2024-002 Activities Allowed or Unallowed and Allowable Costs/Cost Principles Prior Year Finding Number: N/A Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of the Treasury Program: 21.027 COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Award Number and Year: Direct, Not Provided Pass-Through Agency: Direct and City of Saint Paul Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 U.S. Code of Federal Regulations §§ 200.403(a) and 200.403(g) require costs to be necessary and reasonable, and be adequately documented. Condition: The County did not obtain itemized documentation for five out of 44 disbursements tested. Questioned Costs: $181,377; known questioned costs were determined based on individual expenditures with exceptions identified. Context: The County treated one vendor as a subrecipient and approved a budget for this vendor by type of expenditure. The County monitored the vendor's actual expenditures against approved budgeted expenditures. Total expenditures reported on the Schedule of Expenditures of Federal Awards is $50,901,938 for this program. The sample tested included approximately $2,570,500. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Additionally, four individually important items were selected for testing. Effect: The County has insufficient documentation to demonstrate expenditures were for allowable activities and met the requirements of allowable costs. Cause: The County felt its procedures over monitoring actual expenditures to budgeted expenditures were sufficient in lieu of reviewing itemized supporting documentation. Recommendation: We recommend the County obtain supporting documentation related to expenditures, including payroll reports and supporting receipts for purchases, sufficient to determine expenditures were for allowable activities. View of Responsible Official: Concur.
Finding 2024- 006 – Indirect Cost Rate Pool, Noncompliance and Significant Deficiency Federal award agency: Federal Transit Administration Program name and ALN: Federal Transit Cluster ALN 20.507 Federal Transit Formula Grants, ALN 20.525 State of Good Repair Grants Federal award identification number: IL-90-X717, IL-90-X726, IL-90-X743, IL-2016-021-01, IL-2017-028-02, IL-2018-024-01, IL-2019-022-02, IL-2021-002-02, IL-2020-050-02, IL-2021-002-01, IL-2020-018-01, IL-2021-050-02, IL-2021-024-01, IL-2022-032-02, IL-2022-005-01, IL-2023-036-02, IL-2023-036-04, IL-2024-025-02, IL-54-0002, IL-54-0003, IL-54-0006, IL-2016-020-01, IL-2017-028-01, IL-2018-024-02, IL-2019-022-01, IL-2020-050-01, IL-2021-050-01, IL-2022-032-01, IL-2022-032-03, IL-2023-036-01, IL-2023-036-03, IL-2024-025-01 Federal award year: 2013, 2014, 2015, 2016, 2017, 2018, 2020, 2021, 2022, 2023, 2024 Criteria: Under 2 CFR 200.441 (Fines, penalties, damages and other settlements), fines and penalties resulting from violations of, or failure to comply with, federal, state, local, or tribal laws and regulations are unallowable costs, unless incurred as a result of compliance with specific provisions of a federal award or with prior written approval of the federal awarding agency. Appendix V to 2 CFR Part 200 provides the required framework for states and local governments to identify, document, and allocate centralized service costs to benefitted Federal programs through a governmentwide cost allocation plan, as referenced by 200.414 for indirect cost recovery. Additionally, 2 CFR 200.403 and 2 CFR 200.414 require that indirect cost rates be based on allowable, allocable, and reasonable costs and that unallowable costs be excluded from indirect cost pools used to allocate costs to federal awards. Condition: During our testing of the underlying activity supporting the auditee’s federally approved indirect cost rate, we identified that the indirect cost rate pool submitted to and approved by the Federal Transit Administration (FTA) included a tax penalty related to the late payment of a state/local tax obligation. The tax penalty was not identified and excluded from the indirect cost pool prior to submission for rate approval. The tax penalty was not directly charged to any federal award; however, because it was included in the approved indirect cost rate pool, a portion of the unallowable cost was allocated to federal awards through application of the indirect cost rate during the audit period. Cause: The auditee did not have sufficient review controls over the preparation of the indirect cost rate proposal to ensure that unallowable costs, including tax penalties, were identified and excluded from the indirect cost pool prior to submission and approval by the FTA. Effect or potential effect: As a result, the FTA approved indirect cost rate was calculated using a pool that included unallowable costs, causing a portion of the tax penalty to be indirectly charged to federal awards. Questioned costs: N/A Context: The unallowable tax penalty identified in the indirect cost pool represents $487,000, an amount in relation to the total overhead costs included in the cost allocation plan of approximately $87.9 million. The approved indirect cost allocation plan was used to charge approximately $17 million to the major program during the audit period. Recommendation: We recommend that the auditee: • Revise its indirect cost rate development procedures to ensure unallowable costs are excluded from the indirect cost pool prior to submission; • Strengthen review controls over indirect cost proposals to ensure compliance with 2 CFR Part 200; and • Coordinate with the FTA to determine whether a rate adjustment, rate correction, or reimbursement to federal programs is required for amounts allocated using the affected indirect cost rate. Views of responsible officials: Management acknowledges the finding and agrees that remediation is necessary. Management will implement the recommendations that it has defined within the corrective action plan required by Title 2 CFR 200.511 (c) executed on April 16, 2026.
(3) Findings and Questioned Costs Relating to Federal Awards Finding No. 2024 002 Loan Origination Involving Fraudulent Documentation Program Name: EDA Revolving Loan Fund Program Capital Allocation - New York Contractor Loans (a non-major program) Federal Department/Agency: U.S. Department of Commerce Economic Development Administration Assistance Listing Number: 11.307 Federal Award Year: January 1, 2024 December 31, 2024 Grant Number Award #01-79-15074 Compliance Requirements: Activities Allowed and Unallowed and Allowable Costs Criteria Federal regulations and the Organization’s own policies require effective internal controls to ensure that loans, including those funded by federal programs, are made only to eligible, legitimate recipients and are properly authorized and documented. Specifically, 2 CFR §200.303 (Internal Controls) mandates that recipients of federal funds establish effective controls to safeguard assets and ensure proper use of federal awards. 2 CFR Part 200 establishes cost principles for determining costs applicable to federal awards with nonprofit organizations. The Uniform Guidance (2 CFR 200.403) requires that costs charged to federal awards be necessary, reasonable, allocable, adequately documented, and in compliance with the terms and conditions of the federal award. The Organization’s Contractor Mobilization Loan Program guidelines also require verification of each subcontractor’s legitimacy and confirmation of their engagement by a general contractor before loan disbursement. Condition and context In 2025, management conducted an internal review that uncovered several instances of fraud within the Organization’s Contractor Mobilization Loan Program. One of the loans, valued at $410,000, was funded using a grant provided by a U.S. Department of Commerce Economic Development Administration (EDA). The Schedule of Expenditures of Federal Awards includes approximately $3.3 million in federal expenditures related to EDA grants. The internal review determined that the borrower was not a legitimate subcontractor and did not hold contractual relationships or involvement with the general contractor identified in the loan applications; consequently, the loan was determined to be fraudulent. Furthermore, during the approval process, the employee responsible for verifying subcontractor eligibility misrepresented to the Organization’s underwriters that appropriate due diligence, including confirmation of existence and project participation from general contractor had been completed. However, those verifications were not performed, resulting in the loan being issued based on inaccurate information. Cause The primary cause of this finding was a gap in internal controls and oversight that allowed required due diligence procedures to be bypassed. The designated loan officer responsible for verifying subcontractors’ legitimacy failed to perform the mandated verification steps and misrepresented to underwriters that all requisite due diligence had been completed including claims of general contractor confirmation. This misrepresentation was possible due to a lack of segregation of duties in the loan approval process which enabled the loan officer to circumvent controls without detection. The Organization relied on a single designated individual to verify subcontractor legitimacy and project approval without sufficient independent checks or supervisory review. Effect This gap in the control resulted in the disbursement of $410,000 from a U.S. Department of Commerce Economic Development Administration grant to a an illegitimate subcontractor who did not hold contractual relationships or involvement with the general contractor. This lack of proper segregation of duties represents a material weakness in internal control over financial reporting and material noncompliance with federal award requirements. Questioned Costs $410,000. Statistical Sample Not applicable Repeat Finding A similar finding was not reported in the prior year. Recommendation We recommend that the Organization’s management design and implement enhanced internal control procedures over the subcontractor verification process that include considerations regarding segregation of duties, independent verification of general contractors, enhanced communication protocols and employee training. Views of Responsible Officials Management acknowledges the questioned cost and the need for improved controls as highlighted in this audit finding. However, the borrower referenced in this finding was a registered business whose corporate credentials and credit history were verified through standard underwriting procedures at the time of origination. The issue pertains specifically to documentation intended to demonstrate subcontractor engagement with general contractors, which was subsequently found to be invalid following further examination. In response, management has implemented several corrective actions including the adoption of a Know Your Customer (KYC) Policy, a Fraud and Suspicious Activity Reporting Policy and a Mandatory Leave Policy. Collectively, these policies introduce enhanced verification procedures, multiple and independent contractor confirmation requirements, comprehensive IRS tax transcript reviews, new fraud and suspicious activity reporting protocols, site visits, annual borrower review requirements and mandatory leave for employees in sensitive positions. Additionally, an independent Internal Audit function will be established in the third quarter of 2026. The matter referenced in this finding is currently the subject of a criminal investigation, and all characterizations of employee conduct remain alleged until the investigation concludes. Subsequent to year-end and prior to the issuance of this report, TruFund received instructions from the EDA to replenish the EDA Revolving Loan Fund with the $410,000 question cost and complied with those instructions.
Finding 2024-002 Information on the federal program: Federal Agency: Federal Transportation Administration Pass-Through Entity: N/A Federal Program: Federal Transit Cluster Assistance Listing Number: 20.507 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs – Cost Principles Audit Findings: Material Weakness Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. The Corporation should have controls in place to document that salaries and overtime paid with federal funds were allowable. Timecards supporting hours worked should be approved and pay rates reviewed. Condition and Context: A summary of allowable charges for the grant was prepared for submission. Within the sample of 42, we noted that 9 timecards for bus operators did not have documented review. Documented review was implemented in September 2024. All instances of the error were prior to September 2024. We also noted 1 timecard showed 2 hours more than reflected on the pay register, resulting in a net underpayment. Effect: Payroll expenditures could be inaccurately charged as an allowable activity or allowable costs to the federal grant. Cause: Management noted that time is tracked in a spreadsheet and is reviewed but formal documentation of review was not maintained. Questioned Costs: None. Identification as a Repeat Finding, if Applicable: This is a repeat finding. See finding 2023-001 in the prior report. Recommendation: We recommend the Corporation maintain documented approval of all timecards. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Criteria: Per 2 CFR § 200.303(a), the non-Federal entity must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the entity is managing the award in compliance with Federal statutes, regulations, and the terms and conditions of the awards. Additionally, per 2 CFR §200.403 and §200.302, costs charged to federal awards must be allowable, allocable, and properly documented, and financial reporting must be accurate, complete, and supported by the accounting system. Condition: Although the Parish has implemented internal controls related to the allowability of costs and the preparation of required reports for the Coronavirus State and Local Fiscal Recovery funds, they were not operating effectively during fiscal year 2024. Tests of controls indicated that transactions were not tracked appropriately to ensure they were charged to the correct funding source. In addition, quarterly project and expenditure reports submitted to the U.S. Treasury included inaccurate or unsupported information due to a lack of tracking and reconciliation procedures. Cause: As discussed in item 2024-001, the Parish encountered several challenges during the transition of administration and key personnel. Parish administration and management were immediately tasked with enhancing operations related to procedural concerns from the prior administration and performing the accounting function without sufficient documentation on several balances and transactions. The documented controls were not in practice because of this. Effect: While no instances of noncompliance were noted, the lack of documented controls in practice increases the risk that future required reports could be incomplete, inaccurate, or untimely, as well as, federal costs being unallowed per the cost principles which could potentially result in program noncompliance. Recommendation: We recommend that the Parish enhance and document internal controls over financial reporting, as described in our recommendations described under item 2024-001, to prevent noncompliance of the Uniform Guidance as required. Views of responsible officials: See management’s responses to findings on Page 116.
