2023-002 (2022-002) – Allocation Percentage Charged – Significant Deficiency in Internal Controls over Compliance ALN: 84.126 Federal Award Title: Rehabilitation Services Vocational Rehabilitation Grants to States Federal Agency: United States Department of Education Pass-Through Entity: Texas Health and Human Services Commission Award Number(s): HHS000186000005, HHS000202900008 Federal Award Year: 2023 Condition: The Organization allocated nonpayroll costs between grants using an incorrect calculation in 2 out of 40 items tested. Criteria: Per Title 2 US Code of Federal Regulations Part 200.303a, non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entities 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). According to 2 CFR 200.405(a)(2), costs allocated to a Federal award must be distributed in proportions that may be approximated using reasonable methods. Effect: The Organization may unintentionally under/over charge expenses to the grant which could lead to questioned costs and repayment of funds to the grantor agency. Cause: The Organization does not have proper controls in place to verify the approved allocation % is charged on expenses. Questioned Costs: Known questioned costs of $27 and likely questioned costs of $939.
2023-002 (2022-002) – Allocation Percentage Charged – Significant Deficiency in Internal Controls over Compliance ALN: 84.126 Federal Award Title: Rehabilitation Services Vocational Rehabilitation Grants to States Federal Agency: United States Department of Education Pass-Through Entity: Texas Health and Human Services Commission Award Number(s): HHS000186000005, HHS000202900008 Federal Award Year: 2023 Condition: The Organization allocated nonpayroll costs between grants using an incorrect calculation in 2 out of 40 items tested. Criteria: Per Title 2 US Code of Federal Regulations Part 200.303a, non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entities 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). According to 2 CFR 200.405(a)(2), costs allocated to a Federal award must be distributed in proportions that may be approximated using reasonable methods. Effect: The Organization may unintentionally under/over charge expenses to the grant which could lead to questioned costs and repayment of funds to the grantor agency. Cause: The Organization does not have proper controls in place to verify the approved allocation % is charged on expenses. Questioned Costs: Known questioned costs of $27 and likely questioned costs of $939.
FINDING REFERENCE NUMBER 2023-030 (See Finding Reference Number 2023-002) FEDERAL PROGRAM (ALN – 93.489; 93.575 AND 93.596) CHILD CARE CLUSTER U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBER G2101PRCDC6 (Federal Award Years: 2020 through 2023) ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT ACTIVITIES ALLOWED OR UNALLOWED // ALLOWABLE COSTS/COSTS PRINCIPLES TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA Uniform Guidance at 2 CFR Section 200.302 (b)(4) establishes that the financial management system of each non-Federal entity must provide effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes. In 2 CFR 200.405 (a)(1) establishes 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. This standard is met if the cost: is incurred specifically for the Federal award. In addition, 34 CFR 76.702 establishes that a State and a subgrantee shall use fiscal control and fund accounting procedures that insure proper disbursement of and accounting for Federal funds. STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance with the allowable activities’ requirement, we selected a sample of forty-four (44) disbursements to suppliers made during the fiscal year under audit of a total population of 2,534. In one (1) instance, we found that the ACUDEN issued an advance payment to a supplier who in turn subcontracted with other suppliers for professional services or consumer education advertising campaign, media plan, and event coordination not performed, and that they had been invoiced in advance as of the invoice date. QUESTIONED COSTS $208,823.33. PERSPECTIVE INFORMATION This deficiency is a systemic problem. When the invoices reach the ACUDEN finance personnel in charge of the payment issuance process, they must review the invoice in all its parts, ensuring that the billed services are received accordingly, identifying the period of service performed. However, a supplier issued an invoice dated March 21, 2023, which included professional services of marketing for a consumer education campaign, media planning, and event coordination for the ACUDEN Child Care Program and PDG-B-5 programs. These services had been invoiced in advance for the period from April 1, 2023 through September 30, 2023 and during the payment process this situation was not detected and the payment for these services invoiced in advance was incorrectly issued on May 2, 2023, according to the disbursement voucher. During our inspection of the disbursement voucher, we noted the voucher had a note from de Finance Director indicating her refusing to authorize the disbursement voucher. However, although the disbursement voucher had this note, the Administrator signed the disbursement voucher and authorized the payment. STATEMENT OF CAUSE The lack of proper training and controls that requires standard evaluation and approval of expenditures incurred, in accordance with the state and Federal regulation. POSSIBLE ASSERTED EFFECT ACUDEN incurred in overpayments to suppliers for services not rendered to ACUDEN. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend management to establish internal control processes consistent with the requirements of 2 CFR 200. In addition, design and implement internal control processes to meet the requirements of subrecipient monitoring and procurement standards.
