Criteria – According to 2 CFR § 200.403, 2 CFR § 200.405, and 2 CFR § 200.405, costs charged to federal awards must be allowable, reasonable, and allocable. Specifically, costs must be necessary and reasonable for the performance of the federal award, must conform to limitations and exclusions set forth in the cost principles, must be consistent with policies that apply uniformly to both federally financed and other activities, and costs must comply with the terms and conditions of the federal award. Federal funds must also only be used for expenditures incurred during the award period. Condition – During our review of expenditures charged to the Crime Victim Assistance (VOCA) grant, we noted that management charged an expense prior to the completion of the project. The expense was allowable under the grant, but the timing of the charge did not align with when the activity occurred. Cause – The premature charge occurred due to management attempting to use the remaining grant funds for that period before they expired. Questioned Cost Amount – Based on deviations noted in our testwork the projected likely questioned costs resulting in noncompliance are as follows: Crime Victim Assistance (VOCA), 16.575: $74,661. Effect – The Organization was not in compliance with the requirements listed above. Recommendation – We recommend the Organization review and reinforce policies regarding timing of cost obligations and expenditures and ensure expenses are recorded in alignment with when the related activity occurs. View of Responsible Officials – Management agrees with the finding. Corrective Action Plan – See attached corrective action plan from management.
Criteria – According to 2 CFR § 200.403, 2 CFR § 200.405, and 2 CFR § 200.405, costs charged to federal awards must be allowable, reasonable, and allocable. Specifically, costs must be necessary and reasonable for the performance of the federal award, must conform to limitations and exclusions set forth in the cost principles, must be consistent with policies that apply uniformly to both federally financed and other activities, and costs must comply with the terms and conditions of the federal award. Federal funds must also only be used for expenditures incurred during the award period. Condition – During our review of expenditures charged to the Crime Victim Assistance (VOCA) grant, we noted that management charged an expense prior to the completion of the project. The expense was allowable under the grant, but the timing of the charge did not align with when the activity occurred. Cause – The premature charge occurred due to management attempting to use the remaining grant funds for that period before they expired. Questioned Cost Amount – Based on deviations noted in our testwork the projected likely questioned costs resulting in noncompliance are as follows: Crime Victim Assistance (VOCA), 16.575: $74,661. Effect – The Organization was not in compliance with the requirements listed above. Recommendation – We recommend the Organization review and reinforce policies regarding timing of cost obligations and expenditures and ensure expenses are recorded in alignment with when the related activity occurs. View of Responsible Officials – Management agrees with the finding. Corrective Action Plan – See attached corrective action plan from management.
Criteria – According to 2 CFR § 200.403, 2 CFR § 200.405, and 2 CFR § 200.405, costs charged to federal awards must be allowable, reasonable, and allocable. Specifically, costs must be necessary and reasonable for the performance of the federal award, must conform to limitations and exclusions set forth in the cost principles, must be consistent with policies that apply uniformly to both federally financed and other activities, and costs must comply with the terms and conditions of the federal award. Federal funds must also only be used for expenditures incurred during the award period. Condition – During our review of expenditures charged to the Crime Victim Assistance (VOCA) grant, we noted that management charged an expense prior to the completion of the project. The expense was allowable under the grant, but the timing of the charge did not align with when the activity occurred. Cause – The premature charge occurred due to management attempting to use the remaining grant funds for that period before they expired. Questioned Cost Amount – Based on deviations noted in our testwork the projected likely questioned costs resulting in noncompliance are as follows: Crime Victim Assistance (VOCA), 16.575: $74,661. Effect – The Organization was not in compliance with the requirements listed above. Recommendation – We recommend the Organization review and reinforce policies regarding timing of cost obligations and expenditures and ensure expenses are recorded in alignment with when the related activity occurs. View of Responsible Officials – Management agrees with the finding. Corrective Action Plan – See attached corrective action plan from management.
Criteria – According to 2 CFR § 200.403, 2 CFR § 200.405, and 2 CFR § 200.405, costs charged to federal awards must be allowable, reasonable, and allocable. Specifically, costs must be necessary and reasonable for the performance of the federal award, must conform to limitations and exclusions set forth in the cost principles, must be consistent with policies that apply uniformly to both federally financed and other activities, and costs must comply with the terms and conditions of the federal award. Federal funds must also only be used for expenditures incurred during the award period. Condition – During our review of expenditures charged to the Crime Victim Assistance (VOCA) grant, we noted that management charged an expense prior to the completion of the project. The expense was allowable under the grant, but the timing of the charge did not align with when the activity occurred. Cause – The premature charge occurred due to management attempting to use the remaining grant funds for that period before they expired. Questioned Cost Amount – Based on deviations noted in our testwork the projected likely questioned costs resulting in noncompliance are as follows: Crime Victim Assistance (VOCA), 16.575: $74,661. Effect – The Organization was not in compliance with the requirements listed above. Recommendation – We recommend the Organization review and reinforce policies regarding timing of cost obligations and expenditures and ensure expenses are recorded in alignment with when the related activity occurs. View of Responsible Officials – Management agrees with the finding. Corrective Action Plan – See attached corrective action plan from management.
2 CFR § 200.405 (a) states, in part, that a cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. Ohio Admin. Code § 5101:9-1-04(C)(3) defines “Social service (SS) administrative costs” as “costs that benefit one or more SS programs. The SS cost pool consists of costs relating to the administration of various SS programs. During our testing of indirect payroll expenditures, we noted that the Belmont County Family and Children First Council Coordinator’s salary and benefits were improperly charged to the social services cost pool. This error resulted in questioned costs of $68,016 against the Temporary Assistance for Needy Families (TANF) Cluster. Failure to charge these costs to the appropriate cost pool resulted in the allocation of costs to a non-benefitting program, which subsequently resulted in improper Federal reimbursement to this non-benefitting program. We recommend the County implement procedures to evaluate expenditures to determine which programs they benefit in order to charge the associated costs to the appropriate indirect cost pool or direct program. We further recommend the County complete the necessary adjustment in CFIS Web to adjust the aforementioned costs, and any similar ones, to the benefitting program.
Finding 2024-001 - Significant Deficiency - Direct Cost Allocation Criteria: In accordance with 2 CFR 200.405(d), if a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. Condition: The Organization improperly allocated certain direct costs to its grant awards during the fiscal year ended December 31, 2024. Cause: The Organizations allocation calculation for certain direct costs did not properly allocate these costs across the projects that were benefitted. Effect: Expenses charged to projects were under-allocated in comparison to the actual time and effort spent on those projects. Recommendation: We recommend that management review their current allocation methods to ensure the expense attibutable to each project is being calculated and recorded correctly.
Identification of the federal program: Federal grantor: United States Department of Health and Human Services (HHS) Assistance Listing No.: 93.048 Program name: Special Programs for the Aging, Title IV, and Title II, Discretionary Projects Criteria or specific requirement (including statutory, regulatory, or other citation): Under 2 CFR 200.403 costs must be allowable; 2 CFR 200.405 allocable; and indirect costs must follow 2 CFR 200.414 and Appendix IV to Part 200 (nonprofit rate determination). Entities without a current negotiated rate may elect the 10% de minimis rate (2 CFR 200.414(f)). HHS adopts these requirements at 45 CFR Part 75. Condition: The organization applied and included an expired provisional indirect cost rate in its HHS grant application and budgets. HHS approved the application and budgets; however, the rate in use was not current and the Organization had no active negotiated indirect cost rate agreement (NICRA). Cause: Lapse in monitoring and renewing the negotiated indirect cost rate. Effect or potential effect: Risk of noncompliance with cost principles and potential unallowable indirect cost recoveries if the expired rate differs from an approved current rate. Questioned costs: Undetermined. The variance between the expired rate and an allowable rate was not calculated. Recommendation: Either (1) obtain an updated NICRA from the cognizant agency (HHS) and apply it prospectively and, if required, retroactively. Implement controls to track rate expirations and require documented verification of the current rate before budget submissions and draw requests. Views of responsible officials: Management occurs with the recommendation. See Management’s Corrective Action Plan.
Finding 2024-004: Cost Allocation Methodology Condition: As a result of audit procedures, it was determined that Wisconsin Women's Business Initiative Corporation's cost allocation methodology was not properly updated based on a recent time study or other means to verify the accuracy of the allocations. For some awards, the de minimis rate was used but it was not applied consistently to all programs, where a method of direct allocation was done based on a prior time study conducted in 2020. Criteria: Per 2 CFR §200.405(d), if a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. Cause: Wisconsin Women's Business Initiative Corporation continued to use a legacy cost allocation model without periodic review or revision. There was no formal process to evaluate whether the methodology remained appropriate given changes in program structure, staffing, or funding sources. Effect: As a result of the financial reporting matter identified in the condition paragraph, a significant deficiency exists in Wisconsin Women's Business Initiative Corporation's internal controls over financial reporting. Recommendation: We recommend Wisconsin Women's Business Initiative Corporation conduct a comprehensive review of its cost allocation methodology, update policies to reflect current program operations and federal requirements. Wisconsin Women's Business Initiative Corporation should also implement controls to ensure allocations are based on actual benefit and supported by documentation and provide staff training on time-and-effort reporting and allocation principles. View of responsible officials: Management agrees with the finding and has developed a written corrective action plan. This finding represents a significant deficiency in internal controls over compliance and a non-material non-compliance with the reporting requirement for the major federal programs. Questioned Costs: None Major Programs: AL #14.218 Community Development Block Grant Cluster, Award Numbers CDBG FY 2024, FD 003 2023, CD5075180249, CDBG MKE RLF, CDBG Racine 2023-2024, CDBG FY 2023, B-23-UC-55-0003, ED 24020, 2024-2025 CDBG - Classic; AL #59.046 Microloan Program, Award Numbers SBAOCAML230534, SBAOCAML2024001568
Compliance Requirement Allowable Costs and Allowable Activities Type of Finding Material Weakness in Internal Control over Compliance, Material Noncompliance Program Port Security Grant Program ALN # 97.056 Federal Agency Department of Homeland Security – Direct Award Federal Award Year 2021 and 2023 Grant Numbers EMW-2021-PU-00030- IJ#3 EMW-2023-PU-00164- IJ#4 Questioned Costs $209,855 Criteria - Federal rules require that grant funds be spent only on allowable and necessary costs that are directly related to the purpose of the award. For the Port Security Grant Program (PSGP), this means expenditures must match the projects described in the approved Investment Justification (IJ). In addition, all costs must be incurred within the official grant period; expenses made before or after the authorized performance dates are not permitted. Uniform Guidance establishes clear requirements for allowability of costs under federal awards: • 2 CFR 200.403 – Costs must be necessary, reasonable, allocable, and consistently treated in accordance with the terms and conditions of the federal award. • 2 CFR 200.405 – Costs must be directly allocable to the federal award in proportion to the benefits received. • 2 CFR 200.403(c) and 200.404 – Costs must conform to limitations or exclusions set forth in the award documents and applicable federal regulations. • 2 CFR 200.309 – A non-federal entity may charge to the federal award only allowable costs incurred during the period of performance, unless specifically authorized otherwise.Condition - Testing of 50 invoices identified significant noncompliance. Fourteen (14) invoices represented expenditures that were not aligned with the approved Investment Justification (IJ), indicating that funds were used for purposes outside the scope of the grant award. In addition, one (1) invoice reflected costs incurred prior to the authorized period of performance, in direct violation of federal grant requirements. a) Expenditures were charged to the 2021 PSGP for the purchase of camera equipment, installation, and project management activities that lacked support within the approved Investment Justification No. 3 MSOC Security Sustainment Costs, resulting in questioned costs of $78,910. b) Expenditures were charged to the 2023 PSGP for the purchase of computer equipment, conference room enhancements, and biological and cultural survey that lacked support within the approved Investment Justification No. 3 GIS Acquisition and Implementation, resulting in questioned costs of $115,044 c) Expenditures were charged to the 2023 PSGP for the purchase of executive leadership training and datto backups that lacked support within the approved Investment Justification No. 4 Sustainment for Cybersecurity Network and IT Systems, resulting in questioned costs of $15,901Cause - The District failed to implement and enforce adequate internal controls to ensure that expenditures were reviewed and validated against both the approved Investment Justification and the grant’s period of performance prior to authorization. This lack of oversight reflects a breakdown in management’s responsibility for compliance with federal grant requirements. Effect - Because the District did not ensure expenditures were properly reviewed against the approved Investment Justifications and the authorized period of performance, a total of $209,855 in questioned costs was identified. These unallowable expenditures increase the risk that federal grantor agencies may require repayment or disallowance of costs, and indicate material noncompliance with federal grant requirements. The lack of adequate review and oversight also undermines accountability for federal funds, creating heightened risk of waste, abuse, and additional future noncompliance. Recommendation - The District must implement and enforce formal review procedures requiring all PSGP expenditures to be cross-checked against the approved Investment Justification (IJ) and verified for compliance with the grant’s period of performance prior to payment. No disbursement of federal funds should occur until documentation demonstrates that the expenditure directly aligns with the approved grant scope and timing. The District must consult with FEMA regarding the allowability of identified questioned costs.