Finding 2024-004 Lack of documented approval of Other Than Personal Services (OTPS) expenditures charged to federal awards (Assistance Listings 19.510, 93.566, 93.583 and 93.576) Criteria: Under 2 CFR 200.303, the nonfederal entity must establish, document, and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award; those internal controls should align with the Green Book or COSO framework and include adequate authorization and review of disbursements. To be allowable under a federal award, costs must be necessary and reasonable, allocable, accorded consistent treatment, determined in accordance with GAAP, not used to meet cost-sharing of other federal programs, adequately documented, and incurred during the approved budget period per 2 CFR 200.403. Inadequate or missing documentation may result in costs being considered improper payments or disallowed costs. Condition and Context: During testing of OTPS expenditures charged to the programs, the Organization did not consistently document required management approval prior to payment. For 13 of 23 OTPS transactions tested, totaling $49,393, the supporting documentation did not contain evidence of review and approval by an individual with appropriate authority in accordance with the Organization’s written policies and procedures. In addition, for these items, there was no alternative documentation demonstrating that the costs had been reviewed for allowability, allocability, and reasonableness before being charged to the federal award. Cause: The Organization’s policies require documented approval for OTPS expenditures; however, management did not effectively enforce these procedures, and staff responsible for processing OTPS transactions were not consistently following the policy and procedures on the documentation and approval requirements. Effect: Because documented approval was not consistently obtained prior to payment, there is an increased risk that unallowable, unreasonable, or non-program-related OTPS costs could be charged to the federal award. The transactions identified without documented approval may be subject to disallowance by the federal awarding agency or pass-through entity. Identification as a repeat finding: No. Questioned costs: None. Recommendation: We recommend that management: Reinforce and, if necessary, update written policies and procedures to require documented review and approval of all OTPS expenditures charged to federal awards prior to payment, including documentation of the program, funding source, and allowability assessment. Provide training to staff responsible for initiating, reviewing, and approving OTPS transactions to ensure understanding of Uniform Guidance requirements for allowability, allocability, and documentation. Implement periodic monitoring (for example, supervisory review of a sample of OTPS transactions) to verify that approvals are documented and that OTPS costs charged to federal awards are properly supported and in compliance with 2 CFR 200.303 and 2 CFR 200.403. Views of Responsible Officials: The Organization proactively enacted rigorous internal controls and systemic enhancements for FY25 to ensure optimal oversight and adherence to federal guidelines. Management has addressed this recommendation by deploying a strict, comprehensive expense request process to ensure robust internal controls over all Other Than Personal Services (OTPS) expenditures. To ensure full compliance with 2 CFR 200.303 and 200.403, Finance has deployed the following enhancements to our accounts payable workflows: Strict Electronic Approval Workflow: Finance has established a stringent review and approval protocol that requires direct involvement from Program Directors and Department Heads. All OTPS expenditures are now routed through a formalized electronic workflow, which mandates documented review and secure electronic signatures from authorized leadership prior to any payment processing. System-Integrated Documentation: The new process strictly requires that all supporting documentation-including invoices, receipts, and evidence of allowability-be provided upfront. These documents are now uploaded and attached directly to the specific transaction within the accounting program, creating a permanent, easily accessible, and audit-ready trail for every federal charge. Targeted Training and Oversight: To support this modernized workflow, Finance is providing targeted training to all staff responsible for initiating and approving transactions, ensuring a clear understanding of Uniform Guidance requirements. Furthermore, Finance leadership conducts periodic supervisory reviews directly within the accounting system to verify that all electronic approvals are captured and source documents are properly attached.
Assistance Listing Number(s): 10.902 Name of Federal Program or Cluster: Soil and Water Conservation Name of Federal Agency: Department of Agriculture Award Periods: Grant # NR205F48XXXXC006 and period September 30, 2020 through September 30, 2025 and Grant # FAN NR223A750022C002 and period December 21, 2023 through September 30, 2025 Assistance Listing Number(s): 10.912 Name of Federal Program or Cluster: Environmental Quality Incentives Program Name of Federal Agency: Department of Agriculture Award Periods: Grant # NR205F48XXXXC006 and period September 30, 2020 through September 30, 2025 and Grant # FAN NR223A750022C002 and period December 21, 2023 through September 30, 2025 Assistance Listing Number(s): 10.924 Name of Federal Program or Cluster: Conservation Stewardship Program Name of Federal Agency: Department of Agriculture Award Periods: Grant # NR205F48XXXXC006 and period September 30, 2020 through September 30, 2025 and Grant # FAN NR223A750022C002 and period December 21, 2023 through September 30, 2025 Criteria or Specific Requirement: 2 CFR Section 200.403 states the factors that determine allowability of costs charged to federal awards and requires costs to be determined in accordance with generally accepted accounting principles. Condition: We identified costs incurred in 2023 that were incorrectly recorded as 2024 costs and charged to federal awards. Cause: Management has not designed and implemented sufficient internal controls to ensure costs are recorded in accordance with generally accepted accounting principles to be allowable for federal awards. Effect or Potential Effect: An unallowable cost could be charged to the federal program. Context and Questioned Costs: During our testing of grants for appropriate accounting period cutoff, we identified 2023 costs that were charged to grants in 2024. Thus, we selected all grant transactions charged to the major program that were recorded in January 2024, and grant transactions over $2,500 for the period February 1, 2024 through June 30, 2024 to test for recognition in the proper period. The amount tested totaled $346,077, which included $9,506 of costs recorded in the wrong period. Other than not being recorded in accordance with generally accepted accounting principles, these costs were otherwise allowable and recorded in the proper period of performance. Repeat Finding: Yes Recommendation: We recommend management design and implement sufficient internal controls to ensure costs are recorded in accordance with generally accepted accounting principles to be allowable for federal awards. Views of Responsible Officials: Views of Responsible Officials: Management agrees with the finding and they will evaluate our findings to determine an appropriate corrective action. After evaluation, Glacierland will designate specific tasks to the ‘Bookkeeper’ and ‘Executive Assistant’. These tasks will be reviewed by one another and the Executive Director. Creation of these two roles and review procedures will allow for increased internal controls to ensure costs are recorded in accordance with GAAP.
2024-006 Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting Prior Year Finding Number: N/A Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Grants to States for Medicaid Award Number and Year: 2405MN5ADM; 2024 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 U.S. Code of Federal Regulations §§ 200.403(a) and 200.403(g) require costs to be necessary and reasonable, and be adequately documented. For federal awards received from the Minnesota Department of Human Services (DHS), internal controls should be established and maintained to provide assurance that program reports submitted to DHS are completed and documented in accordance with DHS reporting instructions. As part of Wilkin County’s reporting requirements, the Public Health Department submits the Local Collaborative Time Study (LCTS) Public Health Cost Schedule DHS-3220.3 on a quarterly basis. Condition: The County did not maintain adequate support for the reported payroll amounts on LCTS Public Health Cost Schedule DHS-3220.3 reports tested. The reports also had no documentation of review. Questioned Costs: $329,183; known questioned costs were determined based on the payroll costs from each of the four LCTS Public Health Cost Schedule DHS-3220.3 reports. Context: Minnesota DHS relies on accurate submission of program costs to ensure that resulting grant funds paid to Wilkin County are for applicable federal program activities/costs. Total expenditures reported on the Schedule of Expenditures of Federal Awards are $416,193. Amounts reported on the DHS-2550, DHS-2556, and LCTS Public Health Cost Schedule DHS-3220.3 reports were $759,694, $1,879,054, and $379,254, respectively. The State of Minnesota determines the reimbursement of reported expenditures. The reporting population consisted of four quarterly DHS-2550, DHS-2556, and LCTS Public Health Cost Schedule DHS-3220.3 reports; and originally a sample of two of each report type was selected for report testing. Additionally, a sample of 40 expenditures were selected for testing, which included five LCTS Public Health Cost Schedule DHS-3220.3 expenditures for testing. Payroll reported expenditure testing relating to the LCTS Public Health Cost Schedule DHS-3220.3 was expanded to cover payroll expenditures of all four quarters.The sample size was based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits, and subsequently expanded. Effect: Errors in the identification and reporting of costs on the quarterly reports can impair DHS’ ability to provide required oversight over federal programs and result in the County receiving either more or less federal funds than justified based on the actual underlying activity. Cause: The employee who prepared the reports and the supporting documentation left the County in 2025. The supporting documentation could not be located. Recommendation: We recommend the County implement controls to ensure activities allowed and allowable costs are appropriately identified and accurately reported to DHS in accordance with federal program guidance and DHS instructions, including that reports are reviewed by someone other than the preparer. We also recommend the County correct and resubmit reports submitted with unallowable activities or costs, costs allocated incorrectly, or activity reporting incorrectly. View of Responsible Official: Concur
Finding 2024-002: Significant Deficiency – Allowable Costs / Cost Principles Repeat Finding – 2023-002 Federal Program: Opioid STR - SARC Federal Agency: U.S. Department of Health and Human Services Assistance Listing Number (ALN): 93.788 Pass-Through Agency: Minnesota Department of Health and Human Services Criteria: 2 CFR 200.403(e) and (f) state that charges to federal awards must be determined in accordance with generally accepted accounting principles (GAAP) and be adequately documented. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated; and support the distribution of the costs among specific activities or cost objectives if the expenses supported more than one federal award, or a federal award and non-federal award. Also, 2 CFR 200.430(i)(1)(i) & (vii) state that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated; and support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one federal award, or a federal award and non-federal award. Condition: Two of the forty non-payroll transactions that were tested did not have evidence of approval for the amount allocated to the federal program. Seven of the forty payroll transactions that were tested did not have evidence of an approved pay rate. The sample was not a statistically valid sample. Cause: The Organization's control process for expenditure and payroll authorizations were not properly implemented. Effect: Inadequate controls over the allocation of costs could result in unallowable costs being improperly applied to the federal program. Questioned Costs: Not required Recommendation: The Organization should have formal written procedures to ensure that all relevant authorization and reviews have been completed before allocating costs to federal programs. Views of Responsible Officials and Planned Corrective Action: Management agrees with the auditors' finding and will take action to implement controlling procedures over federal programs.
2024 – 003 Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Low-Income Home Energy Assistance Program (LIHEAP) Assistance Listing Number: 93.568 Federal Award Identification Number and Year: G-2402LLIEA 6/1/2024; 2302ILLIEI 3/1/2023; G 2302ILLIEA 10/1/2022 Pass-Through Agency: Illinois Department of Commerce and Economic Opportunity Pass-Through Numbers: 23-221038; 23-274038; 23-224038 Award Period: June 1, 2024 through September 30, 2025; March 1, 2023 through August 31, 2024; October 1, 2022 through August 31, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or Specific Requirement: Uniform Grant Guidance (2 CFR 200.303) requires non-federal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Uniform Grant Guidance (2 CFR 200.308, 200.309, and 200.403(h)) requires that only allowable costs incurred during the approved budget period of a federal award’s period of performance be charged to the award. Effective internal controls should include procedures that involve costs charged to federal awards being reviewed and approved for proper period of performance. Condition: The County charged costs to the federal award after the end of the period of performance. Furthermore, although payroll transactions charged to the federal award were reviewed and approved, documentation of such review was not retained. Questioned Costs: $706 Context: 4 of 97 transactions tested were incurred after the period of performance end date. All 18 payroll transactions tested lacked documentation of review and approval. Cause: Costs were inadvertently claimed outside the period of performance. Documentation of review and approval for payroll transactions was also not retained. Effect: Charging costs outside the period of performance can result in unallowable costs being charged to federal awards, which could lead to noncompliance with federal requirements and potential repayment obligations. Repeat Finding: The finding is a repeat of a finding in the prior year. The prior year finding number was 2023-005. Section III – Findings and Questioned Costs – Major Federal Programs (Continued) 2024 – 003 Period of Performance (Continued) Recommendation: We recommend that the County review and strengthen its internal controls to ensure that only costs incurred within the period of performance are charged. Costs charged to federal awards should be reviewed and approved for proper period of performance, and documentation of such review should be retained. Views of Responsible Officials: There is no disagreement with the audit finding.