FINDING REFERENCE NUMBER 2023-030 (See Finding Reference Number 2023-002) FEDERAL PROGRAM (ALN – 93.489; 93.575 AND 93.596) CHILD CARE CLUSTER U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBER G2101PRCDC6 (Federal Award Years: 2020 through 2023) ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT ACTIVITIES ALLOWED OR UNALLOWED // ALLOWABLE COSTS/COSTS PRINCIPLES TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA Uniform Guidance at 2 CFR Section 200.302 (b)(4) establishes that the financial management system of each non-Federal entity must provide effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes. In 2 CFR 200.405 (a)(1) establishes 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. This standard is met if the cost: is incurred specifically for the Federal award. In addition, 34 CFR 76.702 establishes that a State and a subgrantee shall use fiscal control and fund accounting procedures that insure proper disbursement of and accounting for Federal funds. STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance with the allowable activities’ requirement, we selected a sample of forty-four (44) disbursements to suppliers made during the fiscal year under audit of a total population of 2,534. In one (1) instance, we found that the ACUDEN issued an advance payment to a supplier who in turn subcontracted with other suppliers for professional services or consumer education advertising campaign, media plan, and event coordination not performed, and that they had been invoiced in advance as of the invoice date. QUESTIONED COSTS $208,823.33. PERSPECTIVE INFORMATION This deficiency is a systemic problem. When the invoices reach the ACUDEN finance personnel in charge of the payment issuance process, they must review the invoice in all its parts, ensuring that the billed services are received accordingly, identifying the period of service performed. However, a supplier issued an invoice dated March 21, 2023, which included professional services of marketing for a consumer education campaign, media planning, and event coordination for the ACUDEN Child Care Program and PDG-B-5 programs. These services had been invoiced in advance for the period from April 1, 2023 through September 30, 2023 and during the payment process this situation was not detected and the payment for these services invoiced in advance was incorrectly issued on May 2, 2023, according to the disbursement voucher. During our inspection of the disbursement voucher, we noted the voucher had a note from de Finance Director indicating her refusing to authorize the disbursement voucher. However, although the disbursement voucher had this note, the Administrator signed the disbursement voucher and authorized the payment. STATEMENT OF CAUSE The lack of proper training and controls that requires standard evaluation and approval of expenditures incurred, in accordance with the state and Federal regulation. POSSIBLE ASSERTED EFFECT ACUDEN incurred in overpayments to suppliers for services not rendered to ACUDEN. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend management to establish internal control processes consistent with the requirements of 2 CFR 200. In addition, design and implement internal control processes to meet the requirements of subrecipient monitoring and procurement standards.