Finding Reference: 2024-004 – Inappropriate Allocation of Expenses Federal Agency: U.S. Department of Treasury Pass-Through Entity: Commonwealth Financing Authority Federal Program: Coronavirus State and Local Fiscal Recovery Funds – ALN 21.027 Compliance Requirement: Allowable Costs / Cost Principles Type of Finding: Compliance and Material Weakness in Internal Control over Compliance Criteria: Per 2 CFR §200.403 and §200.405, costs charged to a federal award must be allowable, allocable, and not reimbursed by another federal source. Internal controls should ensure that expenses are properly reviewed and approved prior to being charged to federal programs. Condition: During our audit, we noted that the Borough initially charged expenses to the COVID-19 ARPA H20 PA grant that were also being reimbursed under a separate federal grant. This resulted in duplicate reimbursement requests for the same costs, rendering the original charges to the COVID-19 ARPA H20 PA grant unallowable. Cause: The Borough’s internal controls over compliance did not detect that the same expenses were being submitted for reimbursement under multiple federal programs. This indicates a lack of adequate review procedures to prevent duplicate claims. Possible Asserted Effects: Although the expenses were ultimately not reimbursed twice, the initial submission of unallowable costs could have resulted in questioned costs and noncompliance with federal requirements. Upon identification by the auditors, the Borough communicated with the grantor agency and received approval to substitute allowable expenses under the grant. Questioned Costs: None noted. The Borough corrected the issue prior to final grant closeout, and no federal funds were improperly expended. Context: All grant expenditures were tested. Repeat Finding: Not Applicable Recommendations: We recommend that the Borough strengthen its internal control procedures over grant expense allocations, including implementing a cross-check process to ensure expenses are not submitted to multiple grants simultaneously. Views of responsible officials and planned corrective actions: After the review of the audit findings, the Borough has implemented additional oversight to include the review/validation of expenses prior to grant payment processing and/or grant closeout. The process and implementation are further detailed on the separate corrective action plan.
ALN 14.251 and ALN 21.027 Finding #2024‐006 Financial Policies and Procedures Repeat Finding: No Condition: The Organization did not have formalized, written financial policies and procedures that address key Uniform Guidance requirements. Criteria: Under 2 CFR 200.302(b), non‐federal entities must establish and maintain effective financial management systems that provide accurate, current, and complete disclosure of the financial results of each federal award. Uniform Guidance further requires that entities implement written policies and procedures governing: · Allowable costs (2 CFR 200.302(b)(7) and 200.403–200.405), · Procurement (2 CFR 200.317–200.327), · Cash management (2 CFR 200.305), · Travel costs (2 CFR 200.475), and · Conflict of interest (2 CFR 200.318(c)(1)). Written policies serve as the framework for consistent compliance with federal requirements. Cause: The Organization had not developed or adopted written financial policies, relying instead on informal practices and staff knowledge to manage federal awards. Effect: The absence of formalized financial policies increases the risk of noncompliance with Uniform Guidance, inconsistent application of requirements, and potential misuse of federal funds. The lack of a documented framework also limits accountability and makes it difficult to train new staff or demonstrate compliance to oversight agencies. Questioned Costs: None noted. Perspective Information: This condition applied to the Organization’s overall financial management system and impacted all federal programs administered during the year ended December 31, 2024. As such, the lack of formalized financial policies represents a systemic issue and a material weakness in internal control over compliance. Recommendation: We recommend that the Organization adopt formal, written financial policies and procedures that address all Uniform Guidance requirements applicable to federal awards. These policies should be approved by management and the governing body, disseminated to staff, and reviewed periodically to ensure continued compliance. Reporting Views of Responsible Officials: The Organization agrees with the finding. The Organization will establish formalized accounting policies and procedures that adhere to the requirements of the Uniform Guidance.
Criteria: In accordance with 2 CFR 200.405, costs must be allocated to the projects based on the proportional benefit. If this cannot be determined, costs may be allocated or transferred to benefitted projects on any reasonable documented basis. Condition: For the year ended December 31, 2024, AEA did not maintain support for their allocation methodology for 9 cash disbursement items selected. Allocations amounts were determined by the current year’s management. Cause: The expense allocations may not be appropriate. Effect: AEA is not in compliance with 2 CFR 200.405. Questioned Costs: None reported. Context: A random sampling of the federal expenditures. Repeat Finding: This finding was not corrected. See finding item 2023-102 in the prior year findings. Recommendation: We recommend that AEA review and reestablish their allocation methodology for allocated costs. View of Responsible Officials: See management’s corrective action plan.
#2024-005 – Major Federal Award Finding – Allocation of Costs Nature of Finding: Compliance Finding Allowable Costs and Material Weakness in Internal Controls over Compliance Criteria/Condition: Federal regulations 2 CFR 200.405 provide that costs benefiting two or more projects in proportions that can be easily determined must be allocated to the projects based on the proportional benefit. If proportions cannot be easily determined, the costs may be allocated to the benefitted projects on a reasonable and documented basis. Questioned Costs: Not able to be determined. Identification of How Questioned Costs Were Computed: Of the non-payroll major program expenditures selected for testing, certain costs charged to the major program did not have proper support for the allocation percentages that were utilized, or they were missing documented approval for the allocation percentages. Some of the allocation percentages utilized were not consistent throughout the year. These matters are not isolated or contained to any particular type of expenditure. There was no meaningful methodology identified to quantify or extend the errors to the population. Cause/Context: Controls were not in place to evaluate the allocation of costs to grants based on proportional benefit provided to each grant. For 11 of the 40 non-payroll expenditures selected for testing, allocation percentages were not properly supported or were missing documented approval. Effect: Expenditures that involve an allocation of costs between grants are not properly supported. The lack of controls results in questioned costs as a disproportionate amount of expenditures may be charged to the federal program. Recommendation: We recommend management establish procedures and controls to allocate costs between grants based upon actual costs attributed to the grant and the particular expenditure allowed by the grant. Any such allocations should be supported by activity-level substantiation and be reviewed. Documentation of the allocation methodology, review and approval should be maintained. Views of Responsible Officials and Planned Corrective Actions Percentages used for allocations will be reviewed annually across all grants/programs and updated during the budget process. These allocations will be reviewed by the CFO.
#2024-005 – Major Federal Award Finding – Allocation of Costs Nature of Finding: Compliance Finding Allowable Costs and Material Weakness in Internal Controls over Compliance Criteria/Condition: Federal regulations 2 CFR 200.405 provide that costs benefiting two or more projects in proportions that can be easily determined must be allocated to the projects based on the proportional benefit. If proportions cannot be easily determined, the costs may be allocated to the benefitted projects on a reasonable and documented basis. Questioned Costs: Not able to be determined. Identification of How Questioned Costs Were Computed: Of the non-payroll major program expenditures selected for testing, certain costs charged to the major program did not have proper support for the allocation percentages that were utilized, or they were missing documented approval for the allocation percentages. Some of the allocation percentages utilized were not consistent throughout the year. These matters are not isolated or contained to any particular type of expenditure. There was no meaningful methodology identified to quantify or extend the errors to the population. Cause/Context: Controls were not in place to evaluate the allocation of costs to grants based on proportional benefit provided to each grant. For 11 of the 40 non-payroll expenditures selected for testing, allocation percentages were not properly supported or were missing documented approval. Effect: Expenditures that involve an allocation of costs between grants are not properly supported. The lack of controls results in questioned costs as a disproportionate amount of expenditures may be charged to the federal program. Recommendation: We recommend management establish procedures and controls to allocate costs between grants based upon actual costs attributed to the grant and the particular expenditure allowed by the grant. Any such allocations should be supported by activity-level substantiation and be reviewed. Documentation of the allocation methodology, review and approval should be maintained. Views of Responsible Officials and Planned Corrective Actions Percentages used for allocations will be reviewed annually across all grants/programs and updated during the budget process. These allocations will be reviewed by the CFO.
#2024-005 – Major Federal Award Finding – Allocation of Costs Nature of Finding: Compliance Finding Allowable Costs and Material Weakness in Internal Controls over Compliance Criteria/Condition: Federal regulations 2 CFR 200.405 provide that costs benefiting two or more projects in proportions that can be easily determined must be allocated to the projects based on the proportional benefit. If proportions cannot be easily determined, the costs may be allocated to the benefitted projects on a reasonable and documented basis. Questioned Costs: Not able to be determined. Identification of How Questioned Costs Were Computed: Of the non-payroll major program expenditures selected for testing, certain costs charged to the major program did not have proper support for the allocation percentages that were utilized, or they were missing documented approval for the allocation percentages. Some of the allocation percentages utilized were not consistent throughout the year. These matters are not isolated or contained to any particular type of expenditure. There was no meaningful methodology identified to quantify or extend the errors to the population. Cause/Context: Controls were not in place to evaluate the allocation of costs to grants based on proportional benefit provided to each grant. For 11 of the 40 non-payroll expenditures selected for testing, allocation percentages were not properly supported or were missing documented approval. Effect: Expenditures that involve an allocation of costs between grants are not properly supported. The lack of controls results in questioned costs as a disproportionate amount of expenditures may be charged to the federal program. Recommendation: We recommend management establish procedures and controls to allocate costs between grants based upon actual costs attributed to the grant and the particular expenditure allowed by the grant. Any such allocations should be supported by activity-level substantiation and be reviewed. Documentation of the allocation methodology, review and approval should be maintained. Views of Responsible Officials and Planned Corrective Actions Percentages used for allocations will be reviewed annually across all grants/programs and updated during the budget process. These allocations will be reviewed by the CFO.