2024 – 003 Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Low-Income Home Energy Assistance Program (LIHEAP) Assistance Listing Number: 93.568 Federal Award Identification Number and Year: G-2402LLIEA 6/1/2024; 2302ILLIEI 3/1/2023; G 2302ILLIEA 10/1/2022 Pass-Through Agency: Illinois Department of Commerce and Economic Opportunity Pass-Through Numbers: 23-221038; 23-274038; 23-224038 Award Period: June 1, 2024 through September 30, 2025; March 1, 2023 through August 31, 2024; October 1, 2022 through August 31, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or Specific Requirement: Uniform Grant Guidance (2 CFR 200.303) requires non-federal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Uniform Grant Guidance (2 CFR 200.308, 200.309, and 200.403(h)) requires that only allowable costs incurred during the approved budget period of a federal award’s period of performance be charged to the award. Effective internal controls should include procedures that involve costs charged to federal awards being reviewed and approved for proper period of performance. Condition: The County charged costs to the federal award after the end of the period of performance. Furthermore, although payroll transactions charged to the federal award were reviewed and approved, documentation of such review was not retained. Questioned Costs: $706 Context: 4 of 97 transactions tested were incurred after the period of performance end date. All 18 payroll transactions tested lacked documentation of review and approval. Cause: Costs were inadvertently claimed outside the period of performance. Documentation of review and approval for payroll transactions was also not retained. Effect: Charging costs outside the period of performance can result in unallowable costs being charged to federal awards, which could lead to noncompliance with federal requirements and potential repayment obligations. Repeat Finding: The finding is a repeat of a finding in the prior year. The prior year finding number was 2023-005. Section III – Findings and Questioned Costs – Major Federal Programs (Continued) 2024 – 003 Period of Performance (Continued) Recommendation: We recommend that the County review and strengthen its internal controls to ensure that only costs incurred within the period of performance are charged. Costs charged to federal awards should be reviewed and approved for proper period of performance, and documentation of such review should be retained. Views of Responsible Officials: There is no disagreement with the audit finding.
2024 – 003 Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Low-Income Home Energy Assistance Program (LIHEAP) Assistance Listing Number: 93.568 Federal Award Identification Number and Year: G-2402LLIEA 6/1/2024; 2302ILLIEI 3/1/2023; G 2302ILLIEA 10/1/2022 Pass-Through Agency: Illinois Department of Commerce and Economic Opportunity Pass-Through Numbers: 23-221038; 23-274038; 23-224038 Award Period: June 1, 2024 through September 30, 2025; March 1, 2023 through August 31, 2024; October 1, 2022 through August 31, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or Specific Requirement: Uniform Grant Guidance (2 CFR 200.303) requires non-federal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Uniform Grant Guidance (2 CFR 200.308, 200.309, and 200.403(h)) requires that only allowable costs incurred during the approved budget period of a federal award’s period of performance be charged to the award. Effective internal controls should include procedures that involve costs charged to federal awards being reviewed and approved for proper period of performance. Condition: The County charged costs to the federal award after the end of the period of performance. Furthermore, although payroll transactions charged to the federal award were reviewed and approved, documentation of such review was not retained. Questioned Costs: $706 Context: 4 of 97 transactions tested were incurred after the period of performance end date. All 18 payroll transactions tested lacked documentation of review and approval. Cause: Costs were inadvertently claimed outside the period of performance. Documentation of review and approval for payroll transactions was also not retained. Effect: Charging costs outside the period of performance can result in unallowable costs being charged to federal awards, which could lead to noncompliance with federal requirements and potential repayment obligations. Repeat Finding: The finding is a repeat of a finding in the prior year. The prior year finding number was 2023-005. Section III – Findings and Questioned Costs – Major Federal Programs (Continued) 2024 – 003 Period of Performance (Continued) Recommendation: We recommend that the County review and strengthen its internal controls to ensure that only costs incurred within the period of performance are charged. Costs charged to federal awards should be reviewed and approved for proper period of performance, and documentation of such review should be retained. Views of Responsible Officials: There is no disagreement with the audit finding.
2024 – 003 Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Low-Income Home Energy Assistance Program (LIHEAP) Assistance Listing Number: 93.568 Federal Award Identification Number and Year: G-2402LLIEA 6/1/2024; 2302ILLIEI 3/1/2023; G 2302ILLIEA 10/1/2022 Pass-Through Agency: Illinois Department of Commerce and Economic Opportunity Pass-Through Numbers: 23-221038; 23-274038; 23-224038 Award Period: June 1, 2024 through September 30, 2025; March 1, 2023 through August 31, 2024; October 1, 2022 through August 31, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or Specific Requirement: Uniform Grant Guidance (2 CFR 200.303) requires non-federal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Uniform Grant Guidance (2 CFR 200.308, 200.309, and 200.403(h)) requires that only allowable costs incurred during the approved budget period of a federal award’s period of performance be charged to the award. Effective internal controls should include procedures that involve costs charged to federal awards being reviewed and approved for proper period of performance. Condition: The County charged costs to the federal award after the end of the period of performance. Furthermore, although payroll transactions charged to the federal award were reviewed and approved, documentation of such review was not retained. Questioned Costs: $706 Context: 4 of 97 transactions tested were incurred after the period of performance end date. All 18 payroll transactions tested lacked documentation of review and approval. Cause: Costs were inadvertently claimed outside the period of performance. Documentation of review and approval for payroll transactions was also not retained. Effect: Charging costs outside the period of performance can result in unallowable costs being charged to federal awards, which could lead to noncompliance with federal requirements and potential repayment obligations. Repeat Finding: The finding is a repeat of a finding in the prior year. The prior year finding number was 2023-005. Section III – Findings and Questioned Costs – Major Federal Programs (Continued) 2024 – 003 Period of Performance (Continued) Recommendation: We recommend that the County review and strengthen its internal controls to ensure that only costs incurred within the period of performance are charged. Costs charged to federal awards should be reviewed and approved for proper period of performance, and documentation of such review should be retained. Views of Responsible Officials: There is no disagreement with the audit finding.
2024 – 003 Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Low-Income Home Energy Assistance Program (LIHEAP) Assistance Listing Number: 93.568 Federal Award Identification Number and Year: G-2402LLIEA 6/1/2024; 2302ILLIEI 3/1/2023; G 2302ILLIEA 10/1/2022 Pass-Through Agency: Illinois Department of Commerce and Economic Opportunity Pass-Through Numbers: 23-221038; 23-274038; 23-224038 Award Period: June 1, 2024 through September 30, 2025; March 1, 2023 through August 31, 2024; October 1, 2022 through August 31, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or Specific Requirement: Uniform Grant Guidance (2 CFR 200.303) requires non-federal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Uniform Grant Guidance (2 CFR 200.308, 200.309, and 200.403(h)) requires that only allowable costs incurred during the approved budget period of a federal award’s period of performance be charged to the award. Effective internal controls should include procedures that involve costs charged to federal awards being reviewed and approved for proper period of performance. Condition: The County charged costs to the federal award after the end of the period of performance. Furthermore, although payroll transactions charged to the federal award were reviewed and approved, documentation of such review was not retained. Questioned Costs: $706 Context: 4 of 97 transactions tested were incurred after the period of performance end date. All 18 payroll transactions tested lacked documentation of review and approval. Cause: Costs were inadvertently claimed outside the period of performance. Documentation of review and approval for payroll transactions was also not retained. Effect: Charging costs outside the period of performance can result in unallowable costs being charged to federal awards, which could lead to noncompliance with federal requirements and potential repayment obligations. Repeat Finding: The finding is a repeat of a finding in the prior year. The prior year finding number was 2023-005. Section III – Findings and Questioned Costs – Major Federal Programs (Continued) 2024 – 003 Period of Performance (Continued) Recommendation: We recommend that the County review and strengthen its internal controls to ensure that only costs incurred within the period of performance are charged. Costs charged to federal awards should be reviewed and approved for proper period of performance, and documentation of such review should be retained. Views of Responsible Officials: There is no disagreement with the audit finding.
2024 – 003 Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Low-Income Home Energy Assistance Program (LIHEAP) Assistance Listing Number: 93.568 Federal Award Identification Number and Year: G-2402LLIEA 6/1/2024; 2302ILLIEI 3/1/2023; G 2302ILLIEA 10/1/2022 Pass-Through Agency: Illinois Department of Commerce and Economic Opportunity Pass-Through Numbers: 23-221038; 23-274038; 23-224038 Award Period: June 1, 2024 through September 30, 2025; March 1, 2023 through August 31, 2024; October 1, 2022 through August 31, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or Specific Requirement: Uniform Grant Guidance (2 CFR 200.303) requires non-federal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Uniform Grant Guidance (2 CFR 200.308, 200.309, and 200.403(h)) requires that only allowable costs incurred during the approved budget period of a federal award’s period of performance be charged to the award. Effective internal controls should include procedures that involve costs charged to federal awards being reviewed and approved for proper period of performance. Condition: The County charged costs to the federal award after the end of the period of performance. Furthermore, although payroll transactions charged to the federal award were reviewed and approved, documentation of such review was not retained. Questioned Costs: $706 Context: 4 of 97 transactions tested were incurred after the period of performance end date. All 18 payroll transactions tested lacked documentation of review and approval. Cause: Costs were inadvertently claimed outside the period of performance. Documentation of review and approval for payroll transactions was also not retained. Effect: Charging costs outside the period of performance can result in unallowable costs being charged to federal awards, which could lead to noncompliance with federal requirements and potential repayment obligations. Repeat Finding: The finding is a repeat of a finding in the prior year. The prior year finding number was 2023-005. Section III – Findings and Questioned Costs – Major Federal Programs (Continued) 2024 – 003 Period of Performance (Continued) Recommendation: We recommend that the County review and strengthen its internal controls to ensure that only costs incurred within the period of performance are charged. Costs charged to federal awards should be reviewed and approved for proper period of performance, and documentation of such review should be retained. Views of Responsible Officials: There is no disagreement with the audit finding.
2024 – 003 Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Low-Income Home Energy Assistance Program (LIHEAP) Assistance Listing Number: 93.568 Federal Award Identification Number and Year: G-2402LLIEA 6/1/2024; 2302ILLIEI 3/1/2023; G 2302ILLIEA 10/1/2022 Pass-Through Agency: Illinois Department of Commerce and Economic Opportunity Pass-Through Numbers: 23-221038; 23-274038; 23-224038 Award Period: June 1, 2024 through September 30, 2025; March 1, 2023 through August 31, 2024; October 1, 2022 through August 31, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or Specific Requirement: Uniform Grant Guidance (2 CFR 200.303) requires non-federal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Uniform Grant Guidance (2 CFR 200.308, 200.309, and 200.403(h)) requires that only allowable costs incurred during the approved budget period of a federal award’s period of performance be charged to the award. Effective internal controls should include procedures that involve costs charged to federal awards being reviewed and approved for proper period of performance. Condition: The County charged costs to the federal award after the end of the period of performance. Furthermore, although payroll transactions charged to the federal award were reviewed and approved, documentation of such review was not retained. Questioned Costs: $706 Context: 4 of 97 transactions tested were incurred after the period of performance end date. All 18 payroll transactions tested lacked documentation of review and approval. Cause: Costs were inadvertently claimed outside the period of performance. Documentation of review and approval for payroll transactions was also not retained. Effect: Charging costs outside the period of performance can result in unallowable costs being charged to federal awards, which could lead to noncompliance with federal requirements and potential repayment obligations. Repeat Finding: The finding is a repeat of a finding in the prior year. The prior year finding number was 2023-005. Section III – Findings and Questioned Costs – Major Federal Programs (Continued) 2024 – 003 Period of Performance (Continued) Recommendation: We recommend that the County review and strengthen its internal controls to ensure that only costs incurred within the period of performance are charged. Costs charged to federal awards should be reviewed and approved for proper period of performance, and documentation of such review should be retained. Views of Responsible Officials: There is no disagreement with the audit finding.
