remains as stated. (State Number: 24-1203-02)
(2024-047) Title: Internal control over Special Education period of performance needs improvement Prior Year Findings: See schedule of Findings and Questioned costs for chart/table State Department: Education Administrative and Financial Services State Bureau: Special Services & Inclusive Education General Government Service Center Federal Agency: U.S. Department of Education Assistance Listing Title: Special Education Cluster (IDEA) (COVID-19) Assistance Listing Number: 84.027, 84.173 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Period of performance Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: ALN 84.027 $7,303 Likely Questioned Costs: ALN 84.027 $31,768; likely questioned costs were projected by dividing the known questioned costs identified in the sample by total Federal fiscal year 2022 grant award expenditures tested to establish an error rate, then applying that error rate to total Federal fiscal year 2022 grant award expenditures paid in fiscal year 2024. Criteria: 2 CFR 200.303; 2 CFR 200.403; 34 CFR 76.703 and .709 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department must obligate Federal award funds during the 27-month period of performance, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. Condition: The Department of Education’s (DOE) Office of Special Services & Inclusive Education, in conjunction with the Department of Administrative and Financial Services’ General Government Service Center (GGSC), administers Federal funding received through the Special Education Cluster (SEC) program. The SEC program provides grants to states, and through them to Local Education Agencies (LEAs), to assist in providing special education and related services to eligible children. DOE and GGSC procedures include review and approval of requests for reimbursement from LEAs and other programmatic costs including payroll, administrative expenditures, and awards to subrecipients of State-level activities. This review includes a determination of whether the costs are obligated within the applicable Federal award’s period of performance through a comparison of billing dates and billing periods to grant award terms. Period of performance Federal regulations applicable to the SEC program in fiscal year 2024 relate to the Federal fiscal year 2022 grant award. The award’s obligation period ended September 30, 2023, and the liquidation period ended 120 calendar days following, on January 28, 2024. The Office of the State Auditor (OSA) tested 60 expenditure transactions that occurred during the Federal fiscal year 2022 grant award’s liquidation period to ensure that the expenditures were obligated and liquidated in accordance with Federal regulations. OSA identified five transactions totaling $7,303 where obligations occurred after September 30, 2023. Therefore, these transactions did not meet Federal fiscal year 2022 grant award’s period of performance requirements and are not allowable under the terms of the award. As a result, OSA identified questioned costs totaling $7,303. OSA selected a non-statistical random sample. Context: In fiscal year 2024, the Department expended $68.2 million in SEC program funds. Of this total, $5.8 million of Federal fiscal year 2022 grant funds was expended during the award’s liquidation period which occurred during fiscal year 2024. Cause: • Lack of adequate procedures • Lack of supervisory oversight Effect: • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance procedures and increase oversight to ensure that obligation of grant funds is made within period of performance requirements established in the terms and conditions of Federal grant awards. Corrective Action Plan: See F-21 Management’s Response: The Department agrees with this finding. The Office of Special Services & Inclusive Education has developed and will implement a corrective action plan to address the issue identified. Contact: Barbara McGowen, Director of Financial Management, Office of Special Services & Inclusive Education, DOE, 207-624-6645 (State Number: 24-1201-01)