FINDING REFERENCE NUMBER 2023-030 (See Finding Reference Number 2023-002) FEDERAL PROGRAM (ALN – 93.489; 93.575 AND 93.596) CHILD CARE CLUSTER U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBER G2101PRCDC6 (Federal Award Years: 2020 through 2023) ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT ACTIVITIES ALLOWED OR UNALLOWED // ALLOWABLE COSTS/COSTS PRINCIPLES TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA Uniform Guidance at 2 CFR Section 200.302 (b)(4) establishes that the financial management system of each non-Federal entity must provide effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes. In 2 CFR 200.405 (a)(1) establishes 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. This standard is met if the cost: is incurred specifically for the Federal award. In addition, 34 CFR 76.702 establishes that a State and a subgrantee shall use fiscal control and fund accounting procedures that insure proper disbursement of and accounting for Federal funds. STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance with the allowable activities’ requirement, we selected a sample of forty-four (44) disbursements to suppliers made during the fiscal year under audit of a total population of 2,534. In one (1) instance, we found that the ACUDEN issued an advance payment to a supplier who in turn subcontracted with other suppliers for professional services or consumer education advertising campaign, media plan, and event coordination not performed, and that they had been invoiced in advance as of the invoice date. QUESTIONED COSTS $208,823.33. PERSPECTIVE INFORMATION This deficiency is a systemic problem. When the invoices reach the ACUDEN finance personnel in charge of the payment issuance process, they must review the invoice in all its parts, ensuring that the billed services are received accordingly, identifying the period of service performed. However, a supplier issued an invoice dated March 21, 2023, which included professional services of marketing for a consumer education campaign, media planning, and event coordination for the ACUDEN Child Care Program and PDG-B-5 programs. These services had been invoiced in advance for the period from April 1, 2023 through September 30, 2023 and during the payment process this situation was not detected and the payment for these services invoiced in advance was incorrectly issued on May 2, 2023, according to the disbursement voucher. During our inspection of the disbursement voucher, we noted the voucher had a note from de Finance Director indicating her refusing to authorize the disbursement voucher. However, although the disbursement voucher had this note, the Administrator signed the disbursement voucher and authorized the payment. STATEMENT OF CAUSE The lack of proper training and controls that requires standard evaluation and approval of expenditures incurred, in accordance with the state and Federal regulation. POSSIBLE ASSERTED EFFECT ACUDEN incurred in overpayments to suppliers for services not rendered to ACUDEN. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend management to establish internal control processes consistent with the requirements of 2 CFR 200. In addition, design and implement internal control processes to meet the requirements of subrecipient monitoring and procurement standards.
Section II – Financial Statement Findings Section III - Federal Award Findings and Questioned Costs Material Weakness Public and Indian Housing – CFDA 14.850 Housing Choice Voucher – CFDA 14.871 Finding 2023-003 Allowable Costs Criteria: Per 2 CFR 200.405, the Authority is required to develop, document, and adopt a Cost Allocation Plan for all federally funded programs. Statement of Condition: The Authority did not have an official Cost Allocation Plan adopted by the Board during the year. Accordingly, the Authority did not allocate shared costs among its programs using a reasonable and documented basis. Questioned Cost: N/A Cause: Lack of a proper Cost Allocation Plan. Effect: The Authority did not have a consistent methodology to allocate costs between programs. Identification of a repeat finding: No Recommendation: The Board and management should prepare and adopt a Cost Allocation Plan to be used to share costs between all federally funded programs. Views of responsible officials and planned corrective actions: The Authority agrees with this finding. The Authority has adopted a Cost Allocation Plan which is being used to allocate shared costs.
Section II – Financial Statement Findings Section III - Federal Award Findings and Questioned Costs Material Weakness Public and Indian Housing – CFDA 14.850 Housing Choice Voucher – CFDA 14.871 Finding 2023-003 Allowable Costs Criteria: Per 2 CFR 200.405, the Authority is required to develop, document, and adopt a Cost Allocation Plan for all federally funded programs. Statement of Condition: The Authority did not have an official Cost Allocation Plan adopted by the Board during the year. Accordingly, the Authority did not allocate shared costs among its programs using a reasonable and documented basis. Questioned Cost: N/A Cause: Lack of a proper Cost Allocation Plan. Effect: The Authority did not have a consistent methodology to allocate costs between programs. Identification of a repeat finding: No Recommendation: The Board and management should prepare and adopt a Cost Allocation Plan to be used to share costs between all federally funded programs. Views of responsible officials and planned corrective actions: The Authority agrees with this finding. The Authority has adopted a Cost Allocation Plan which is being used to allocate shared costs.