2024 – 003 Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Low-Income Home Energy Assistance Program (LIHEAP) Assistance Listing Number: 93.568 Federal Award Identification Number and Year: G-2402LLIEA 6/1/2024; 2302ILLIEI 3/1/2023; G 2302ILLIEA 10/1/2022 Pass-Through Agency: Illinois Department of Commerce and Economic Opportunity Pass-Through Numbers: 23-221038; 23-274038; 23-224038 Award Period: June 1, 2024 through September 30, 2025; March 1, 2023 through August 31, 2024; October 1, 2022 through August 31, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or Specific Requirement: Uniform Grant Guidance (2 CFR 200.303) requires non-federal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Uniform Grant Guidance (2 CFR 200.308, 200.309, and 200.403(h)) requires that only allowable costs incurred during the approved budget period of a federal award’s period of performance be charged to the award. Effective internal controls should include procedures that involve costs charged to federal awards being reviewed and approved for proper period of performance. Condition: The County charged costs to the federal award after the end of the period of performance. Furthermore, although payroll transactions charged to the federal award were reviewed and approved, documentation of such review was not retained. Questioned Costs: $706 Context: 4 of 97 transactions tested were incurred after the period of performance end date. All 18 payroll transactions tested lacked documentation of review and approval. Cause: Costs were inadvertently claimed outside the period of performance. Documentation of review and approval for payroll transactions was also not retained. Effect: Charging costs outside the period of performance can result in unallowable costs being charged to federal awards, which could lead to noncompliance with federal requirements and potential repayment obligations. Repeat Finding: The finding is a repeat of a finding in the prior year. The prior year finding number was 2023-005. Section III – Findings and Questioned Costs – Major Federal Programs (Continued) 2024 – 003 Period of Performance (Continued) Recommendation: We recommend that the County review and strengthen its internal controls to ensure that only costs incurred within the period of performance are charged. Costs charged to federal awards should be reviewed and approved for proper period of performance, and documentation of such review should be retained. Views of Responsible Officials: There is no disagreement with the audit finding.
2024 – 003 Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Low-Income Home Energy Assistance Program (LIHEAP) Assistance Listing Number: 93.568 Federal Award Identification Number and Year: G-2402LLIEA 6/1/2024; 2302ILLIEI 3/1/2023; G 2302ILLIEA 10/1/2022 Pass-Through Agency: Illinois Department of Commerce and Economic Opportunity Pass-Through Numbers: 23-221038; 23-274038; 23-224038 Award Period: June 1, 2024 through September 30, 2025; March 1, 2023 through August 31, 2024; October 1, 2022 through August 31, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or Specific Requirement: Uniform Grant Guidance (2 CFR 200.303) requires non-federal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Uniform Grant Guidance (2 CFR 200.308, 200.309, and 200.403(h)) requires that only allowable costs incurred during the approved budget period of a federal award’s period of performance be charged to the award. Effective internal controls should include procedures that involve costs charged to federal awards being reviewed and approved for proper period of performance. Condition: The County charged costs to the federal award after the end of the period of performance. Furthermore, although payroll transactions charged to the federal award were reviewed and approved, documentation of such review was not retained. Questioned Costs: $706 Context: 4 of 97 transactions tested were incurred after the period of performance end date. All 18 payroll transactions tested lacked documentation of review and approval. Cause: Costs were inadvertently claimed outside the period of performance. Documentation of review and approval for payroll transactions was also not retained. Effect: Charging costs outside the period of performance can result in unallowable costs being charged to federal awards, which could lead to noncompliance with federal requirements and potential repayment obligations. Repeat Finding: The finding is a repeat of a finding in the prior year. The prior year finding number was 2023-005. Section III – Findings and Questioned Costs – Major Federal Programs (Continued) 2024 – 003 Period of Performance (Continued) Recommendation: We recommend that the County review and strengthen its internal controls to ensure that only costs incurred within the period of performance are charged. Costs charged to federal awards should be reviewed and approved for proper period of performance, and documentation of such review should be retained. Views of Responsible Officials: There is no disagreement with the audit finding.
2024 – 003 Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Low-Income Home Energy Assistance Program (LIHEAP) Assistance Listing Number: 93.568 Federal Award Identification Number and Year: G-2402LLIEA 6/1/2024; 2302ILLIEI 3/1/2023; G 2302ILLIEA 10/1/2022 Pass-Through Agency: Illinois Department of Commerce and Economic Opportunity Pass-Through Numbers: 23-221038; 23-274038; 23-224038 Award Period: June 1, 2024 through September 30, 2025; March 1, 2023 through August 31, 2024; October 1, 2022 through August 31, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or Specific Requirement: Uniform Grant Guidance (2 CFR 200.303) requires non-federal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Uniform Grant Guidance (2 CFR 200.308, 200.309, and 200.403(h)) requires that only allowable costs incurred during the approved budget period of a federal award’s period of performance be charged to the award. Effective internal controls should include procedures that involve costs charged to federal awards being reviewed and approved for proper period of performance. Condition: The County charged costs to the federal award after the end of the period of performance. Furthermore, although payroll transactions charged to the federal award were reviewed and approved, documentation of such review was not retained. Questioned Costs: $706 Context: 4 of 97 transactions tested were incurred after the period of performance end date. All 18 payroll transactions tested lacked documentation of review and approval. Cause: Costs were inadvertently claimed outside the period of performance. Documentation of review and approval for payroll transactions was also not retained. Effect: Charging costs outside the period of performance can result in unallowable costs being charged to federal awards, which could lead to noncompliance with federal requirements and potential repayment obligations. Repeat Finding: The finding is a repeat of a finding in the prior year. The prior year finding number was 2023-005. Section III – Findings and Questioned Costs – Major Federal Programs (Continued) 2024 – 003 Period of Performance (Continued) Recommendation: We recommend that the County review and strengthen its internal controls to ensure that only costs incurred within the period of performance are charged. Costs charged to federal awards should be reviewed and approved for proper period of performance, and documentation of such review should be retained. Views of Responsible Officials: There is no disagreement with the audit finding.
Finding 2024-007 – Allowable Costs & Period of Performance (Material Weakness and Noncompliance) Information on the Federal Program: U.S. Department of Education, Higher Education- Institutional Aid (Title III), Assistance Listing No. 84.031 Criteria: 2 CFR Part 200 Subpart E establishes cost principles to apply in determining costs under federal awards. Non-federal entities are also required to establish controls over the disbursement process to ensure compliance with allowable cost requirements. In addition, a non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). Condition: We selected a sample of 25 non-payroll disbursements and 25 payroll disbursements charged to the grant. Of the 25 non-payroll, 4 were missing an approval by the Director of Title III Programs and 4 costs were not in the applicable budgets. In addition, 2 were charged to a fund code for a grant period that ended September 30, 2023. There were 44 pay checks tested in the sample of 25; of those 44, 31 exceptions were noted as having an issue around the approved pay rate documentation. In 9 instances, there was no documented approved pay rate, only support provided was a local salary schedule for multiple positions for 6 of the exceptions. In 15 instances, there was no approval for salary to be charged to the grant number and documentation showed unrestricted, a different account or offer letter had no Title III documentation. In 7 instances, the approved pay rate did not agree to actual paycheck report. Cause: The College did not obtain proper approval by the Director of the program, expenses did not fit into the grant budget line items, approved pay rates were not properly documented and the College continued to use funds after the grant period ended based on verbal instruction. Effect: The College’s grant disbursements were not properly approved. Questioned Costs: $35,461 Recommendation: We recommend the College strengthen its policies and procedures surrounding payroll and non-payroll grant disbursements to ensure controls are functioning and compliant with federal regulations Views of Responsible Officials: See Management’s View and Corrective Action Plan included at the end of the report.
Finding Number 2024-001 Assistance Listing # 21.027 - Coronavirus State and Local Fiscal Recovery Funds Allowable Activities and Costs Material Weakness in Internal Control Over Financial Reporting and Compliance Immaterial Noncompliance Criteria: Federal regulations 2 CFR Part 200, §200.403(g) require allowable costs be adequately documented. Condition: The Organization did not retain general ledger supporting detail of the costs directly coded to the federal award program and requested for reimbursement. Further, the Organization does not allocate administrative costs directly within the general ledger. Cause: A breakdown in procedures, partially attributable to the federal award program being new during the year, led to expenses being coded to the federal award program within the general ledger that were not submitted for reimbursement. In some cases, expense coding was changed after reimbursement requests were submitted, thereby effectively reclassifying expenses into the federal award program within the general ledger, or out of the federal award program. Additionally, the Organization does not journalize the allocation of administrative costs to specific federal award programs within the general ledger. Effect: As a result of this condition, the Organization's general ledger does not reconcile to the total expenses requested for reimbursement for the federal award program. The general ledger supports expenses of approximately $13,000 less than the reimbursements received, because it excludes the administrative costs allocation. Administrative costs claimed for reimbursement approximated $15,000, and when combined with expenses directly coded to the federal award program, total expenses exceed the reimbursements received, therefore, there are no questioned costs. Questioned Costs: None. Recommendation: We recommend management develop procedures whereby administrative allocations are journalized monthly to each applicable program. Upon submitting reimbursement requests, the Organization should retain documentation for each federal award program that supports the costs claimed for reimbursement. Management's Response: The Organization acknowledges the finding and agrees with the auditors' recommendations. We recognize the importance of maintaining accurate documentation and financial controls to ensure compliance with federal regulations. To address the finding, the Organization will implement the following corrective actions: 1) Journalizing administrative allocations - effective March 31, the Organization will implement a procedure to allocate administrative costs to each applicable federal award program through monthly journal entries within the general ledger. 2) Improved documentation retention - the Organization will establish a process to retain supporting documentation for all costs submitted for reimbursement, ensuring alignment between the general ledger and reimbursement requests. 3) Internal controls for expense classification - the Organization will implement additional controls to prevent expenses from being reclassified within the general ledger after reimbursement requests have been submitted. Any necessary adjustments will be documented with a clear audit trail. These corrective actions will be fully implemented by March 31, 2025, will include and cover all such costs from the start of the fiscal year which began October 1, 2024, and management will monitor compliance to ensure ongoing adherence to these procedures. Responsible Party for Corrective Action: Bryce Hundley, Director of Finance Anticipated Completion Date: February 2025
Finding Number 2024-001 Assistance Listing # 21.027 - Coronavirus State and Local Fiscal Recovery Funds Allowable Activities and Costs Material Weakness in Internal Control Over Financial Reporting and Compliance Immaterial Noncompliance Criteria: Federal regulations 2 CFR Part 200, §200.403(g) require allowable costs be adequately documented. Condition: The Organization did not retain general ledger supporting detail of the costs directly coded to the federal award program and requested for reimbursement. Further, the Organization does not allocate administrative costs directly within the general ledger. Cause: A breakdown in procedures, partially attributable to the federal award program being new during the year, led to expenses being coded to the federal award program within the general ledger that were not submitted for reimbursement. In some cases, expense coding was changed after reimbursement requests were submitted, thereby effectively reclassifying expenses into the federal award program within the general ledger, or out of the federal award program. Additionally, the Organization does not journalize the allocation of administrative costs to specific federal award programs within the general ledger. Effect: As a result of this condition, the Organization's general ledger does not reconcile to the total expenses requested for reimbursement for the federal award program. The general ledger supports expenses of approximately $13,000 less than the reimbursements received, because it excludes the administrative costs allocation. Administrative costs claimed for reimbursement approximated $15,000, and when combined with expenses directly coded to the federal award program, total expenses exceed the reimbursements received, therefore, there are no questioned costs. Questioned Costs: None. Recommendation: We recommend management develop procedures whereby administrative allocations are journalized monthly to each applicable program. Upon submitting reimbursement requests, the Organization should retain documentation for each federal award program that supports the costs claimed for reimbursement. Management's Response: The Organization acknowledges the finding and agrees with the auditors' recommendations. We recognize the importance of maintaining accurate documentation and financial controls to ensure compliance with federal regulations. To address the finding, the Organization will implement the following corrective actions: 1) Journalizing administrative allocations - effective March 31, the Organization will implement a procedure to allocate administrative costs to each applicable federal award program through monthly journal entries within the general ledger. 2) Improved documentation retention - the Organization will establish a process to retain supporting documentation for all costs submitted for reimbursement, ensuring alignment between the general ledger and reimbursement requests. 3) Internal controls for expense classification - the Organization will implement additional controls to prevent expenses from being reclassified within the general ledger after reimbursement requests have been submitted. Any necessary adjustments will be documented with a clear audit trail. These corrective actions will be fully implemented by March 31, 2025, will include and cover all such costs from the start of the fiscal year which began October 1, 2024, and management will monitor compliance to ensure ongoing adherence to these procedures. Responsible Party for Corrective Action: Bryce Hundley, Director of Finance Anticipated Completion Date: February 2025
2024 – 001 – Factors Affecting Allowability of Costs Health Center Program & Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.224 & 93.527 Federal Award ID Number: H8004213 H8F41284 C1650401 H8G47667 H8L51683 H2E45573 Department of Health and Human Services Funding 2024 Criteria: 2 CFR Part 200.403 sets forth the requirements for costs to be allowable. This section specifically states that costs should “not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period.” 2 CFR 200.303 provides that non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance of compliance with Uniform Guidance. Condition: Brevard Health Alliance requested reimbursement for $8,978 of expenditures under two different federal grants. One grant is requested based upon clinic hours and another based on an individual’s time and effort. Cause: The cause of the situation was due to poorly designed internal control procedures related to the allocation of payroll expense requested for reimbursement between various grants. Effect: If the same expenditure is requested multiple times from the granting agency, they may request funds be returned. Questioned Cost: $8,978 of known questioned costs. However, the Alliance has additional allowable payroll costs to cover the amounts duplicated. Perspective: Total payroll that was requested for reimbursement was $5,251,473, with known questioned cost being $8,978 resulting in only 0.2% of payroll expenditures. Recommendation: The client should verify that reimbursement request do not include payroll expenditures submitted for other grants. The allocation of payroll should be done monthly. Management Response: Brevard Health Alliance will ensure allocation of payroll expenditures submitted for grants is done monthly to ensure stronger internal controls regarding grant funds.