#2024-005 – Major Federal Award Finding – Allocation of Costs Nature of Finding: Compliance Finding Allowable Costs and Material Weakness in Internal Controls over Compliance Criteria/Condition: Federal regulations 2 CFR 200.405 provide that costs benefiting two or more projects in proportions that can be easily determined must be allocated to the projects based on the proportional benefit. If proportions cannot be easily determined, the costs may be allocated to the benefitted projects on a reasonable and documented basis. Questioned Costs: Not able to be determined. Identification of How Questioned Costs Were Computed: Of the non-payroll major program expenditures selected for testing, certain costs charged to the major program did not have proper support for the allocation percentages that were utilized, or they were missing documented approval for the allocation percentages. Some of the allocation percentages utilized were not consistent throughout the year. These matters are not isolated or contained to any particular type of expenditure. There was no meaningful methodology identified to quantify or extend the errors to the population. Cause/Context: Controls were not in place to evaluate the allocation of costs to grants based on proportional benefit provided to each grant. For 11 of the 40 non-payroll expenditures selected for testing, allocation percentages were not properly supported or were missing documented approval. Effect: Expenditures that involve an allocation of costs between grants are not properly supported. The lack of controls results in questioned costs as a disproportionate amount of expenditures may be charged to the federal program. Recommendation: We recommend management establish procedures and controls to allocate costs between grants based upon actual costs attributed to the grant and the particular expenditure allowed by the grant. Any such allocations should be supported by activity-level substantiation and be reviewed. Documentation of the allocation methodology, review and approval should be maintained. Views of Responsible Officials and Planned Corrective Actions Percentages used for allocations will be reviewed annually across all grants/programs and updated during the budget process. These allocations will be reviewed by the CFO.
#2024-005 – Major Federal Award Finding – Allocation of Costs Nature of Finding: Compliance Finding Allowable Costs and Material Weakness in Internal Controls over Compliance Criteria/Condition: Federal regulations 2 CFR 200.405 provide that costs benefiting two or more projects in proportions that can be easily determined must be allocated to the projects based on the proportional benefit. If proportions cannot be easily determined, the costs may be allocated to the benefitted projects on a reasonable and documented basis. Questioned Costs: Not able to be determined. Identification of How Questioned Costs Were Computed: Of the non-payroll major program expenditures selected for testing, certain costs charged to the major program did not have proper support for the allocation percentages that were utilized, or they were missing documented approval for the allocation percentages. Some of the allocation percentages utilized were not consistent throughout the year. These matters are not isolated or contained to any particular type of expenditure. There was no meaningful methodology identified to quantify or extend the errors to the population. Cause/Context: Controls were not in place to evaluate the allocation of costs to grants based on proportional benefit provided to each grant. For 11 of the 40 non-payroll expenditures selected for testing, allocation percentages were not properly supported or were missing documented approval. Effect: Expenditures that involve an allocation of costs between grants are not properly supported. The lack of controls results in questioned costs as a disproportionate amount of expenditures may be charged to the federal program. Recommendation: We recommend management establish procedures and controls to allocate costs between grants based upon actual costs attributed to the grant and the particular expenditure allowed by the grant. Any such allocations should be supported by activity-level substantiation and be reviewed. Documentation of the allocation methodology, review and approval should be maintained. Views of Responsible Officials and Planned Corrective Actions Percentages used for allocations will be reviewed annually across all grants/programs and updated during the budget process. These allocations will be reviewed by the CFO.
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.
Finding 2024-003: Unsubstantiated Expense Program Name: Rail and Transit Security Grant Program Assistance Listing No. 97.075 Federal Award No.: EMW-2021-RA-00048 Federal Agency: U.S. Department of Homeland Security Criteria The code of federal regulations – 2 CFR 200.405 Allocable costs requires that: A cost is allocable to a Federal award or other cost objective if the cost is assignable to that Federal award or other cost objective in accordance with the relative benefits received. This standard is met if the cost satisfies any of the following criteria: (1) Is incurred specifically for the Federal award; (2) Benefits both the Federal award and other work of the recipient or subrecipient and can be distributed in proportions that may be approximated using reasonable methods; or (3) Is necessary to the overall operation of the recipient or subrecipient and is assignable in part to the Federal award in accordance with these cost principles. The code of federal regulations – 2 CFR 200.1 Definitions defines Questioned costs as: Questioned cost means an amount, expended or received from a Federal award, that in the auditor’s judgment: (i) Is noncompliant or suspected noncompliant with Federal statutes, regulations, or the terms and conditions of the Federal award; The following exceptions to the criteria were observed during the performance of the audit procedures: 1. As part of our procedures relating to the testing requirement of Sections A and B (Activities Allowed or Unallowed and Allowable Costs/Cost Principles), we identified a transaction erroneously included in the expenditure population that did not represent an expenditure allocable to Assistance Listing #97.075 incurred by Amtrak. The $24,200 amount included on the SEFA and in the underlying population related to a project funded by the Assistance Listing #20.315. Cause Amtrak’s control procedures in place as it relates to the review of manual journal entries related to reclassification of expenses between different projects under different funding sources were not operating effectively. The review process failed to identify the correct project to allocate the reclassification journal entry to. Effect Amtrak is in non-compliance with the related grant agreement. Questioned Costs This finding resulted in a total of $24,200 of questioned costs for Assistance Listing #97.075 – Rail and Transit Security Grant Program for Federal Award # EMW-2021-RA-00048. Context We selected 40 AB expenditure transactions, related to Assistance Listing #97.075, for internal control and compliance testing. One exception as described in the Condition section above was noted for matters 1-3 in the Criteria section above, indicating that internal controls were not functioning. Identification as a Repeat Finding Not a repeat finding. Recommendation We recommend that management strengthen the process to identify and review funding sources of underlying expenditures, that support the amounts of the reclassification journal entries. This could include reviewing approved budgets for the federal award in scope at a necessary level of detail to determine appropriateness of allocations in a timely manner. Views of Responsible Officials The invoice identified in this finding was initially charged to the incorrect project code, due to a manual process that was done incorrectly. The charges on the invoice should have been recorded to Amtrak’s annual grant, not the Rail and Transit Security Grant. The Company has moved the charges to the correct project code. The review and approval controls within the procurement process would have normally prevented the assignment of the incorrect project code, but in this situation, the project code was not set up at the time the services were rendered and an incorrect project code was used. This created the requirement for a manual journal entry to reclassify the expenses and at that time the incorrect code was selected. Amtrak will reinforce the need for proper project set up in advance and proper review of project charges once incurred.
Finding 2024-003: Unsupported Payroll Charges and Improper Drawdown of Federal Funds Compliance Requirements: Allowable Costs/Cost Principles; Cash Management; Reporting Type: Material Weakness in Internal Control over Compliance and Material Noncompliance Federal Agency: U.S. Department of Health and Human Services (Centers for Disease Control and Prevention) AL Numbers and Titles: 93.809 – National Organizations for Chronic Disease Prevention and Health Promotion Federal Award Number: NU58DP007562 Questioned Costs: $423,094 Repeat Finding: No Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to a federal award must be necessary, reasonable, and allocable, and must conform to the terms and conditions of the award. Per 2 CFR §200.430(i), charges for salaries and wages must be supported by records that accurately reflect the work performed and be supported by a system of internal control. Furthermore, 2 CFR §200.305(b) requires that non-federal entities minimize the time between federal fund drawdown and disbursement, and limits advances to amounts needed for the immediate cash requirements of the program. Condition: During our testing of payroll-related transactions charged to the 93.809 federal program, we identified a significant reallocation of personnel costs from unrestricted funds to the federal grant that occurred late in the audit period. These charges related to multiple employees whose compensation was not included in the originally approved budget for the federal program. At the time of our testing, no formal budget revision had been submitted to the awarding agency, and the names of these staff had not been recorded in the federal grant reporting system as required by the award terms. Additionally, the auditee was unable to provide any documentation, such as certifications, labor distribution reports, calendars, or other records, to support that these employees worked on activities allocable to the federal program. We further noted that the auditee drew down federal funds prior to the recording of these payroll charges, at a time when the costs in question had neither been incurred nor documented. This resulted in federal funds being drawn in advance of need, contrary to federal cash management requirements. Cause: The auditee did not have adequate internal controls to ensure that only appropriately budgeted and documented payroll costs were charged to the federal award. In addition, the organization lacked procedures to confirm that federal funds were drawn only for costs that were allowable, incurred, and supported at the time of drawdown. These weaknesses allowed significant payroll reallocations to be processed retroactively without timely budget amendments or sufficient documentation of allocability. Effect: As a result of these control deficiencies, a total of $423,094 in personnel-related costs, including direct salaries, fringe benefits, and associated indirect costs, was charged to the federal program without appropriate budget authorization or time and effort support. These unsupported costs were also used as the basis for a drawdown of federal funds that occurred before the expenditures were recorded or substantiated. This resulted in noncompliance with both cost principles and cash management requirements and exposes the auditee to potential disallowance or repayment of federal funds. Recommendation: We recommend that the auditee enhance internal controls related to grant budgeting, payroll allocations, and cash management. These controls should ensure that payroll costs charged to federal awards are included in the approved budget or are formally revised and submitted to the grantor, are supported by accurate time and effort documentation, and that federal funds are drawn only when actual, allowable costs have been incurred and documented. We further recommend that the auditee consult with the awarding agency to determine whether any retroactive budget revision or corrective action is available or whether repayment of questioned costs will be required. Views of Responsible Officials Corrective Actions: Management agrees with this finding. Please refer to the Corrective Action Plan.
U.S. Department of Health and Human Services - 93.432 Center for Independent Living 2024-005 Lack of Written Allocation Plan for Shared Costs Criteria: In accordance with 2 CFR §200.405(d), any cost allocated to a federal award must be allocable, reasonable, and based on a method that is supported and consistently applied. In addition, 2 CFR §200.403(g) requires that costs be adequately documented. A written allocation plan is essential to demonstrate that the allocation of shared costs is equitable and in compliance with Uniform Guidance. Condition: During our audit of federal award expenditures, we found that the Organization did not maintain a written cost allocation plan to support how shared costs, such as payroll, health insurance, and retirement, were distributed across programs, including federal awards. While costs were charged to various funding sources, no formal documentation existed to describe the basis or methodology for those allocations. Cause: The League relied on informal practices, but did not document or formalize the methodology in a written plan. As a result, there was no consistent or verifiable support for how shared costs were distributed. Effect: Without a written allocation plan, there is an increased risk that shared costs may be allocated inconsistently or inappropriately to federal awards, potentially resulting in noncompliance with federal costs principles and questioned costs. Questioned Costs: None noted. Recommendation: We recommend that the League develop and implement a written cost allocation plan that outlines the basis for distributing shared costs, including the allocation methodology, the types of costs involved, and the programs affected. The plan should be reviewed periodically and updated as necessary to reflect changes in funding or operations. Supporting documentation for allocations should be maintained and readily available for audit purposes. Views of Responsible Officials and Planned Corrective Actions: See corrective action plan on page 50.