Section II – Financial Statement Findings Section III - Federal Award Findings and Questioned Costs Material Weakness Public and Indian Housing – CFDA 14.850 Housing Choice Voucher – CFDA 14.871 Finding 2023-003 Allowable Costs Criteria: Per 2 CFR 200.405, the Authority is required to develop, document, and adopt a Cost Allocation Plan for all federally funded programs. Statement of Condition: The Authority did not have an official Cost Allocation Plan adopted by the Board during the year. Accordingly, the Authority did not allocate shared costs among its programs using a reasonable and documented basis. Questioned Cost: N/A Cause: Lack of a proper Cost Allocation Plan. Effect: The Authority did not have a consistent methodology to allocate costs between programs. Identification of a repeat finding: No Recommendation: The Board and management should prepare and adopt a Cost Allocation Plan to be used to share costs between all federally funded programs. Views of responsible officials and planned corrective actions: The Authority agrees with this finding. The Authority has adopted a Cost Allocation Plan which is being used to allocate shared costs.
Section II – Financial Statement Findings Section III - Federal Award Findings and Questioned Costs Material Weakness Public and Indian Housing – CFDA 14.850 Housing Choice Voucher – CFDA 14.871 Finding 2023-003 Allowable Costs Criteria: Per 2 CFR 200.405, the Authority is required to develop, document, and adopt a Cost Allocation Plan for all federally funded programs. Statement of Condition: The Authority did not have an official Cost Allocation Plan adopted by the Board during the year. Accordingly, the Authority did not allocate shared costs among its programs using a reasonable and documented basis. Questioned Cost: N/A Cause: Lack of a proper Cost Allocation Plan. Effect: The Authority did not have a consistent methodology to allocate costs between programs. Identification of a repeat finding: No Recommendation: The Board and management should prepare and adopt a Cost Allocation Plan to be used to share costs between all federally funded programs. Views of responsible officials and planned corrective actions: The Authority agrees with this finding. The Authority has adopted a Cost Allocation Plan which is being used to allocate shared costs.
Finding 2022-003 ? Unallowable Use of Public Housing Program Funds (Noncompliance/Other Matter) Public Housing Program ? Assistance Listing No. 14.850a, Grant Period: Year-End December 31, 2022 Criteria The cost principles in 2 CFR Part 200, Sub-part E of the Uniform Guidance describe allowable and unallowable uses of federal award program subsidies. Parts 200.403 and 200.405 prohibit the use of federal award program subsidies to fund expenditures outside of the applicable federal award program. Specifically, the Public Housing Programs subsidies and reserves cannot be used to fund expenditures and/or deficits of other federal or non-federal programs, except through allowable Management, Book-keeping and Service Fees. Condition and Perspective During 2022, the Authority?s Public Housing Program loaned the Central Office Cost Center (COCC) $668,552. This amount was payable back to the Public Housing Program as of December 31, 2022.Questioned Costs ? None noted Cause Lack of non-federal funds available to finance non-federal expenditures. Effect Non-compliance with federal Allowable Cost requirements. Recommendation We recommend that the Authority limit funding the COCC from the Public Housing Program, to allowable Fees only as specified in the Uniform Guidance and applicable HUD literature. Management?s Response The Authority will limit funding the COCC from the Public Housing Program, to allowable Fees only. The Authority?s Executive Director, Trey George, has assumed the responsibility of executing this corrective action as of November 1, 2023.