2024 – 001 – Factors Affecting Allowability of Costs Health Center Program & Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.224 & 93.527 Federal Award ID Number: H8004213 H8F41284 C1650401 H8G47667 H8L51683 H2E45573 Department of Health and Human Services Funding 2024 Criteria: 2 CFR Part 200.403 sets forth the requirements for costs to be allowable. This section specifically states that costs should “not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period.” 2 CFR 200.303 provides that non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance of compliance with Uniform Guidance. Condition: Brevard Health Alliance requested reimbursement for $8,978 of expenditures under two different federal grants. One grant is requested based upon clinic hours and another based on an individual’s time and effort. Cause: The cause of the situation was due to poorly designed internal control procedures related to the allocation of payroll expense requested for reimbursement between various grants. Effect: If the same expenditure is requested multiple times from the granting agency, they may request funds be returned. Questioned Cost: $8,978 of known questioned costs. However, the Alliance has additional allowable payroll costs to cover the amounts duplicated. Perspective: Total payroll that was requested for reimbursement was $5,251,473, with known questioned cost being $8,978 resulting in only 0.2% of payroll expenditures. Recommendation: The client should verify that reimbursement request do not include payroll expenditures submitted for other grants. The allocation of payroll should be done monthly. Management Response: Brevard Health Alliance will ensure allocation of payroll expenditures submitted for grants is done monthly to ensure stronger internal controls regarding grant funds.
2024 – 001 – Factors Affecting Allowability of Costs Health Center Program & Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.224 & 93.527 Federal Award ID Number: H8004213 H8F41284 C1650401 H8G47667 H8L51683 H2E45573 Department of Health and Human Services Funding 2024 Criteria: 2 CFR Part 200.403 sets forth the requirements for costs to be allowable. This section specifically states that costs should “not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period.” 2 CFR 200.303 provides that non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance of compliance with Uniform Guidance. Condition: Brevard Health Alliance requested reimbursement for $8,978 of expenditures under two different federal grants. One grant is requested based upon clinic hours and another based on an individual’s time and effort. Cause: The cause of the situation was due to poorly designed internal control procedures related to the allocation of payroll expense requested for reimbursement between various grants. Effect: If the same expenditure is requested multiple times from the granting agency, they may request funds be returned. Questioned Cost: $8,978 of known questioned costs. However, the Alliance has additional allowable payroll costs to cover the amounts duplicated. Perspective: Total payroll that was requested for reimbursement was $5,251,473, with known questioned cost being $8,978 resulting in only 0.2% of payroll expenditures. Recommendation: The client should verify that reimbursement request do not include payroll expenditures submitted for other grants. The allocation of payroll should be done monthly. Management Response: Brevard Health Alliance will ensure allocation of payroll expenditures submitted for grants is done monthly to ensure stronger internal controls regarding grant funds.
2024 – 001 – Factors Affecting Allowability of Costs Health Center Program & Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.224 & 93.527 Federal Award ID Number: H8004213 H8F41284 C1650401 H8G47667 H8L51683 H2E45573 Department of Health and Human Services Funding 2024 Criteria: 2 CFR Part 200.403 sets forth the requirements for costs to be allowable. This section specifically states that costs should “not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period.” 2 CFR 200.303 provides that non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance of compliance with Uniform Guidance. Condition: Brevard Health Alliance requested reimbursement for $8,978 of expenditures under two different federal grants. One grant is requested based upon clinic hours and another based on an individual’s time and effort. Cause: The cause of the situation was due to poorly designed internal control procedures related to the allocation of payroll expense requested for reimbursement between various grants. Effect: If the same expenditure is requested multiple times from the granting agency, they may request funds be returned. Questioned Cost: $8,978 of known questioned costs. However, the Alliance has additional allowable payroll costs to cover the amounts duplicated. Perspective: Total payroll that was requested for reimbursement was $5,251,473, with known questioned cost being $8,978 resulting in only 0.2% of payroll expenditures. Recommendation: The client should verify that reimbursement request do not include payroll expenditures submitted for other grants. The allocation of payroll should be done monthly. Management Response: Brevard Health Alliance will ensure allocation of payroll expenditures submitted for grants is done monthly to ensure stronger internal controls regarding grant funds.
2024 – 001 – Factors Affecting Allowability of Costs Health Center Program & Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.224 & 93.527 Federal Award ID Number: H8004213 H8F41284 C1650401 H8G47667 H8L51683 H2E45573 Department of Health and Human Services Funding 2024 Criteria: 2 CFR Part 200.403 sets forth the requirements for costs to be allowable. This section specifically states that costs should “not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period.” 2 CFR 200.303 provides that non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance of compliance with Uniform Guidance. Condition: Brevard Health Alliance requested reimbursement for $8,978 of expenditures under two different federal grants. One grant is requested based upon clinic hours and another based on an individual’s time and effort. Cause: The cause of the situation was due to poorly designed internal control procedures related to the allocation of payroll expense requested for reimbursement between various grants. Effect: If the same expenditure is requested multiple times from the granting agency, they may request funds be returned. Questioned Cost: $8,978 of known questioned costs. However, the Alliance has additional allowable payroll costs to cover the amounts duplicated. Perspective: Total payroll that was requested for reimbursement was $5,251,473, with known questioned cost being $8,978 resulting in only 0.2% of payroll expenditures. Recommendation: The client should verify that reimbursement request do not include payroll expenditures submitted for other grants. The allocation of payroll should be done monthly. Management Response: Brevard Health Alliance will ensure allocation of payroll expenditures submitted for grants is done monthly to ensure stronger internal controls regarding grant funds.
2024 – 001 – Factors Affecting Allowability of Costs Health Center Program & Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.224 & 93.527 Federal Award ID Number: H8004213 H8F41284 C1650401 H8G47667 H8L51683 H2E45573 Department of Health and Human Services Funding 2024 Criteria: 2 CFR Part 200.403 sets forth the requirements for costs to be allowable. This section specifically states that costs should “not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period.” 2 CFR 200.303 provides that non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance of compliance with Uniform Guidance. Condition: Brevard Health Alliance requested reimbursement for $8,978 of expenditures under two different federal grants. One grant is requested based upon clinic hours and another based on an individual’s time and effort. Cause: The cause of the situation was due to poorly designed internal control procedures related to the allocation of payroll expense requested for reimbursement between various grants. Effect: If the same expenditure is requested multiple times from the granting agency, they may request funds be returned. Questioned Cost: $8,978 of known questioned costs. However, the Alliance has additional allowable payroll costs to cover the amounts duplicated. Perspective: Total payroll that was requested for reimbursement was $5,251,473, with known questioned cost being $8,978 resulting in only 0.2% of payroll expenditures. Recommendation: The client should verify that reimbursement request do not include payroll expenditures submitted for other grants. The allocation of payroll should be done monthly. Management Response: Brevard Health Alliance will ensure allocation of payroll expenditures submitted for grants is done monthly to ensure stronger internal controls regarding grant funds.
2024 – 001 – Factors Affecting Allowability of Costs Health Center Program & Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.224 & 93.527 Federal Award ID Number: H8004213 H8F41284 C1650401 H8G47667 H8L51683 H2E45573 Department of Health and Human Services Funding 2024 Criteria: 2 CFR Part 200.403 sets forth the requirements for costs to be allowable. This section specifically states that costs should “not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period.” 2 CFR 200.303 provides that non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance of compliance with Uniform Guidance. Condition: Brevard Health Alliance requested reimbursement for $8,978 of expenditures under two different federal grants. One grant is requested based upon clinic hours and another based on an individual’s time and effort. Cause: The cause of the situation was due to poorly designed internal control procedures related to the allocation of payroll expense requested for reimbursement between various grants. Effect: If the same expenditure is requested multiple times from the granting agency, they may request funds be returned. Questioned Cost: $8,978 of known questioned costs. However, the Alliance has additional allowable payroll costs to cover the amounts duplicated. Perspective: Total payroll that was requested for reimbursement was $5,251,473, with known questioned cost being $8,978 resulting in only 0.2% of payroll expenditures. Recommendation: The client should verify that reimbursement request do not include payroll expenditures submitted for other grants. The allocation of payroll should be done monthly. Management Response: Brevard Health Alliance will ensure allocation of payroll expenditures submitted for grants is done monthly to ensure stronger internal controls regarding grant funds.
Condition: Rent expense for the 2025 fiscal year in one branch office was paid in advance, in order to receive a discount, and charged to the federal award rather than capitalized and amortized over the period of benefit. Criteria: Costs must be determined in accordance with generally accepted accounting principles (GAAP). Context: World Relief follows GAAP in financial reporting. Cause: As rent is routinely charged each month it is paid, management overlooked capitalizing the payment and amortizing it over the periods benefited. Effect: As this cost was a prepayment for future period benefit, it was not determined in accordance with generally accepted accounting principles as required under 2 CFR 200.403, Factors affecting allowability of costs.
2024-002 Internal Controls over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs/Cost Principles Requirements (Significant Deficiency) Information on the Federal Program: U.S. Agency for International Development Assistance Listing Number: 98.001 Assistance Listing Name: USAID Foreign Assistance for Programs Overseas Grant Award Number(s): Direct Award Number Award Period 720BHA22GR00225 May 13, 2022 through May 10, 2024 720BHA22GR00127 April 15, 2022 through April 14, 2024 Criteria or Specific Requirement: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D ‐ Post Federal Award Requirements, Section 200.303 ‐ Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non‐Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with a framework such as the “Internal Control Integrated Framework”, issued by the COSO. In accordance with 2 CFR §200. 308, 200.309, and 200.403(h), a non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity. A period of performance may contain one or more budget periods. Condition: During our testing of the activities allowed or unallowed and allowable costs/cost principles compliance requirements, we identified one disbursement sample out of a total of twenty-five disbursement samples tested wherein management charged the federal program on June 2024 when the transaction happened on December 2022. In particular, the inventory distribution in the amount of $4,258.53 that took place in December 2022 should have been recorded as an expense in fiscal year 2023 rather than in fiscal year 2024. In addition, during our testing of period of performance compliance requirements, we also noted another inventory distribution in the amount of $235.89 that took place on August 2023 but it was only recorded on June 2024. The expenditures are allowable and within the period of performance, however, the controls over timely reconciliation and recording the inventory distributions did not occur in the appropriate reporting period. Questioned Costs: There are no known or likely questioned costs. Context: This is a condition based on testing of CRS’s compliance with specified requirements. The prevalence of the finding is detailed in the condition section above. The samples were selected using a non-statistical method. Cause: Delays in performing the reconciliation and timely recording of inventory distributions in certain CRS country offices were caused by personnel’s unfamiliarity with the use of the new Supply Chain Management system, a system used in inventory management. Effect: Failure to timely reconcile and record transactions in the correct accounting period results in incorrect SEFA reporting to the U.S. government. Repeat Finding: No. Recommendation: We recommend that management ensure timely reconciliation of inventory distributions in order to record the transactions in the correct accounting period. In addition, management should conduct appropriate training to CRS country office personnel with the proper use of the Supply Chain Management system to ensure timely reconciliation and recording of inventory distributions. Views of Responsible Officials: CRS management agrees with the finding and recommendations and will enhance the inventory reconciliation processes.