#2024-005 – Major Federal Award Finding – Allocation of Costs Nature of Finding: Compliance Finding Allowable Costs and Material Weakness in Internal Controls over Compliance Criteria/Condition: Federal regulations 2 CFR 200.405 provide that costs benefiting two or more projects in proportions that can be easily determined must be allocated to the projects based on the proportional benefit. If proportions cannot be easily determined, the costs may be allocated to the benefitted projects on a reasonable and documented basis. Questioned Costs: Not able to be determined. Identification of How Questioned Costs Were Computed: Of the non-payroll major program expenditures selected for testing, certain costs charged to the major program did not have proper support for the allocation percentages that were utilized, or they were missing documented approval for the allocation percentages. Some of the allocation percentages utilized were not consistent throughout the year. These matters are not isolated or contained to any particular type of expenditure. There was no meaningful methodology identified to quantify or extend the errors to the population. Cause/Context: Controls were not in place to evaluate the allocation of costs to grants based on proportional benefit provided to each grant. For 11 of the 40 non-payroll expenditures selected for testing, allocation percentages were not properly supported or were missing documented approval. Effect: Expenditures that involve an allocation of costs between grants are not properly supported. The lack of controls results in questioned costs as a disproportionate amount of expenditures may be charged to the federal program. Recommendation: We recommend management establish procedures and controls to allocate costs between grants based upon actual costs attributed to the grant and the particular expenditure allowed by the grant. Any such allocations should be supported by activity-level substantiation and be reviewed. Documentation of the allocation methodology, review and approval should be maintained. Views of Responsible Officials and Planned Corrective Actions Percentages used for allocations will be reviewed annually across all grants/programs and updated during the budget process. These allocations will be reviewed by the CFO.
#2024-005 – Major Federal Award Finding – Allocation of Costs Nature of Finding: Compliance Finding Allowable Costs and Material Weakness in Internal Controls over Compliance Criteria/Condition: Federal regulations 2 CFR 200.405 provide that costs benefiting two or more projects in proportions that can be easily determined must be allocated to the projects based on the proportional benefit. If proportions cannot be easily determined, the costs may be allocated to the benefitted projects on a reasonable and documented basis. Questioned Costs: Not able to be determined. Identification of How Questioned Costs Were Computed: Of the non-payroll major program expenditures selected for testing, certain costs charged to the major program did not have proper support for the allocation percentages that were utilized, or they were missing documented approval for the allocation percentages. Some of the allocation percentages utilized were not consistent throughout the year. These matters are not isolated or contained to any particular type of expenditure. There was no meaningful methodology identified to quantify or extend the errors to the population. Cause/Context: Controls were not in place to evaluate the allocation of costs to grants based on proportional benefit provided to each grant. For 11 of the 40 non-payroll expenditures selected for testing, allocation percentages were not properly supported or were missing documented approval. Effect: Expenditures that involve an allocation of costs between grants are not properly supported. The lack of controls results in questioned costs as a disproportionate amount of expenditures may be charged to the federal program. Recommendation: We recommend management establish procedures and controls to allocate costs between grants based upon actual costs attributed to the grant and the particular expenditure allowed by the grant. Any such allocations should be supported by activity-level substantiation and be reviewed. Documentation of the allocation methodology, review and approval should be maintained. Views of Responsible Officials and Planned Corrective Actions Percentages used for allocations will be reviewed annually across all grants/programs and updated during the budget process. These allocations will be reviewed by the CFO.
#2024-005 – Major Federal Award Finding – Allocation of Costs Nature of Finding: Compliance Finding Allowable Costs and Material Weakness in Internal Controls over Compliance Criteria/Condition: Federal regulations 2 CFR 200.405 provide that costs benefiting two or more projects in proportions that can be easily determined must be allocated to the projects based on the proportional benefit. If proportions cannot be easily determined, the costs may be allocated to the benefitted projects on a reasonable and documented basis. Questioned Costs: Not able to be determined. Identification of How Questioned Costs Were Computed: Of the non-payroll major program expenditures selected for testing, certain costs charged to the major program did not have proper support for the allocation percentages that were utilized, or they were missing documented approval for the allocation percentages. Some of the allocation percentages utilized were not consistent throughout the year. These matters are not isolated or contained to any particular type of expenditure. There was no meaningful methodology identified to quantify or extend the errors to the population. Cause/Context: Controls were not in place to evaluate the allocation of costs to grants based on proportional benefit provided to each grant. For 11 of the 40 non-payroll expenditures selected for testing, allocation percentages were not properly supported or were missing documented approval. Effect: Expenditures that involve an allocation of costs between grants are not properly supported. The lack of controls results in questioned costs as a disproportionate amount of expenditures may be charged to the federal program. Recommendation: We recommend management establish procedures and controls to allocate costs between grants based upon actual costs attributed to the grant and the particular expenditure allowed by the grant. Any such allocations should be supported by activity-level substantiation and be reviewed. Documentation of the allocation methodology, review and approval should be maintained. Views of Responsible Officials and Planned Corrective Actions Percentages used for allocations will be reviewed annually across all grants/programs and updated during the budget process. These allocations will be reviewed by the CFO.
#2024-005 – Major Federal Award Finding – Allocation of Costs Nature of Finding: Compliance Finding Allowable Costs and Material Weakness in Internal Controls over Compliance Criteria/Condition: Federal regulations 2 CFR 200.405 provide that costs benefiting two or more projects in proportions that can be easily determined must be allocated to the projects based on the proportional benefit. If proportions cannot be easily determined, the costs may be allocated to the benefitted projects on a reasonable and documented basis. Questioned Costs: Not able to be determined. Identification of How Questioned Costs Were Computed: Of the non-payroll major program expenditures selected for testing, certain costs charged to the major program did not have proper support for the allocation percentages that were utilized, or they were missing documented approval for the allocation percentages. Some of the allocation percentages utilized were not consistent throughout the year. These matters are not isolated or contained to any particular type of expenditure. There was no meaningful methodology identified to quantify or extend the errors to the population. Cause/Context: Controls were not in place to evaluate the allocation of costs to grants based on proportional benefit provided to each grant. For 11 of the 40 non-payroll expenditures selected for testing, allocation percentages were not properly supported or were missing documented approval. Effect: Expenditures that involve an allocation of costs between grants are not properly supported. The lack of controls results in questioned costs as a disproportionate amount of expenditures may be charged to the federal program. Recommendation: We recommend management establish procedures and controls to allocate costs between grants based upon actual costs attributed to the grant and the particular expenditure allowed by the grant. Any such allocations should be supported by activity-level substantiation and be reviewed. Documentation of the allocation methodology, review and approval should be maintained. Views of Responsible Officials and Planned Corrective Actions Percentages used for allocations will be reviewed annually across all grants/programs and updated during the budget process. These allocations will be reviewed by the CFO.
#2024-005 – Major Federal Award Finding – Allocation of Costs Nature of Finding: Compliance Finding Allowable Costs and Material Weakness in Internal Controls over Compliance Criteria/Condition: Federal regulations 2 CFR 200.405 provide that costs benefiting two or more projects in proportions that can be easily determined must be allocated to the projects based on the proportional benefit. If proportions cannot be easily determined, the costs may be allocated to the benefitted projects on a reasonable and documented basis. Questioned Costs: Not able to be determined. Identification of How Questioned Costs Were Computed: Of the non-payroll major program expenditures selected for testing, certain costs charged to the major program did not have proper support for the allocation percentages that were utilized, or they were missing documented approval for the allocation percentages. Some of the allocation percentages utilized were not consistent throughout the year. These matters are not isolated or contained to any particular type of expenditure. There was no meaningful methodology identified to quantify or extend the errors to the population. Cause/Context: Controls were not in place to evaluate the allocation of costs to grants based on proportional benefit provided to each grant. For 11 of the 40 non-payroll expenditures selected for testing, allocation percentages were not properly supported or were missing documented approval. Effect: Expenditures that involve an allocation of costs between grants are not properly supported. The lack of controls results in questioned costs as a disproportionate amount of expenditures may be charged to the federal program. Recommendation: We recommend management establish procedures and controls to allocate costs between grants based upon actual costs attributed to the grant and the particular expenditure allowed by the grant. Any such allocations should be supported by activity-level substantiation and be reviewed. Documentation of the allocation methodology, review and approval should be maintained. Views of Responsible Officials and Planned Corrective Actions Percentages used for allocations will be reviewed annually across all grants/programs and updated during the budget process. These allocations will be reviewed by the CFO.
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.
Finding 2024-003: Unsubstantiated Expense Program Name: Rail and Transit Security Grant Program Assistance Listing No. 97.075 Federal Award No.: EMW-2021-RA-00048 Federal Agency: U.S. Department of Homeland Security Criteria The code of federal regulations – 2 CFR 200.405 Allocable costs requires that: A cost is allocable to a Federal award or other cost objective if the cost is assignable to that Federal award or other cost objective in accordance with the relative benefits received. This standard is met if the cost satisfies any of the following criteria: (1) Is incurred specifically for the Federal award; (2) Benefits both the Federal award and other work of the recipient or subrecipient and can be distributed in proportions that may be approximated using reasonable methods; or (3) Is necessary to the overall operation of the recipient or subrecipient and is assignable in part to the Federal award in accordance with these cost principles. The code of federal regulations – 2 CFR 200.1 Definitions defines Questioned costs as: Questioned cost means an amount, expended or received from a Federal award, that in the auditor’s judgment: (i) Is noncompliant or suspected noncompliant with Federal statutes, regulations, or the terms and conditions of the Federal award; The following exceptions to the criteria were observed during the performance of the audit procedures: 1. As part of our procedures relating to the testing requirement of Sections A and B (Activities Allowed or Unallowed and Allowable Costs/Cost Principles), we identified a transaction erroneously included in the expenditure population that did not represent an expenditure allocable to Assistance Listing #97.075 incurred by Amtrak. The $24,200 amount included on the SEFA and in the underlying population related to a project funded by the Assistance Listing #20.315. Cause Amtrak’s control procedures in place as it relates to the review of manual journal entries related to reclassification of expenses between different projects under different funding sources were not operating effectively. The review process failed to identify the correct project to allocate the reclassification journal entry to. Effect Amtrak is in non-compliance with the related grant agreement. Questioned Costs This finding resulted in a total of $24,200 of questioned costs for Assistance Listing #97.075 – Rail and Transit Security Grant Program for Federal Award # EMW-2021-RA-00048. Context We selected 40 AB expenditure transactions, related to Assistance Listing #97.075, for internal control and compliance testing. One exception as described in the Condition section above was noted for matters 1-3 in the Criteria section above, indicating that internal controls were not functioning. Identification as a Repeat Finding Not a repeat finding. Recommendation We recommend that management strengthen the process to identify and review funding sources of underlying expenditures, that support the amounts of the reclassification journal entries. This could include reviewing approved budgets for the federal award in scope at a necessary level of detail to determine appropriateness of allocations in a timely manner. Views of Responsible Officials The invoice identified in this finding was initially charged to the incorrect project code, due to a manual process that was done incorrectly. The charges on the invoice should have been recorded to Amtrak’s annual grant, not the Rail and Transit Security Grant. The Company has moved the charges to the correct project code. The review and approval controls within the procurement process would have normally prevented the assignment of the incorrect project code, but in this situation, the project code was not set up at the time the services were rendered and an incorrect project code was used. This created the requirement for a manual journal entry to reclassify the expenses and at that time the incorrect code was selected. Amtrak will reinforce the need for proper project set up in advance and proper review of project charges once incurred.