2024-002 Internal Controls over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs/Cost Principles Requirements (Significant Deficiency) Information on the Federal Program: U.S. Agency for International Development Assistance Listing Number: 98.001 Assistance Listing Name: USAID Foreign Assistance for Programs Overseas Grant Award Number(s): Direct Award Number Award Period 720BHA22GR00225 May 13, 2022 through May 10, 2024 720BHA22GR00127 April 15, 2022 through April 14, 2024 Criteria or Specific Requirement: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D ‐ Post Federal Award Requirements, Section 200.303 ‐ Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non‐Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with a framework such as the “Internal Control Integrated Framework”, issued by the COSO. In accordance with 2 CFR §200. 308, 200.309, and 200.403(h), a non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity. A period of performance may contain one or more budget periods. Condition: During our testing of the activities allowed or unallowed and allowable costs/cost principles compliance requirements, we identified one disbursement sample out of a total of twenty-five disbursement samples tested wherein management charged the federal program on June 2024 when the transaction happened on December 2022. In particular, the inventory distribution in the amount of $4,258.53 that took place in December 2022 should have been recorded as an expense in fiscal year 2023 rather than in fiscal year 2024. In addition, during our testing of period of performance compliance requirements, we also noted another inventory distribution in the amount of $235.89 that took place on August 2023 but it was only recorded on June 2024. The expenditures are allowable and within the period of performance, however, the controls over timely reconciliation and recording the inventory distributions did not occur in the appropriate reporting period. Questioned Costs: There are no known or likely questioned costs. Context: This is a condition based on testing of CRS’s compliance with specified requirements. The prevalence of the finding is detailed in the condition section above. The samples were selected using a non-statistical method. Cause: Delays in performing the reconciliation and timely recording of inventory distributions in certain CRS country offices were caused by personnel’s unfamiliarity with the use of the new Supply Chain Management system, a system used in inventory management. Effect: Failure to timely reconcile and record transactions in the correct accounting period results in incorrect SEFA reporting to the U.S. government. Repeat Finding: No. Recommendation: We recommend that management ensure timely reconciliation of inventory distributions in order to record the transactions in the correct accounting period. In addition, management should conduct appropriate training to CRS country office personnel with the proper use of the Supply Chain Management system to ensure timely reconciliation and recording of inventory distributions. Views of Responsible Officials: CRS management agrees with the finding and recommendations and will enhance the inventory reconciliation processes.
2024-003 Internal Controls over Compliance and Compliance with Period of Performance Requirement (Significant Deficiency) Information on the Federal Program: U.S. Department of Agriculture Assistance Listing Number: 10.612 Assistance Listing Name: USDA Local and Regional Food Aid Procurement Program Grant Award Number: Direct Award Number Award Period LRP-686-2019/015-00-A October 1, 2019 through September 30, 2024 Criteria or Specific Requirement: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D ‐ Post Federal Award Requirements, Section 200.303 ‐ Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non‐Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with a framework such as the “Internal Control Integrated Framework”, issued by the COSO. In accordance with 2 CFR §200. 308, 200.309, and 200.403(h), a non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity. A period of performance may contain one or more budget periods. Condition: During our testing of the period of performance compliance requirements, we identified two disbursement samples for a total of $1,574.09 out of a total of twenty-five disbursement samples tested wherein management was unable to provide evidence that the expenditures charged to the program were valid and incurred within the appropriate period of performance. Management also subsequently concluded that these transactions should have been captured as inventory and not charged as expenditure to the federal program. Questioned Costs: $1,574.09 from our samples. Context: This is a condition based on testing of CRS’s compliance with specified requirements. The prevalence of the finding is detailed in the condition section above. The samples were selected using a non-statistical method. The total amount of the twenty-five samples selected for testing was $62,914. Cause: CRS country office personnel did not adhere to CRS’s documented policies and procedures for ensuring only valid and allowable expenses are charged to the federal program within the appropriate period of performance. Effect: Without adequate internal controls in place to ensure costs are properly reviewed for allowability and appropriate period of performance, CRS could be noncompliant with the allowability and period of performance requirements and could request funds for costs that are unallowed. Repeat Finding: No. Recommendation: We recommend that management follow its own policies, procedures and controls to ensure that the inventory expenses charged to the federal program are allowable within the period of performance. Views of Responsible Officials: CRS management agrees with the finding and recommendations and will enhance processes around inventory expense allowability.
2024-001 [2023-001] — INDIRECT COST CALCULATIONS AND REPORTING Type of Finding: (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards (G) Instance of Noncompliance Related to Federal Awards Funding Agency: U.S. Department of Veteran Affairs Title: VA Homeless Providers Grant and Per Diem Program Assistance Listing #: 64.024 Award #: NMVI604-2909-501-PD Award Period: 10/1/2023–9/30/2024 Estimated Questioned Costs: $29,745 Statement of Condition: During our review of the NMVIC’s indirect cost (IDC) calculations, we identified discrepancies between the calculated allowable IDC and the amounts reported. The NMVIC reported total direct costs of $652,406, and after removing rent of $9,083, we calculated a Modified Total Direct Cost (MTDC) base of $643,323. However, because the NMVIC does not separately track federal versus non-federal expenditures, the accuracy of this base is uncertain. As a result, we used revenue received of $427,443 as the base for estimating allowable IDC, applying the approved indirect cost rate of 10% to arrive at an allowable IDC of $42,744. In comparison, the NMVIC’s Profit and Loss report reflected IDC of $64,830, and the SF-425 reports and client-provided calculations indicated IDC of $72,490. The variance appears to have resulted from the calculation method and inconsistent bases used by the NMVIC. Criteria: Per Uniform Guidance (2 CFR 200.403 and 2 CFR 200.414), indirect costs must be calculated based on the approved indirect cost rate agreement and applied to the appropriate base (Modified Total Direct Costs), excluding specifically unallowable costs such as rent. Additionally, the cost base should be properly supported and consistently applied. Cause: The NMVIC did not apply the approved indirect cost rate to an appropriate and supported cost base. Instead, alternative and inconsistent calculation methods were used, resulting in the overstatement of IDC. Effect: As a result of this miscalculation, the NMVIC claimed indirect costs in excess of the allowable amount under their approved rate. This raises the risk of disallowed costs and potential repayment requirements and reflects a deficiency in internal controls over financial reporting related to grant compliance. Recommendation: We recommend that the NMVIC implement procedures to ensure indirect costs are calculated accurately and consistently, in accordance with the approved indirect cost rate agreement and applicable federal regulations. Specifically, the NMVIC should establish controls to maintain a properly supported cost base that distinguishes between federal and non-federal expenditures and ensures that unallowable costs, such as rent, are excluded from the calculation. Additionally, management should reconcile indirect cost calculations across internal reports and federal filings to prevent discrepancies. View of Responsible Officials and Corrective Action Plan We acknowledge the findings and appreciate the diligence of the audit team in identifying the discrepancies in our indirect cost calculations and reporting as outlined in the draft findings. The Veterans Integration Center (VIC) is committed to maintaining the highest standards of compliance with all federal regulations and grant requirements. Corrective Action Plan 1. Training and Guidelines: All relevant staff will undergo training to understand and implement the correct procedures for calculating indirect costs. Comprehensive guidelines will be developed and disseminated to ensure consistency across all calculations and reporting. 2. Completion of SF-425 Jointly: The COO, and VIC’s contracted Accountant will confirm the accurate Modified Total Direct Costs (MTDC) which is to be used in completing the SF-425, then prepare the GPD SF-425 jointly to ensure its accuracy. 3. Review and Approval Process: An additional layer of review and approval will be established for all indirect cost calculations before they are reported. This step will involve our Chief Executive Officer (CEO) to ensure accuracy and compliance. Corrective Action Plan Timeline • Staff Training and Guidelines Distribution: Completed by Q4 2025 • Completion of SF-425 Jointly: Starting Q3 2025 with SF-425 revision • Review and Approval Process: Effective immediately, with CEO, reviews starting Q3 2025 Designation of Employee Position Responsible for Meeting Deadline The Chief Operating Officer (COO) will be responsible for the oversight and successful implementation of the corrective action plan. The COO will coordinate with the contracted internal Accountant to ensure all actions are taken within the stipulated timelines and report directly to the Chief Executive Officer on the progress.
.Activities Allowed or Unallowed; Allowable Costs and Cost Principles Program: ACL Centers for Independent Living (ALN 93.432) Federal Agency: U.S. Department of Health and Human Services Federal Award Year: September 30, 2024 Type of Finding: Significant deficiency in internal control over compliance, other matter compliance finding. Criteria 2 CFR 200.403(a) states that costs must "be necessary and reasonable for the performance of the federal award" to be allowable. Condition Three tested transactions were found to be unallowable in nature as they were not necessary or reasonable for the performance of the federal award. Questioned Costs $166 Context A sample of 40 was made from a population of 541 transactions charged to the major program for program expenses. Of the 40 sampled transactions, 3 transactions were found to be unreasonable and unallowable. Effect Charging unallowable costs to the major program results in erroneous charges to the federal award and raises compliance concerns. This can potentially lead to overcharging or undercharging the federal award, which may result in penalties or repayment obligations.Activities Allowed or Unallowed; Allowable Costs and Cost Principles Program: ACL Centers for Independent Living (ALN 93.432) Federal Agency: U.S. Department of Health and Human Services Federal Award Year: September 30, 2024 Type of Finding: Significant deficiency in internal control over compliance, other matter compliance finding. Criteria 2 CFR 200.403(a) states that costs must "be necessary and reasonable for the performance of the federal award" to be allowable. Condition Three tested transactions were found to be unallowable in nature as they were not necessary or reasonable for the performance of the federal award. Questioned Costs $166 Context A sample of 40 was made from a population of 541 transactions charged to the major program for program expenses. Of the 40 sampled transactions, 3 transactions were found to be unreasonable and unallowable. Effect Charging unallowable costs to the major program results in erroneous charges to the federal award and raises compliance concerns. This can potentially lead to overcharging or undercharging the federal award, which may result in penalties or repayment obligations. Cause The Organization had inadequate internal controls over compliance to detect charges that were unallowable prior to requesting reimbursement for the federal award. Repeat Finding No Auditor Recommendation We recommend that the Organization obtains a better understanding of allowable and unallowable costs for federal awards. We also recommend that the Organization implement a system of internal controls that can detect noncompliance prior to charging costs to the federal award. Views of Responsible Officials The Organization has reviewed, and agrees with, the finding and recommendation.
.Activities Allowed or Unallowed; Allowable Costs and Cost Principles Program: ACL Centers for Independent Living (ALN 93.432) Federal Agency: U.S. Department of Health and Human Services Federal Award Year: September 30, 2024 Type of Finding: Significant deficiency in internal control over compliance, other matter compliance finding. Criteria 2 CFR 200.403(a) states that costs must "be necessary and reasonable for the performance of the federal award" to be allowable. Condition Three tested transactions were found to be unallowable in nature as they were not necessary or reasonable for the performance of the federal award. Questioned Costs $166 Context A sample of 40 was made from a population of 541 transactions charged to the major program for program expenses. Of the 40 sampled transactions, 3 transactions were found to be unreasonable and unallowable. Effect Charging unallowable costs to the major program results in erroneous charges to the federal award and raises compliance concerns. This can potentially lead to overcharging or undercharging the federal award, which may result in penalties or repayment obligations.Activities Allowed or Unallowed; Allowable Costs and Cost Principles Program: ACL Centers for Independent Living (ALN 93.432) Federal Agency: U.S. Department of Health and Human Services Federal Award Year: September 30, 2024 Type of Finding: Significant deficiency in internal control over compliance, other matter compliance finding. Criteria 2 CFR 200.403(a) states that costs must "be necessary and reasonable for the performance of the federal award" to be allowable. Condition Three tested transactions were found to be unallowable in nature as they were not necessary or reasonable for the performance of the federal award. Questioned Costs $166 Context A sample of 40 was made from a population of 541 transactions charged to the major program for program expenses. Of the 40 sampled transactions, 3 transactions were found to be unreasonable and unallowable. Effect Charging unallowable costs to the major program results in erroneous charges to the federal award and raises compliance concerns. This can potentially lead to overcharging or undercharging the federal award, which may result in penalties or repayment obligations. Cause The Organization had inadequate internal controls over compliance to detect charges that were unallowable prior to requesting reimbursement for the federal award. Repeat Finding No Auditor Recommendation We recommend that the Organization obtains a better understanding of allowable and unallowable costs for federal awards. We also recommend that the Organization implement a system of internal controls that can detect noncompliance prior to charging costs to the federal award. Views of Responsible Officials The Organization has reviewed, and agrees with, the finding and recommendation.