Finding 2024-003: Unsupported Payroll Charges and Improper Drawdown of Federal Funds Compliance Requirements: Allowable Costs/Cost Principles; Cash Management; Reporting Type: Material Weakness in Internal Control over Compliance and Material Noncompliance Federal Agency: U.S. Department of Health and Human Services (Centers for Disease Control and Prevention) AL Numbers and Titles: 93.809 – National Organizations for Chronic Disease Prevention and Health Promotion Federal Award Number: NU58DP007562 Questioned Costs: $423,094 Repeat Finding: No Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to a federal award must be necessary, reasonable, and allocable, and must conform to the terms and conditions of the award. Per 2 CFR §200.430(i), charges for salaries and wages must be supported by records that accurately reflect the work performed and be supported by a system of internal control. Furthermore, 2 CFR §200.305(b) requires that non-federal entities minimize the time between federal fund drawdown and disbursement, and limits advances to amounts needed for the immediate cash requirements of the program. Condition: During our testing of payroll-related transactions charged to the 93.809 federal program, we identified a significant reallocation of personnel costs from unrestricted funds to the federal grant that occurred late in the audit period. These charges related to multiple employees whose compensation was not included in the originally approved budget for the federal program. At the time of our testing, no formal budget revision had been submitted to the awarding agency, and the names of these staff had not been recorded in the federal grant reporting system as required by the award terms. Additionally, the auditee was unable to provide any documentation, such as certifications, labor distribution reports, calendars, or other records, to support that these employees worked on activities allocable to the federal program. We further noted that the auditee drew down federal funds prior to the recording of these payroll charges, at a time when the costs in question had neither been incurred nor documented. This resulted in federal funds being drawn in advance of need, contrary to federal cash management requirements. Cause: The auditee did not have adequate internal controls to ensure that only appropriately budgeted and documented payroll costs were charged to the federal award. In addition, the organization lacked procedures to confirm that federal funds were drawn only for costs that were allowable, incurred, and supported at the time of drawdown. These weaknesses allowed significant payroll reallocations to be processed retroactively without timely budget amendments or sufficient documentation of allocability. Effect: As a result of these control deficiencies, a total of $423,094 in personnel-related costs, including direct salaries, fringe benefits, and associated indirect costs, was charged to the federal program without appropriate budget authorization or time and effort support. These unsupported costs were also used as the basis for a drawdown of federal funds that occurred before the expenditures were recorded or substantiated. This resulted in noncompliance with both cost principles and cash management requirements and exposes the auditee to potential disallowance or repayment of federal funds. Recommendation: We recommend that the auditee enhance internal controls related to grant budgeting, payroll allocations, and cash management. These controls should ensure that payroll costs charged to federal awards are included in the approved budget or are formally revised and submitted to the grantor, are supported by accurate time and effort documentation, and that federal funds are drawn only when actual, allowable costs have been incurred and documented. We further recommend that the auditee consult with the awarding agency to determine whether any retroactive budget revision or corrective action is available or whether repayment of questioned costs will be required. Views of Responsible Officials Corrective Actions: Management agrees with this finding. Please refer to the Corrective Action Plan.
U.S. Department of Health and Human Services - 93.432 Center for Independent Living 2024-005 Lack of Written Allocation Plan for Shared Costs Criteria: In accordance with 2 CFR §200.405(d), any cost allocated to a federal award must be allocable, reasonable, and based on a method that is supported and consistently applied. In addition, 2 CFR §200.403(g) requires that costs be adequately documented. A written allocation plan is essential to demonstrate that the allocation of shared costs is equitable and in compliance with Uniform Guidance. Condition: During our audit of federal award expenditures, we found that the Organization did not maintain a written cost allocation plan to support how shared costs, such as payroll, health insurance, and retirement, were distributed across programs, including federal awards. While costs were charged to various funding sources, no formal documentation existed to describe the basis or methodology for those allocations. Cause: The League relied on informal practices, but did not document or formalize the methodology in a written plan. As a result, there was no consistent or verifiable support for how shared costs were distributed. Effect: Without a written allocation plan, there is an increased risk that shared costs may be allocated inconsistently or inappropriately to federal awards, potentially resulting in noncompliance with federal costs principles and questioned costs. Questioned Costs: None noted. Recommendation: We recommend that the League develop and implement a written cost allocation plan that outlines the basis for distributing shared costs, including the allocation methodology, the types of costs involved, and the programs affected. The plan should be reviewed periodically and updated as necessary to reflect changes in funding or operations. Supporting documentation for allocations should be maintained and readily available for audit purposes. Views of Responsible Officials and Planned Corrective Actions: See corrective action plan on page 50.
2024-009: Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Information on Federal Program: United States Department of the Treasury. Federal Assistance Listing Number 21.027 – Coronavirus State and Local Fiscal Recovery Funds. Compliance Requirements: Allowable Costs/Cost Principles Criteria: Per 2 CFR § 200.403(g), costs must be adequately documented. Under 2 CFR § 200.403(a) and § 200.405(a), only costs that are necessary, reasonable, and allocable to the federal program may be charged. Condition: The County overpaid the vendor by $25,170. The full amount of the invoice, including the overpayment, was charged to the federal award. The overpayment was not identified during the normal processing and payment of the invoice. Cause: The overpayment was due to an oversight during invoice processing. Effect: Federal funds were used to pay an amount not allocable to the program, resulting in $25,170 of unallowable costs charged to the federal award. Questioned Costs: $25,170 in Coronavirus State and Local Fiscal Recovery Funds. Context: We randomly selected tested fifteen (15) expenditures charged to the SLFRF program in the amount of $1,241,980 from a population of $1,292,822 and found one (1) instance of noncompliance totaling $25,170. Recommendation: We recommend that the entity seek reimbursement for the $25,170 overpayment and make appropriate adjustments to the Schedule of Expenditures of Federal Awards (SEFA) and the accounting records, as needed. Management should ensure final payment amounts are fully supported by invoice documentation. Views of Responsible Officials and Planned Corrective Actions: We agree with the findings and recommendations. This was an isolated incident whereas the payment amount was mistakenly pulled from the wrong line on a contractor’s pay application. This overpayment was missed in the subject fiscal year as the program was still active. Once the overpayment was identified, the county sought reimbursement from the vendor for the overpayment and has since received the funds. The reimbursement will be included as program revenues in the next audit report. The County will reconcile contract values as each pay application is processed in lieu of awaiting program/project closeout in the future.
Finding 2024-001 (A/B – Activities Allowed or Unallowed and Allowable Costs / Cost Principles) Identification of the federal program: Federal Grantor: US Department of Homeland Security Federal Emergency Management Agency (FEMA) Assistance Listing No.: 97.036 - COVID-19 - Disaster Grants – Public Assistance (Presidentially Declared Disasters) Criteria or specific requirement (including statutory, regulatory or other citation): The Uniform Guidance 2 CFR section 200.303 states, “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” The Uniform Guidance 2 CFR sections 200.400 through 200.405 set forth the guidance for allowable costs for projects funded with Federal funds. Condition: Baptist Health Care, Inc. (the Company) received funding under program 97.036 – COVID-19 - Disaster Grants – Public Assistance (Presidentially Declared Disasters) (Program) during the fiscal year ended September 30, 2024. The Company submitted duplicate invoices for different projects that resulted in expenditures being reimbursed for costs incurred multiple times. The Company also submitted for reimbursement an amount greater than what was supported by the underlying invoice due to incorrect data submission. Based on discussions with management, we understand that the Company utilized a contracted third party to assist with collecting the information to be submitted to FEMA. However, the internal controls over compliance did not detect or prevent these situations from occurring at the required level of precision. As such, we consider the lack of effectiveness of controls to validate completeness and accuracy of the amounts submitted for reimbursement for this program to represent a material weakness in internal control over compliance. Cause: The Company’s internal controls in place over the review of the completeness and accuracy of amounts submitted for reimbursement under the Program were not sufficient to detect or prevent errors in the underlying files submitted for reimbursement. Effect or potential effect: The lack of management review at a sufficient level of precision regarding expenditures submitted for reimbursement under this Program resulted in the reimbursement of duplicate invoices and reimbursement of an amount greater than the amount supported by the underlying supporting documentation from the granting agency. As a result, the Company will be required to reimburse the Federal Agency. Questioned costs: $79,118.82 Context: There were 8 individual projects for the COVID-19 disaster that the Company received funding for in fiscal year 2024. These projects were submitted to FEMA during the fiscal years 2020 through 2022. We selected 40 expenditures totaling $161,579 from the total population of expenditures totaling $1,843,741. We identified a duplicate invoice in our testing sample. We then reviewed the total population of invoices subject to testing and identified 24 invoices totaling $77,521.50 that were submitted for reimbursement more than once and therefore reimbursed by the Program more than once. We also identified one invoice totaling $177.48 for which reimbursement was requested for an amount $1,597.32 greater than the invoice amount. We extrapolated this error to estimate the likely questioned costs of $16,629.33. We reviewed the entire population of expenditures for which reimbursement was requested and received to determine the total amount of duplicate reimbursements and reimbursements in excess of supporting documentation to quantify the total known questioned costs of $79,118.82. Identification as a repeat finding, if applicable: Not applicable. Recommendation: The Company should ensure that a diligent review of amounts submitted for reimbursement is conducted at a sufficient level of precision by an appropriate individual with knowledge of the Program to ensure expenditures are only submitted once for reimbursement and to ensure that amounts submitted for reimbursement are not in excess of the amounts supported by appropriate documentation. We also recommend that management reimburse the Agency for the amounts reimbursed more than once and reimbursed at amounts in excess of the appropriate supporting documentation. Views of responsible officials: The Company agrees with the above recommendation. See separate Corrective Action Plan.
2024-042 - Misallocation of Expenditures Across Federal Awards Federal Program 14.228 - Community Development Block Grants Program 23.002 - Appalachian Area Development 90.210 - Delta Regional Authority (not subject to audit under Uniform Guidance) Award Numbers ARC-20698 ARC-20699 CDBG Subgrant: 1137-21-111-PF-01 Federal Agencies U.S. Department of Housing and Urban Development (HUD) U.S. Department of the Treasury (via Appalachian Regional Commission) Delta Regional Authority (DRA) Compliance Requirements Allowable Costs/Cost Principles - 2 CFR §200.403 and §200.405 Internal Controls - 2 CFR §200.303 Type of Finding Internal Control over Compliance - Significant Deficiency Compliance '- Noncompliance Questioned Costs (TABLE) Per 2 CFR §200.403, costs must be necessary, reasonable, and allocable to the federal award. Under §200.405, costs must be assigned to the federal award in accordance with the relative benefits received. Additionally, §200.303 requires the non-federal entity to maintain effective internal control over federal awards to ensure compliance. Condition During testing of 13 disbursements totaling $1,541,660 charged to the above federal programs, 11 invoices were not allocated in accordance with the approved budget percentages. This resulted in over-reimbursements across multiple federal awards. Known Over (Under) Reimbursements by Program and Fiscal Year (TABLE) *ALN 90.210 was not subject to audit under Uniform Guidance. Amounts shown are for context only. Cause The City did not consistently apply approved budget allocation percentages when charging expenditures to federal awards. This resulted in misclassification of costs and excess reimbursement from federal sources. Effect The City received federal reimbursements in excess of allowable amounts under ALNs 14.228 and 23.002. These errors may result in repayment obligations and indicate a broader weakness in internal controls over grant accounting and drawdown procedures. Recommendation We recommend the City strengthen its internal controls over grant accounting and reimbursement procedures. This should include: Formal review of allocation schedules prior to submission of reimbursement requests Periodic reconciliation of actual expenditures to approved budget allocations Staff training on federal cost principles and grant compliance requirements Views of Responsible Officials Management concurs with the finding. The City acknowledges that allocation errors occurred across multiple federal programs due to inconsistent application of approved budget percentages. To address this, the City will implement a formal review process for allocation schedules and establish reconciliation procedures to ensure expenditures align with approved budgets. Staff will receive training on federal cost principles and grant compliance requirements. The City will also evaluate prior reimbursements and consult with awarding agencies regarding any necessary adjustments.
2024-041 - Unsupported FEMA Reimbursements Federal Program 97.036 - FEMA Disaster Grants - Public Assistance (Presidentially Declared Disasters) Award Numbers PW No. 51 (0) and PW No. 34(0) Federal Agency Department of Homeland Security Compliance requirement Allowable Costs/Cost Principles - 2 CFR §200.403 and §200.405 Type of Finding Internal Control over Compliance - Significant Deficiency Compliance - Noncompliance Questioned Costs: $10,254 Criteria In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and adequately documented. Reimbursen,ents based on estimated costs must be reconciled to actual expenditures, and any unsupported amounts must be excluded from final claims. Condition The City received FEMA reimbursements totaling $99,548 under PW No. 51 (0) and $5,704 under PW No. 34(0). These reimbursements were based on estimated costs submitted to FEMA. However, during the financial statement audit, the following discrepancies were noted: PW No. 51 (0): Claimed: Labor $1,048; Equipment $1.8,811; Materials $76,559; Contract $3;130 - Total $99,548 Documented: Labor $1,048; Equipment $8,874; Materials $78,966; Contract $3, 130-Total $92,018 Unsupported costs: $7,530 PW No. 34(0): Claimed: Labor $2,374; Equipment $3,330 -Total $5,704 Documented: Equipment $2,980 - Total $2,980 Unsupported costs: $2,724 Cause The City did not reconcile estimated FEMA reimbursements to actual expenditures incurred and failed to maintain adequate supporting documentation for all cost categories. Effect The City may have received federal funds in excess of actual eligible expenditures, resulting in potential noncompliance with federal cost principles and risk of disallowed costs. Recommendation The City should implement procedures to ensure all FEMA reimbursements are supported by actual, documented expenditures. Management should review the unsupported amounts and consult with FEMA regarding potential repayment or adjustments. Views of Responsible Officials Management concurs with the finding. The City acknowledges that FEMA reimbursements were based on estimated costs and that documentation for certain categories was incomplete. The City will strengthen its procedures for reconciling estimated reimbursements to actual expenditures and ensure that all future claims are supported by detailed documentation. Staff will receive training on FEMA cost principles and documentation standards, and the City will consult with FEMA regarding resolution of the questioned costs.
U.S. Department of Housing and Urban Development #14.251 Economic Development Initiative, Community Project Funding, and Miscellaneous Grants 2024-005 Lack of Written Allocation Plan for Shared Costs (Significant Deficiency) Criteria: In accordance with 2 CFR §200.405(d), any cost allocated to a federal award must be allocable, reasonable, and based on a method that is supported and consistently applied. In addition, 2 CFR §200.403(g) requires that costs be adequately documented. A written allocation plan is essential to demonstrate that the allocation of shared costs is equitable and in compliance with Uniform Guidance. Condition: The Organization does not have a written cost allocation plan to document the basis for distributing shared costs such as salaries, occupancy, and administrative expenses among its programs and grants. Instead, management relies on grant budgets and staff judgment to determine which costs are charged to each grant. As a result, there is no consistent or documented methodology supporting the allocation of shared costs to benefiting programs. Cause: Management has not developed or implemented a written cost allocation plan. Cost allocations have historically been based on grant budgets or management's understanding of what each grant will support, rather than on a systematic and documented method. Effect: Without a written cost allocation plan, there is an increased risk that costs may not be allocated consistently or accurately among programs and grants. This could result in noncompliance with federal cost principles and potential questioned costs if expenses are not properly supported. Questioned Costs: None noted. Recommendation: We recommend that the Organization develop and implement a written cost allocation plan that outlines the basis for distributing shared costs, including the allocation methodology, the types of costs involved, and the programs affected. The plan should be reviewed periodically and updated as necessary to reflect changes in funding or operations. Supporting documentation for allocations should be maintained and readily available for audit purposes. Views of Responsible Officials and Planned Corrective Actions: Management agrees and recognizes the importance of consistent allocation methodologies. Corrective Action: Increase the Cost Allocation Plan defining allocation bases for shared expenses, supported by documentation and reviewed annually.
2024-004 Payroll Allocation Programs: 16.820 Post Conviction DNA Testing, 21.027 Coronavirus State and Local Fiscal Recovery Funds, 84.047 TRIO Cluster – TRIO-Upward Bound Criteria: Per 2 CFR section 200.405, a cost is allocable to a particular Federal award if the goods or services involved are chargeable or assignable to that Federal award in accordance with relative benefits received, which can be met if the cost is incurred specifically for the Federal award. Condition: A payroll allocation change for an employee working on multiple grants was submitted in April 2024, but allocation was not updated in the payroll system timely. Cause: Human error and oversight resulted in delays in updating the change in allocation between grants. Effect: The 21.027 Coronavirus State and Local Fiscal Recovery Funds grant was overcharged by $4,673 for related payroll costs. Questioned Costs: The conditions did not result in questioned costs greater than $25,000. Context: While payroll allocation changes were properly approved in April 2024 and total pay to the employee was correct, human error resulted in delays in updating the change in allocation between grants. When the error was identified, updates were made to the allocation in September 2024. Repeat Finding: No. Recommendation: Grant management personnel should enhance review procedures for payroll-related expenditures after grant allocation changes are made to ensure that changes submitted are properly reflected in the accounting records in the appropriate period. Views of Responsible Officials: Management agrees with the finding and a response is included in the corrective action plan.
2024-004 Payroll Allocation Programs: 16.820 Post Conviction DNA Testing, 21.027 Coronavirus State and Local Fiscal Recovery Funds, 84.047 TRIO Cluster – TRIO-Upward Bound Criteria: Per 2 CFR section 200.405, a cost is allocable to a particular Federal award if the goods or services involved are chargeable or assignable to that Federal award in accordance with relative benefits received, which can be met if the cost is incurred specifically for the Federal award. Condition: A payroll allocation change for an employee working on multiple grants was submitted in April 2024, but allocation was not updated in the payroll system timely. Cause: Human error and oversight resulted in delays in updating the change in allocation between grants. Effect: The 21.027 Coronavirus State and Local Fiscal Recovery Funds grant was overcharged by $4,673 for related payroll costs. Questioned Costs: The conditions did not result in questioned costs greater than $25,000. Context: While payroll allocation changes were properly approved in April 2024 and total pay to the employee was correct, human error resulted in delays in updating the change in allocation between grants. When the error was identified, updates were made to the allocation in September 2024. Repeat Finding: No. Recommendation: Grant management personnel should enhance review procedures for payroll-related expenditures after grant allocation changes are made to ensure that changes submitted are properly reflected in the accounting records in the appropriate period. Views of Responsible Officials: Management agrees with the finding and a response is included in the corrective action plan.
2024-004 Payroll Allocation Programs: 16.820 Post Conviction DNA Testing, 21.027 Coronavirus State and Local Fiscal Recovery Funds, 84.047 TRIO Cluster – TRIO-Upward Bound Criteria: Per 2 CFR section 200.405, a cost is allocable to a particular Federal award if the goods or services involved are chargeable or assignable to that Federal award in accordance with relative benefits received, which can be met if the cost is incurred specifically for the Federal award. Condition: A payroll allocation change for an employee working on multiple grants was submitted in April 2024, but allocation was not updated in the payroll system timely. Cause: Human error and oversight resulted in delays in updating the change in allocation between grants. Effect: The 21.027 Coronavirus State and Local Fiscal Recovery Funds grant was overcharged by $4,673 for related payroll costs. Questioned Costs: The conditions did not result in questioned costs greater than $25,000. Context: While payroll allocation changes were properly approved in April 2024 and total pay to the employee was correct, human error resulted in delays in updating the change in allocation between grants. When the error was identified, updates were made to the allocation in September 2024. Repeat Finding: No. Recommendation: Grant management personnel should enhance review procedures for payroll-related expenditures after grant allocation changes are made to ensure that changes submitted are properly reflected in the accounting records in the appropriate period. Views of Responsible Officials: Management agrees with the finding and a response is included in the corrective action plan.
2024-004 Payroll Allocation Programs: 16.820 Post Conviction DNA Testing, 21.027 Coronavirus State and Local Fiscal Recovery Funds, 84.047 TRIO Cluster – TRIO-Upward Bound Criteria: Per 2 CFR section 200.405, a cost is allocable to a particular Federal award if the goods or services involved are chargeable or assignable to that Federal award in accordance with relative benefits received, which can be met if the cost is incurred specifically for the Federal award. Condition: A payroll allocation change for an employee working on multiple grants was submitted in April 2024, but allocation was not updated in the payroll system timely. Cause: Human error and oversight resulted in delays in updating the change in allocation between grants. Effect: The 21.027 Coronavirus State and Local Fiscal Recovery Funds grant was overcharged by $4,673 for related payroll costs. Questioned Costs: The conditions did not result in questioned costs greater than $25,000. Context: While payroll allocation changes were properly approved in April 2024 and total pay to the employee was correct, human error resulted in delays in updating the change in allocation between grants. When the error was identified, updates were made to the allocation in September 2024. Repeat Finding: No. Recommendation: Grant management personnel should enhance review procedures for payroll-related expenditures after grant allocation changes are made to ensure that changes submitted are properly reflected in the accounting records in the appropriate period. Views of Responsible Officials: Management agrees with the finding and a response is included in the corrective action plan.