Criteria: In accordance with 2 CFR 200.405(a), costs must be allocable to the Federal award in proportion to the benefits received. A cost is allocable to a Federal award if it is incurred specifically for the award, benefits both the award and other work, and can be distributed in proportions that may be approximated using reasonable methods. Condition: During the fiscal year under audit, the auditee hosted two events at the same hotel—one charged to a nonfederal program and the other related to a Federal program. Initially, all event-related costs were charged to the nonfederal program. Subsequently, $28,500 was reclassified to the Federal program. However, only $14,500 of this amount was applicable to the Federal program. As a result, $14,000 was incorrectly charged to the Federal award. Additional review identified further errors in related reclassifications, with total known questioned costs of $18,387. Cause: The auditee did not implement sufficient review controls over cost allocations and reclassifications between programs, resulting in misallocation of shared event costs. Effect: A total of $18,387 in known questioned costs was charged to the Federal program inappropriately. Based on a sample of 40 transactions and one error totaling $14,000. One of 40 sampled transactions contained this error, which represents 2.5% of the sample population. This misallocation could lead to disallowed costs and potential recovery actions by the granting agency. Repeat finding: This is not a repeat finding. Questioned costs: $18,387 Recommendation: We recommend that the Organization implement stronger internal controls over the expenditure process to ensure that all costs charged to the program are allowable under 2 CFR 200.403, provide training to staff on the requirements for allowable costs and importance of proper oversight and conduct regular reviews of expenses charged to the programs to identify and correct any unallowable costs promptly.
Allowable Costs/Activities Allowed Material Weakness, Noncompliance 2024-002 Strengthen Controls to Ensure Compliance with Allowable Costs Requirements Agency: U.S. Department of Transportation; Passed-through Mississippi Office of Highway Safety ALN Numbers: 20.600 State and Community Highway Safety 20.616 National Priority Safety Programs Federal Award: M5TR-2024-MD-22-51 Repeat Finding: No Questioned Costs: $1,432.84 Criteria: In accordance with 2 CFR 200.403, costs charged to a federal award must be necessary, reasonable, and allocable. Further, per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal controls over the federal award. Condition: During our evaluation and testing of the grant, we were alerted to improper payments totaling $1,432 made to employees as the result of misrepresentation of reimbursable expenses. The payments were processed and disbursed; however, internal controls subsequently identified and alerted officials to the improper payments. The employees were terminated, and no additional payments were made. Cause: Fraudulent requests for employee expense reimbursement for travel were submitted and not independently verified. Although controls were in place to verify such requests, the fraud attempt bypassed initial detection. The City’s post-disbursement review controls detected the issue, but only after payment had occurred. Effect: The City disbursed $1,432 in federal funds to fraudulent reimbursements. Although no additional losses occurred and corrective actions were taken, the incident reflects a breakdown in the preventative control environment over disbursement verification. Recommendation: We recommend that the City implement additional internal controls to ensure that proper and substantiated travel reimbursement payments are made. Views of Responsible Officials: The City concurs with the finding. While our internal post-payment review control ultimately identified the issue, we acknowledge the breakdown in the preventive stage. We have since revised our procedures to require independent verification. We also reported the incident to proper agencies as required.
Allowable Costs/Activities Allowed Material Weakness, Noncompliance 2024-002 Strengthen Controls to Ensure Compliance with Allowable Costs Requirements Agency: U.S. Department of Transportation; Passed-through Mississippi Office of Highway Safety ALN Numbers: 20.600 State and Community Highway Safety 20.616 National Priority Safety Programs Federal Award: M5TR-2024-MD-22-51 Repeat Finding: No Questioned Costs: $1,432.84 Criteria: In accordance with 2 CFR 200.403, costs charged to a federal award must be necessary, reasonable, and allocable. Further, per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal controls over the federal award. Condition: During our evaluation and testing of the grant, we were alerted to improper payments totaling $1,432 made to employees as the result of misrepresentation of reimbursable expenses. The payments were processed and disbursed; however, internal controls subsequently identified and alerted officials to the improper payments. The employees were terminated, and no additional payments were made. Cause: Fraudulent requests for employee expense reimbursement for travel were submitted and not independently verified. Although controls were in place to verify such requests, the fraud attempt bypassed initial detection. The City’s post-disbursement review controls detected the issue, but only after payment had occurred. Effect: The City disbursed $1,432 in federal funds to fraudulent reimbursements. Although no additional losses occurred and corrective actions were taken, the incident reflects a breakdown in the preventative control environment over disbursement verification. Recommendation: We recommend that the City implement additional internal controls to ensure that proper and substantiated travel reimbursement payments are made. Views of Responsible Officials: The City concurs with the finding. While our internal post-payment review control ultimately identified the issue, we acknowledge the breakdown in the preventive stage. We have since revised our procedures to require independent verification. We also reported the incident to proper agencies as required.
Allowable Costs/Activities Allowed Material Weakness, Noncompliance 2024-002 Strengthen Controls to Ensure Compliance with Allowable Costs Requirements Agency: U.S. Department of Transportation; Passed-through Mississippi Office of Highway Safety ALN Numbers: 20.600 State and Community Highway Safety 20.616 National Priority Safety Programs Federal Award: M5TR-2024-MD-22-51 Repeat Finding: No Questioned Costs: $1,432.84 Criteria: In accordance with 2 CFR 200.403, costs charged to a federal award must be necessary, reasonable, and allocable. Further, per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal controls over the federal award. Condition: During our evaluation and testing of the grant, we were alerted to improper payments totaling $1,432 made to employees as the result of misrepresentation of reimbursable expenses. The payments were processed and disbursed; however, internal controls subsequently identified and alerted officials to the improper payments. The employees were terminated, and no additional payments were made. Cause: Fraudulent requests for employee expense reimbursement for travel were submitted and not independently verified. Although controls were in place to verify such requests, the fraud attempt bypassed initial detection. The City’s post-disbursement review controls detected the issue, but only after payment had occurred. Effect: The City disbursed $1,432 in federal funds to fraudulent reimbursements. Although no additional losses occurred and corrective actions were taken, the incident reflects a breakdown in the preventative control environment over disbursement verification. Recommendation: We recommend that the City implement additional internal controls to ensure that proper and substantiated travel reimbursement payments are made. Views of Responsible Officials: The City concurs with the finding. While our internal post-payment review control ultimately identified the issue, we acknowledge the breakdown in the preventive stage. We have since revised our procedures to require independent verification. We also reported the incident to proper agencies as required.
Condition: HOPE has elected to use the de minimis indirect cost rate of 10%. While billing the federal grantor on a monthly basis, HOPE applied this 10% rate to the direct costs. However, there was no clear documentation demonstrating how this application related to the organization's actual indirect costs incurred to support the federal program, beyond simply adding the percentage to the direct cost billing. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Subpart E, § 200.403, states that costs charged to Federal awards must be allowable, allocable, and reasonable. While § 200.414(f) permits the use of a de minimis indirect cost rate of 10%, its application should serve as a mechanism to recover a portion of the organization's actual indirect costs. Cause and effect: HOPE experienced turnover in the CFO position during the year. In prior years, HOPE recorded all costs, including indirect costs, in the cost center (“class”) assigned to the funding source. During the year under audit, this practice wasn’t consistently followed. Recommendation: I recommend that HOPE continue to use “classes” consistently in the accounting software to capture program expenditures by funding source, including indirect costs. Views of Responsible Officials: This discrepancy resulted from a lack of understanding by the CFO in processing grant related funding. Grant policies have been updated, and personnel trained to direct and understand the role of independent accounting by funding sources through class codes.
Condition: HOPE has elected to use the de minimis indirect cost rate of 10%. While billing the federal grantor on a monthly basis, HOPE applied this 10% rate to the direct costs. However, there was no clear documentation demonstrating how this application related to the organization's actual indirect costs incurred to support the federal program, beyond simply adding the percentage to the direct cost billing. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Subpart E, § 200.403, states that costs charged to Federal awards must be allowable, allocable, and reasonable. While § 200.414(f) permits the use of a de minimis indirect cost rate of 10%, its application should serve as a mechanism to recover a portion of the organization's actual indirect costs. Cause and effect: HOPE experienced turnover in the CFO position during the year. In prior years, HOPE recorded all costs, including indirect costs, in the cost center (“class”) assigned to the funding source. During the year under audit, this practice wasn’t consistently followed. Recommendation: I recommend that HOPE continue to use “classes” consistently in the accounting software to capture program expenditures by funding source, including indirect costs. Views of Responsible Officials: This discrepancy resulted from a lack of understanding by the CFO in processing grant related funding. Grant policies have been updated, and personnel trained to direct and understand the role of independent accounting by funding sources through class codes.
Condition: HOPE has elected to use the de minimis indirect cost rate of 10%. While billing the federal grantor on a monthly basis, HOPE applied this 10% rate to the direct costs. However, there was no clear documentation demonstrating how this application related to the organization's actual indirect costs incurred to support the federal program, beyond simply adding the percentage to the direct cost billing. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Subpart E, § 200.403, states that costs charged to Federal awards must be allowable, allocable, and reasonable. While § 200.414(f) permits the use of a de minimis indirect cost rate of 10%, its application should serve as a mechanism to recover a portion of the organization's actual indirect costs. Cause and effect: HOPE experienced turnover in the CFO position during the year. In prior years, HOPE recorded all costs, including indirect costs, in the cost center (“class”) assigned to the funding source. During the year under audit, this practice wasn’t consistently followed. Recommendation: I recommend that HOPE continue to use “classes” consistently in the accounting software to capture program expenditures by funding source, including indirect costs. Views of Responsible Officials: This discrepancy resulted from a lack of understanding by the CFO in processing grant related funding. Grant policies have been updated, and personnel trained to direct and understand the role of independent accounting by funding sources through class codes.
Criteria – The Agency is required to follow OMB Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards contained in 2CFR Chapter I and Chapter II. One of the general criteria contained in §200.403, costs must be “necessary and reasonable for the performance of the Federal Award and be allocable thereto under these principles”. Condition – The Agency has a contract to purchase bulk cable services and is required to pass these costs to the tenants who are the users of the service. During our audit we noted the Agency did not have the fees charged to the tenants high enough to cover the cost incurred for the service. The amount of costs not recovered was $4,503 for the year ended September 30, 2024. Cause – This finding was repeated from the prior year. The Agency did not increase the amount charged to tenants during the year ended September 30, 2024. Effect or Potential Effect - The cost of the cable service does not meet the “necessary and reasonable” criteria and resulted in questioned costs of $4,503. Subsequent the fiscal year end, the Agency has increased the fees charged. Recommendation - We recommend in the future that the Agency consider the basic criteria of being “necessary and reasonable” before incurring costs in a Federal Award program. The costs of the cable services need to be paid fully by the tenants and should be monitored by management to ensure the Public Housing Program does not incur any of these costs. View of Responsible Official: Management agrees with the Finding.