2024-004 Payroll Allocation Programs: 16.820 Post Conviction DNA Testing, 21.027 Coronavirus State and Local Fiscal Recovery Funds, 84.047 TRIO Cluster – TRIO-Upward Bound Criteria: Per 2 CFR section 200.405, a cost is allocable to a particular Federal award if the goods or services involved are chargeable or assignable to that Federal award in accordance with relative benefits received, which can be met if the cost is incurred specifically for the Federal award. Condition: A payroll allocation change for an employee working on multiple grants was submitted in April 2024, but allocation was not updated in the payroll system timely. Cause: Human error and oversight resulted in delays in updating the change in allocation between grants. Effect: The 21.027 Coronavirus State and Local Fiscal Recovery Funds grant was overcharged by $4,673 for related payroll costs. Questioned Costs: The conditions did not result in questioned costs greater than $25,000. Context: While payroll allocation changes were properly approved in April 2024 and total pay to the employee was correct, human error resulted in delays in updating the change in allocation between grants. When the error was identified, updates were made to the allocation in September 2024. Repeat Finding: No. Recommendation: Grant management personnel should enhance review procedures for payroll-related expenditures after grant allocation changes are made to ensure that changes submitted are properly reflected in the accounting records in the appropriate period. Views of Responsible Officials: Management agrees with the finding and a response is included in the corrective action plan.
2024-004 Payroll Allocation Programs: 16.820 Post Conviction DNA Testing, 21.027 Coronavirus State and Local Fiscal Recovery Funds, 84.047 TRIO Cluster – TRIO-Upward Bound Criteria: Per 2 CFR section 200.405, a cost is allocable to a particular Federal award if the goods or services involved are chargeable or assignable to that Federal award in accordance with relative benefits received, which can be met if the cost is incurred specifically for the Federal award. Condition: A payroll allocation change for an employee working on multiple grants was submitted in April 2024, but allocation was not updated in the payroll system timely. Cause: Human error and oversight resulted in delays in updating the change in allocation between grants. Effect: The 21.027 Coronavirus State and Local Fiscal Recovery Funds grant was overcharged by $4,673 for related payroll costs. Questioned Costs: The conditions did not result in questioned costs greater than $25,000. Context: While payroll allocation changes were properly approved in April 2024 and total pay to the employee was correct, human error resulted in delays in updating the change in allocation between grants. When the error was identified, updates were made to the allocation in September 2024. Repeat Finding: No. Recommendation: Grant management personnel should enhance review procedures for payroll-related expenditures after grant allocation changes are made to ensure that changes submitted are properly reflected in the accounting records in the appropriate period. Views of Responsible Officials: Management agrees with the finding and a response is included in the corrective action plan.
2024-004 Payroll Allocation Programs: 16.820 Post Conviction DNA Testing, 21.027 Coronavirus State and Local Fiscal Recovery Funds, 84.047 TRIO Cluster – TRIO-Upward Bound Criteria: Per 2 CFR section 200.405, a cost is allocable to a particular Federal award if the goods or services involved are chargeable or assignable to that Federal award in accordance with relative benefits received, which can be met if the cost is incurred specifically for the Federal award. Condition: A payroll allocation change for an employee working on multiple grants was submitted in April 2024, but allocation was not updated in the payroll system timely. Cause: Human error and oversight resulted in delays in updating the change in allocation between grants. Effect: The 21.027 Coronavirus State and Local Fiscal Recovery Funds grant was overcharged by $4,673 for related payroll costs. Questioned Costs: The conditions did not result in questioned costs greater than $25,000. Context: While payroll allocation changes were properly approved in April 2024 and total pay to the employee was correct, human error resulted in delays in updating the change in allocation between grants. When the error was identified, updates were made to the allocation in September 2024. Repeat Finding: No. Recommendation: Grant management personnel should enhance review procedures for payroll-related expenditures after grant allocation changes are made to ensure that changes submitted are properly reflected in the accounting records in the appropriate period. Views of Responsible Officials: Management agrees with the finding and a response is included in the corrective action plan.
2024-004 Payroll Allocation Programs: 16.820 Post Conviction DNA Testing, 21.027 Coronavirus State and Local Fiscal Recovery Funds, 84.047 TRIO Cluster – TRIO-Upward Bound Criteria: Per 2 CFR section 200.405, a cost is allocable to a particular Federal award if the goods or services involved are chargeable or assignable to that Federal award in accordance with relative benefits received, which can be met if the cost is incurred specifically for the Federal award. Condition: A payroll allocation change for an employee working on multiple grants was submitted in April 2024, but allocation was not updated in the payroll system timely. Cause: Human error and oversight resulted in delays in updating the change in allocation between grants. Effect: The 21.027 Coronavirus State and Local Fiscal Recovery Funds grant was overcharged by $4,673 for related payroll costs. Questioned Costs: The conditions did not result in questioned costs greater than $25,000. Context: While payroll allocation changes were properly approved in April 2024 and total pay to the employee was correct, human error resulted in delays in updating the change in allocation between grants. When the error was identified, updates were made to the allocation in September 2024. Repeat Finding: No. Recommendation: Grant management personnel should enhance review procedures for payroll-related expenditures after grant allocation changes are made to ensure that changes submitted are properly reflected in the accounting records in the appropriate period. Views of Responsible Officials: Management agrees with the finding and a response is included in the corrective action plan.
2024-004 Payroll Allocation Programs: 16.820 Post Conviction DNA Testing, 21.027 Coronavirus State and Local Fiscal Recovery Funds, 84.047 TRIO Cluster – TRIO-Upward Bound Criteria: Per 2 CFR section 200.405, a cost is allocable to a particular Federal award if the goods or services involved are chargeable or assignable to that Federal award in accordance with relative benefits received, which can be met if the cost is incurred specifically for the Federal award. Condition: A payroll allocation change for an employee working on multiple grants was submitted in April 2024, but allocation was not updated in the payroll system timely. Cause: Human error and oversight resulted in delays in updating the change in allocation between grants. Effect: The 21.027 Coronavirus State and Local Fiscal Recovery Funds grant was overcharged by $4,673 for related payroll costs. Questioned Costs: The conditions did not result in questioned costs greater than $25,000. Context: While payroll allocation changes were properly approved in April 2024 and total pay to the employee was correct, human error resulted in delays in updating the change in allocation between grants. When the error was identified, updates were made to the allocation in September 2024. Repeat Finding: No. Recommendation: Grant management personnel should enhance review procedures for payroll-related expenditures after grant allocation changes are made to ensure that changes submitted are properly reflected in the accounting records in the appropriate period. Views of Responsible Officials: Management agrees with the finding and a response is included in the corrective action plan.
Finding - Activities Allowed or Unallowed & Allowable Costs/Cost Principles: Payroll, Assistance Listing Number 93.243; June 30, 2024 award year; U.S. Department of Health and Human Services Criteria or Specific Requirement In accordance with 2 CFR 200.405, A cost is allocable to a Federal award if the cost is assignable to that Federal award with the relative benefits received. These costs must be incurred specifically for the Federal award. Condition Found Of the Seventeen payroll charges selected for testing, the allocation of payroll charged to the Federal grant did not align with the percentage of time incurred specifically for the Federal grant in four instances. Questioned Costs None. Cause The Organization's payroll software did not allocate payroll charges in accordance with the percentage of hours spent working on the Federal grant. Effect Management charged costs to the grant in excess of those costs that were incurred specifically for the grant. Identification as a Repeat Finding This is not a repeat finding. Recommendation Management should understand the cause of the misallocation and correct this within their payroll software. Management should additionally ensure adequate review of payroll costs is in place to correct misallocations. Views of Responsible Officials and Planned Corrective Action See Corrective Action Plan.
2024-002 No Indirect Cost Allocation Methodology Program Name/Assistance Listing Number: 93.788 Opioid STR Federal Agency: Department of Health and Human Services Federal Award Identification: Unknown Type of Finding: Significant Deficiency Compliance Requirement: Allowable Cost/Cost Principles Criteria: According to 2 CFR Part 200 subpart E, Appendix IV, NPOs that receive Federal Awards are required to comply with the cost principles outlined in the Uniform Guidance when charging indirect costs to those awards. The criteria for NPO documentation of indirect cost allocation methodology include identifying the methods used to allocate indirect costs, documenting the basis for determining the allocation of each indirect cost, describing changes made to the methodology, accounting for differences between estimated and actual amounts, supporting the indirect cost rate(s) used, and demonstrating compliance with any specific limitations on indirect cost reimbursement imposed by the Federal Award. Condition: The Organization does not have a documented cost allocation methodology to ensure costs are properly allocated to the projects or activities that benefit from them. Cause of Condition: The organization has not established formal policies or procedures for documenting and applying cost allocation methodologies across programs. There is a lack of clear guidance on how to determine the proportional benefit of costs shared between multiple programs. Potential Effect of Condition: If an organization's indirect cost allocation methodology is not properly documented, it may be difficult for the auditors to verify that the indirect costs allocated to a particular federal award are reasonable, necessary, and allocable. This may result in disallowed costs or findings in the audit report, which could impact the organization's ability to receive future federal awards. Questioned Cost: Not quantifiable. Recommendation: We recommend that the organization should develop and implement a documented cost allocation methodology in accordance with CFR 200.405(d). This methodology should clearly define how costs are allocated when they benefit multiple projects and ensure that the allocation is based on proportional benefit, or any reasonable documented basis if proportions cannot be determined. Regular training should be provided to relevant employees who are responsible for indirect cost allocation to ensure adherence to the new methodology. Additionally, the organization should review its allocation process periodically to ensure compliance with regulatory requirements and internal controls. Description of the Nature and Extent of Issues Reported: We consider the following materiality for considerations of material noncompliance for the major program 93.788 at 5% of the total awards expended amounting to $106,845. Management Response: Management concurred with the finding. The Organization will use the Full-Time Equivalent (FTE) as an allocation method for such costs.