Capital Fund Program Grants Draws Condition: During our audit procedures over revenue recognition for the Capital Fund Program (CFP), we identified drawdowns of federal funds for which the client was unable to provide adequate supporting documentation. Specifically, the expenditures associated with the draw requests lacked invoices, contracts, or other substantiating records to demonstrate that the costs were allowable, allocable, and incurred in accordance with applicable federal requirements. Criteria: Per 2 CFR §200.403 and §200.302, costs charged to federal awards must be adequately documented and supported by source documentation. Additionally, 2 CFR §200.516(a)(3) requires auditors to report known questioned costs exceeding $25,000 for any federal program, even if not selected as a major program. Cause: The deficiency appears to result from inadequate internal controls over documentation retention and grant compliance monitoring for the CFP. Effect: The lack of documentation impairs the auditor’s ability to verify the allowability of expenditures, resulting in known questioned costs exceeding $25,000. Questioned Cost: $90,149 Recommendations: We recommend that management implement procedures to ensure that all draw requests under the CFP are supported by complete and accurate documentation. This includes maintaining invoices, contracts, and payment records that clearly link expenditures to the approved scope of work under the grant. Management Response: Today’s Marlboro County Housing Authority management acknowledges the auditor’s finding that documentation to support certain CFP drawdowns was incomplete or missing and concurs that this represents a failure to comply with Uniform Guidance documentation requirements under 2 CFR §200.302 and §200.403. The Authority recognizes the importance of maintaining complete and accurate supporting records—such as invoices, contracts, and payment documentation—to substantiate costs charged to federal programs and ensure allowability and allocability under the Capital Fund Program. Effective October 1st, 2024, all draw requests under the Capital Fund Program ARE supported by: Approved contracts or purchase orders Invoices or other source documents Proof of payment (e.g., canceled checks, ACH confirmations) Documentation clearly linking each expense to an approved activity in the CFP Annual Statement
Finding Number: 2024-009 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: U.S. Department of the Treasury COVID-19 – Coronavirus Capital Projects Fund ALN: 21.029 Award #: CPFFN0167 Award Year: 02/09/2022 – 12/31/2026 Government Department/Agency: Office of the Deputy Mayor for Planning and Economic Development (DMPED) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.403, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented.” In addition, the U.S. Department of Treasury, Guidance for the Coronavirus Capital Projects Fund For States, Territories & Freely Associated States (CPF), Section D. Eligible and Ineligible Cost: states that “Allowable costs are determined in accordance with the cost principles identified in 2 CFR Part 200, Subpart E. Federal funds committed to an award may only be used to cover allowable costs incurred during the period of performance and for allowable closeout costs incurred during the grant closeout process. Cost sharing is not a requirement for the use of these funds” Section C. Project Eligibility: also states the following, “Capital Project or Project means the construction, purchase, and installation of, and/or improvements to capital assets where the costs of such assets are capitalized or depreciated, including ancillary costs necessary to put the capital asset to use. Examples of capital assets include buildings, towers, digital devices and equipment, fiber-optic lines, and broadband networks. Examples of ancillary costs include project costs related to project planning and feasibility, broadband installation, and community engagement, broadband adoption, digital literacy, and training associated with a planned or completed Project funded by the Capital Projects Fund program.” Condition – During our examination of Activities Allowed or Unallowed and Allowable Costs/Cost Principles, we observed that the agency used federal funds to reimburse their subrecipient for lease rent of $3,242,953 invoiced from August 2023 through May 2024. This amount was reported to the Federal agency as ancillary costs. However, upon reviewing the supporting documentation, it was found that the rent charged to the grant pertained to the period following the substantial completion of the capital project's construction. Additionally, the leased rent does not appear to align with the definition of ancillary costs as outlined by the CFP guidance mentioned earlier. Furthermore, the agency was unable to provide documentation from the U.S. Treasury approving the leased rent or indicating its knowledge that it was included as part of ancillary costs. Based on the procedures performed and the review of relevant guidance, BDO notes that these costs do not meet the requirements to be considered allowable under the program. Questioned Costs – Known amount $3,242,953. Context – This is a condition identified per review of DMPED’s compliance with specified requirements using a statistically valid sample. Total subrecipient expenditures reported as allowable costs were $14,400,000. Effect – DMPED was unable to demonstrate that the rent charged was approved by the Department of Treasury and was an allowable cost under the guidance. Cause – DMPED did not have proper internal controls and policies and procedures in place to identify allowable costs and activities. Recommendation – We recommend that DMPED evaluate its procedures to ensure only allowable expenses are charged to the program as required under 2 CFR Section 200.403. Related Noncompliance – Material noncompliance. Views of Responsible Officials and Planned Corrective Actions – DMPED does not concur with the auditor’s finding regarding the allowability of rent per the CPF guidance. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section. BDO’s Response – We have reviewed management’s response and our finding remains as indicated.
Finding Number: 2024-028 Prior Year Finding Number: 2023-033 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: U.S. Department of Health and Human Services Opioid STR ALN: 93.788 Award #: Various Award Year: 09/30/2020 – 09/29/2024 Government Department/Agency: Department of Behavioral Health (DBH) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.403, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented.” Condition – During our testwork over nonpayroll transactions for the Activities Allowed or Unallowed and Allowable Costs/Cost Principles, we noted that for one (1) out of sixty-two (62) samples, the transaction was charged twice to the program. Total amount of nonpayroll transactions is $19,095,189, and the amount of exception is $122,311. Questioned Costs – Known amount is $122,311. Context – This is a condition identified per review of DBH’s compliance with specified requirements using a statistically valid sample. Total amount of samples selected for testing amounted to $5,633,513. Effect – Lack of proper review of expenditures could result to unallowable costs charged to the program. Cause – DBH does not have adequate controls in place to ensure that only allowable costs are charged to the program. Recommendation – We recommend that DBH strengthen internal control procedures to ensure that expenditures are allowable, and that sufficient documentation is retained to support that allowability. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – DBH concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
2024-002 – Material Weakness in Internal Control over Compliance and Noncompliance – Allowable Costs/Cost Principles: Indirect Costs Identification of federal program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Criteria: Uniform Guidance 2 C.F.R. § 200.414(f): Any non-federal entity that does not have a current negotiated cost rate may elect to charge a de minimis rate of 10% of modified total direct costs (MTDC) which may be used indefinitely. As described in § 200.403, costs must be consistently charged as either indirect or direct costs, but may not be double charged or inconsistently charged as both. If chosen, this methodology once elected must be used consistently for all federal awards until such time as a nonfederal entity chooses to negotiate for a rate, which the non-federal entity may apply to do at any time. Condition: As defined by the Uniform Guidance, the determination of MTDC excludes equipment and capital expenditures, in addition to various other categories of expenditures. The Council properly elected to utilize the 10% de minimis rate, however, improperly included amounts related to capital expenditures in their determination of the MTDC base. Cause: The Council was aware of the proper method to be used in calculations but the inclusion of capital expenditures was overlooked in error. Effect or potential effect: The Council charged indirect costs to the federal program that exceeded 10% of the MTDC. The overage that was charged to the federal program does not exceed 5% of the total program expenditures over the lifetime of the award. Questioned Costs: $121,838 Context: Over the lifetime of the award, the Council had various capital expenditure purchases totaling approximately $1,350,520 that were improperly included in the calculation of the MTDC. Identification of Repeat Finding: Not applicable. Recommendations: We recommend that the Council works to improve processes and controls over the calculation of, and monitoring of, indirect costs charged to federal programs. We also recommend that training be provided to ensure that all parties are aware of the proper methodology and processes. Views of Responsible Officials: See Corrective Action Plan.
Federal Program: AL 20.237 – High Priority Commercial Motor Vehicle Grant Program, Federal Motor Carrier Safety Administration (FMCSA) Cluster. Compliance Requirements: Period of Performance. Type of Finding: Material Noncompliance and Internal Control Over Noncompliance. Criteria: Per guidance provided by Section 7.5 of the Motor Carrier Safety Assistance Program – Grant Comprehensive Policy, 49 U.S. Code § 31104(f)(2), and 200 Code of Federal Regulations (“CFR”) Section 200.309, only allowable costs incurred during the period of performance specified in the Notice of Grant Award may be charged to the related federal award. Condition and Context: On September 30, 2023, IRP prepaid $174,465 for data repository hosting and maintenance services that were not incurred until the quarter ended December 31, 2023. IRP reported this expenditure in Reports SF-425 and requested its reimbursement on form SF-270, for the quarter ended September 30, 2023, and charged the amount to federal award FM-MP- 0580-21. As expenditure occurred during the fiscal year ending September 30, 2024, it should be charged to federal award FM-MHP-0762-23, which has a period of performance from September 1, 2023, to September 30, 2025 per review of the notice of grant award. Questioned Costs: $174,465. Cause: Management lacked the appropriate knowledge of the period of performance requirements specified by the federal awarding agency and Uniform Guidance. Effect or Potential Effect: This error resulted in a $174,465 charge to award FM-MP-0580-21 for services that were incurred outside of the period of performance. Recommendation: We recommend management implement pre-submission controls, such as requiring date validation for all expenses against the award's period of performance and providing training to educate staff on 2 CFR requirements and period-of-performance limitations. We understand management has alerted FMCSA to the error and intends to work with them to correct the reporting of these expenditures, upon submission to the Federal Audit Clearinghouse of the data collection form and single audit reporting package for the year ended September 30, 2024. Views of Responsible Officials: Management acknowledges the finding and concurs with the recommendation. Grant management procedures have been revised to verify that services are received and costs incurred within the authorized period of performance in accordance with 2 CFR § 200.403 before the costs are charged to a federal award. Staff involved in grant management will receive targeted training on 2 CFR requirements related to period-ofperformance compliance and allowable cost timing.
Finding 2024-003: Unsupported Payroll Charges and Improper Drawdown of Federal Funds Compliance Requirements: Allowable Costs/Cost Principles; Cash Management; Reporting Type: Material Weakness in Internal Control over Compliance and Material Noncompliance Federal Agency: U.S. Department of Health and Human Services (Centers for Disease Control and Prevention) AL Numbers and Titles: 93.809 – National Organizations for Chronic Disease Prevention and Health Promotion Federal Award Number: NU58DP007562 Questioned Costs: $423,094 Repeat Finding: No Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to a federal award must be necessary, reasonable, and allocable, and must conform to the terms and conditions of the award. Per 2 CFR §200.430(i), charges for salaries and wages must be supported by records that accurately reflect the work performed and be supported by a system of internal control. Furthermore, 2 CFR §200.305(b) requires that non-federal entities minimize the time between federal fund drawdown and disbursement, and limits advances to amounts needed for the immediate cash requirements of the program. Condition: During our testing of payroll-related transactions charged to the 93.809 federal program, we identified a significant reallocation of personnel costs from unrestricted funds to the federal grant that occurred late in the audit period. These charges related to multiple employees whose compensation was not included in the originally approved budget for the federal program. At the time of our testing, no formal budget revision had been submitted to the awarding agency, and the names of these staff had not been recorded in the federal grant reporting system as required by the award terms. Additionally, the auditee was unable to provide any documentation, such as certifications, labor distribution reports, calendars, or other records, to support that these employees worked on activities allocable to the federal program. We further noted that the auditee drew down federal funds prior to the recording of these payroll charges, at a time when the costs in question had neither been incurred nor documented. This resulted in federal funds being drawn in advance of need, contrary to federal cash management requirements. Cause: The auditee did not have adequate internal controls to ensure that only appropriately budgeted and documented payroll costs were charged to the federal award. In addition, the organization lacked procedures to confirm that federal funds were drawn only for costs that were allowable, incurred, and supported at the time of drawdown. These weaknesses allowed significant payroll reallocations to be processed retroactively without timely budget amendments or sufficient documentation of allocability. Effect: As a result of these control deficiencies, a total of $423,094 in personnel-related costs, including direct salaries, fringe benefits, and associated indirect costs, was charged to the federal program without appropriate budget authorization or time and effort support. These unsupported costs were also used as the basis for a drawdown of federal funds that occurred before the expenditures were recorded or substantiated. This resulted in noncompliance with both cost principles and cash management requirements and exposes the auditee to potential disallowance or repayment of federal funds. Recommendation: We recommend that the auditee enhance internal controls related to grant budgeting, payroll allocations, and cash management. These controls should ensure that payroll costs charged to federal awards are included in the approved budget or are formally revised and submitted to the grantor, are supported by accurate time and effort documentation, and that federal funds are drawn only when actual, allowable costs have been incurred and documented. We further recommend that the auditee consult with the awarding agency to determine whether any retroactive budget revision or corrective action is available or whether repayment of questioned costs will be required. Views of Responsible Officials Corrective Actions: Management agrees with this finding. Please refer to the Corrective Action Plan.