Federal Program Information: Funding Agency: U.S. Department of Agriculture Title: National School Lunch Program FAL Number: 10.555 & 10.553 Passthrough: N/A Award Year: 2024 Criteria: Title 2 Subtitle A Chapter II Part 200 Section 200.405 Allocable Costs (a) Allocable costs in general. A cost is allocable to a Federal award or other cost objective if the cost is assignable to that Federal award or other cost objective in accordance with the relative benefits received. This standard is met if the cost satisfies any of the following criteria: (1) Is incurred specifically for the Federal award; (2) Benefits both the Federal award and other work of the recipient or subrecipient and can be distributed in proportions that may be approximated using reasonable methods; or (3) Is necessary to the overall operation of the recipient or subrecipient and is assignable in part to the Federal award in accordance with these cost principles. (b) Allocation of indirect costs. All activities which benefit from the recipient's or subrecipient's indirect cost, including unallowable activities and donated services by the recipient or subrecipient or third parties, will receive an appropriate allocation of indirect costs. (c) Limitation on charging certain allocable costs to other Federal awards. A cost allocable to a particular Federal award may not be charged to other Federal awards (for example, to overcome fund deficiencies or to avoid restrictions imposed by Federal statutes, regulations, or the terms and conditions of the Federal awards). However, this prohibition would not preclude the recipient or subrecipient from shifting costs that are allowable under two or more Federal awards in accordance with existing Federal statutes, regulations, or the terms and conditions of the Federal awards. (d) Direct cost allocation principles. If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit However, when those proportions cannot be determined because of the interrelationship of the work involved, then, notwithstanding paragraph (c), the costs may be allocated or transferred to benefitted projects on any reasonable documented basis. Where the purchase of equipment or other capital asset is specifically authorized under a Federal award, the costs are assignable to the Federal award regardless of the use that may be made of the equipment or other capital asset involved, when no longer needed for the purpose for which it was originally required. See also §§ 200.310 through 200.316 and 200.439. Condition: During our review of national school lunch payroll, we identified the following issues: The District used school lunch funds to pay the payroll of an employee who was not working in the program. The employee worked in transportation and accounts payable. Questioned Costs: $59,074.56. This is the amount of school lunch program funds which were paid to the employee. We did not identify any other employees who were not legitimate employees of the school lunch program. Cause: The District did not ensure the funds expended were related to the national school lunch program. Effect: The District is not in compliance with Federal regulations related to internal control procedures and compliance requirements in relation to the grant and could put funding in jeopardy or require the District to reimburse the program. Auditor’s Recommendation: We recommend that all expenditures from the Food Service funds be related to food service. Ensure that only employees in food service are paid out of the national school lunch program funds. Responsible official’s view: Specific corrective action plan for the finding: This was the result of an error in changing a employee’s position from one department to another. Moving forward, the Human Resources Department will notify Payroll of any changes in position and will require TWO SIGNATURES prior to making any changes in pay coding. Timeline for completion of corrective action plan: Immediately. This process has already been put in place. Employee positions(s) responsible for meeting the timeline: Finance Director and Human Resources Director
Department of Health Finding 2024 ¬– 006: ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) A Significant Deficiency and Noncompliance Exist at the Department of Health Related to Activities Allowed or Unallowed, Allowable Costs/Costs Principles Federal Grant Number(s) and Year(s): 231PA705W1003 (10/01/2022-9/30/2023), 241PA705W1003 (10/01/2023-9/30/2024) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Condition: The Pennsylvania Department of Health (DOH) administers and monitors the WIC Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) which provides assistance to low-income families for supplemental foods, education, and social services. WIC funds are received via federal grants from the United States Department of Agriculture (USDA) to meet these needs. The Pennsylvania DOH is responsible for ensuring that granted funds are used for allowable costs and grant provisions are followed. WIC administrative grant Y23172 closed on September 30, 2023. The audit procedures disclosed that the closed grant had federal revenues that exceeded federal expenditures by approximately $95 thousand. DOH indicated that a credit was identified and posted to the grant after the FNS-798 grant close out report was submitted in February 2024. The credit was largely due to overcharges of costs for a Software License Agreement that was not allowable to the grant. The adjustment to record the credit to the grant posted in June 2024. Although DOH had identified and recorded the adjustment, DOH did not update the FNS-798 grant close out report which was necessary to return the corresponding federal funds to the USDA. DOH indicated that it is in the process of generating an updated FNS-798 report to enable the funds to be returned. Criteria: 2 CFR Section 200.303, Internal controls, states: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of the Sponsoring Organizations of the Treadway Commission (COSO). Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. 2 CFR Section 200.405, Allowable costs, states: a) Allocable costs in general. A cost is allocable to a Federal award or other cost objective if the cost is assignable to that Federal award or other cost objective in accordance with the relative benefits received. This standard is met if the cost satisfies any of the following criteria: Finding 2024 ¬– 006: (continued) (1) Is incurred specifically for the Federal award; (2) Benefits both the Federal award and other work of the recipient or subrecipient and can be distributed in proportions that may be approximated using reasonable methods; or (3) Is necessary to the overall operation of the recipient or subrecipient and is assignable in part to the Federal award in accordance with these cost principles. 2 CFR Section 200.406, Applicable credits, states: (a) Applicable credits refer to transactions that offset or reduce direct or indirect costs allocable to a Federal award. Examples of such transactions are purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the recipient or subrecipient relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. Cause: DOH was not aware of the overcharges at the time of grant closeout. Management subsequently became aware of the costs and credited the federal grant expenditures but did not recognize the FNS-798 report needed adjusted to facilitate the return of the federal funds. Effect: DOH had unallowable costs expended within grant Y23172 that were not identified until after the grant was closed. The unallowable costs were later credited to the grant causing cumulative revenues to exceed cumulative expenditures for the grant. The federal funds were not properly returned to the USDA. Recommendation: We recommend that DOH implement formal policies and procedures to prevent and detect any unallowable costs to ensure timely and accurate grant close out procedures. If adjustments are necessary after a grant is closed, procedures should include amending the FNS-798 report at the time of posting the adjustments. Furthermore, DOH should submit an updated FNS-798 report and return the $95 thousand of federal funds to USDA. Agency Response: DOH agrees with this finding. Questioned Costs: None
Department of Health Finding 2024 ¬– 006: ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) A Significant Deficiency and Noncompliance Exist at the Department of Health Related to Activities Allowed or Unallowed, Allowable Costs/Costs Principles Federal Grant Number(s) and Year(s): 231PA705W1003 (10/01/2022-9/30/2023), 241PA705W1003 (10/01/2023-9/30/2024) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Condition: The Pennsylvania Department of Health (DOH) administers and monitors the WIC Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) which provides assistance to low-income families for supplemental foods, education, and social services. WIC funds are received via federal grants from the United States Department of Agriculture (USDA) to meet these needs. The Pennsylvania DOH is responsible for ensuring that granted funds are used for allowable costs and grant provisions are followed. WIC administrative grant Y23172 closed on September 30, 2023. The audit procedures disclosed that the closed grant had federal revenues that exceeded federal expenditures by approximately $95 thousand. DOH indicated that a credit was identified and posted to the grant after the FNS-798 grant close out report was submitted in February 2024. The credit was largely due to overcharges of costs for a Software License Agreement that was not allowable to the grant. The adjustment to record the credit to the grant posted in June 2024. Although DOH had identified and recorded the adjustment, DOH did not update the FNS-798 grant close out report which was necessary to return the corresponding federal funds to the USDA. DOH indicated that it is in the process of generating an updated FNS-798 report to enable the funds to be returned. Criteria: 2 CFR Section 200.303, Internal controls, states: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of the Sponsoring Organizations of the Treadway Commission (COSO). Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. 2 CFR Section 200.405, Allowable costs, states: a) Allocable costs in general. A cost is allocable to a Federal award or other cost objective if the cost is assignable to that Federal award or other cost objective in accordance with the relative benefits received. This standard is met if the cost satisfies any of the following criteria: Finding 2024 ¬– 006: (continued) (1) Is incurred specifically for the Federal award; (2) Benefits both the Federal award and other work of the recipient or subrecipient and can be distributed in proportions that may be approximated using reasonable methods; or (3) Is necessary to the overall operation of the recipient or subrecipient and is assignable in part to the Federal award in accordance with these cost principles. 2 CFR Section 200.406, Applicable credits, states: (a) Applicable credits refer to transactions that offset or reduce direct or indirect costs allocable to a Federal award. Examples of such transactions are purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the recipient or subrecipient relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. Cause: DOH was not aware of the overcharges at the time of grant closeout. Management subsequently became aware of the costs and credited the federal grant expenditures but did not recognize the FNS-798 report needed adjusted to facilitate the return of the federal funds. Effect: DOH had unallowable costs expended within grant Y23172 that were not identified until after the grant was closed. The unallowable costs were later credited to the grant causing cumulative revenues to exceed cumulative expenditures for the grant. The federal funds were not properly returned to the USDA. Recommendation: We recommend that DOH implement formal policies and procedures to prevent and detect any unallowable costs to ensure timely and accurate grant close out procedures. If adjustments are necessary after a grant is closed, procedures should include amending the FNS-798 report at the time of posting the adjustments. Furthermore, DOH should submit an updated FNS-798 report and return the $95 thousand of federal funds to USDA. Agency Response: DOH agrees with this finding. Questioned Costs: None
CONDITION The State Treasurer's Office did not make subrecipients aware of all required grant award information for the Mineral Leasing Act. CRITERIA 2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients. Required information includes: - Subrecipients name (Must match the name associated with its unique entity identifier) - Subrecipients unique entity identifier - Federal award identification number (FAIN) - Federal award date - Subaward period of performance start and end date - Amount of Federal funds obligated in the subaward - Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation - Total amount of the Federal award committed to the subrecipient by the pass-through entity - Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA) - Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity - Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement - Identification of whether the Federal award is for research and development - Indirect cost rate for the Federal award (including if the de minimis rate is used) - All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award 2 CFR 200.303 requires non-Federal entities, in part, 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. CAUSE Not all grant agreement requirements were included in the grant award template. EFFECT Subrecipients may not have been aware of all necessary grant information and requirements. CONTEXT There were 40 awards during the audit period of 7/1/2022 - 6/30/2024. There were 8 awards tested with 8 errors noted. The following criteria were missing: - (ii) Subrecipient's unique entity identifier; - (iii) Federal Award Identification Number (FAIN); - (xiii) Identification of whether the award is R&D; and - (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged) per § 200.414. - (4) (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the pass-through entity must determine the appropriate rate in collaboration with the subrecipient, which is either: (A) The negotiated indirect cost rate between the pass-through entity and the subrecipient; which can be based on a prior negotiated rate between a different PTE and the same subrecipient. If basing the rate on a previously negotiated rate, the pass-through entity is not required to collect information justifying this rate, but may elect to do so; (B) The de minimus indirect cost rate. (ii) The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. Subrecipients can elect to use the cost allocation method to account for indirect costs in accordance with § 200.405(d). - (6) Appropriate terms and conditions concerning closeout of the subaward. Where sampling was performed, the audit used a non-statistical sampling method. IDENTIFICATION AS A REPEAT FINDING Not a repeat finding. RECOMMENDATION We recommend the State Treasurer's Office update its grant award templates to ensure that subrecipients are made award of all required grant award information. STATE TREASURER’S OFFICE RESPONSE The Office of the State Treasurer does agree with finding that our grant award template did not make subrecipients aware of all required grant award information for the Mineral Leasing Act as required. See “Management’s Response and Corrective Action” section of this report.