Finding Number: 2022-002 Finding Type: Federal award finding Federal Assistance Listing No.: 64.033 Program Name: VA Supportive Services for Veteran Families Program Federal Agency: U.S. Department of Veterans Affairs Pass-Through Entity: Transition Projects, Inc. Grant Number: SSVF 19-ZZ-127 Federal Award Year: 2022 through 2023 Control Deficiency Type: Significant deficiency over compliance Instance of Noncompliance: Yes Compliance Requirement: Allowable costs/cost principles Questioned Costs: None Repeat Finding: No Criteria: In accordance with Title 38, U.S. Code of Federal Regulations, Part 62, Supportive Services for Veteran Families Program, grantees may use up to 10 percent of supportive services grant funds for administrative costs that are allowable, allocable, and reasonable in conducting the work under the supportive services grant. The determination of allowable costs must be made in accordance with the applicable Federal Cost Principles set forth in 2 CFR Part 200. Condition: While the organization had sufficient allocable administrative costs in excess of the amount charged, we noted that such costs were charged at a fixed monthly rate, rather than the amount of allowable administrative costs. Cause: The organization did not have policies and procedures over cost principles establishing the determination of allowable costs in accordance with 2 CFR 200.405 and other applicable Federal Cost Principles. Effect: The organization did not fully comply with the allowable cost principles specified in the Code of Federal Regulations. As a result, there may be charges to awards that were not properly allocated, do not have ad-equate support, and/or were not accorded consistent treatment. Questioned Costs: No known or likely questioned costs greater than $25,000. Audit Recommendation: We recommend that the organization implement procedures over the administration of federal awards, including establishing written policies and procedures to ensure compliance with Uniform Guidance cost principles. Management?s Response: Throughout 2022, MPD had a policy of allocating all administrative cost to departments based on employee head count. Within each department managing grants, administrative costs were then allocated down to each grant based on the number of FTE funded by each program. The headcount calculation was set at the beginning of the year and was not updated during the year, leading to the same overhead allocation month after month. As of April 1, 2023, MPD has adopted a new written policy for administrative cost allocation. Costs that are not allowable for federal grants are flagged both on timecards and on purchasing transactions with a subaccount code that segregates them from overhead allocations. Costs related to facilities ? rent, equipment leases, office insurance, shared supplies, depreciation, etc. ? are now allocated to departments based on the square footage occupancy of each department, calculated using the guidance referenced in 2 CFR 200. Administrative costs that serve the entire organization such as Human Resources, Accounting, outsourced IT support, etc., are allocated to each department based on headcount, as we consider the number of personnel per department to be the best estimate of supporting services required by each team. The Payroll Specialist generates a current employee roster by department at the end of each month, which is used to update the administrative allocation. Once all costs have been allocated to the department level, both facilities and administrative costs are allocated down to individual grants based on the proportion of total wage costs assigned to each grant within the department for that month.
FINDING 2022-005 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Subrecipient Monitoring Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2022 Compliance Requirement: Subrecipient Monitoring Audit Findings: Material Weakness, Modified Opinion Condition and Context The County received a total State and Local Fiscal Recovery Funds (SLFRF) allocation of $13,177,707. During the audit period, the County provided subawards of SLFRF funds to other entities. As a pass-through entity, the County must: 1. Identify the award and the applicable requirements to each subrecipient. 2. Evaluate each subrecipient's risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward. 3. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purpose, complies with the terms and conditions of the subaward, and achieves performance goals. Subawards, totaling $2,503,400, were provided to four different entities. Three of the subrecipient agreements associated with the subawards were selected for testing. For the three agreements tested, the following information was incomplete or missing: 1. The subrecipients unique entity identifier. 2. The federal award identification number (FAIN). 3. The federal award date of award to the recipient by the federal agency. 4. The name of the federal awarding agency, pass-through entity (auditee), and contact information for awarding official of the pass-through entity (auditee). 5. The Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance Listings Number at time of disbursement. Furthermore, the County did not have an evaluation of the subrecipients' risk of noncompliance or monitoring activities demonstrating compliance with the subrecipient monitoring requirement. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.331(a) states: "Subrecipients. A subaward is for the purpose of carrying out a portion of a Federal award and creates a Federal assistance relationship with the subrecipient. See definition for Subaward in ? 200.1 of this part. Characteristics which support the classification of the non-Federal entity as a subrecipient include when the non-Federal entity: (1) Determines who is eligible to receive what Federal assistance; (2) Has its performance measured in relation to whether objectives of a Federal program were met; (3) Has responsibility for programmatic decision-making; (4) Is responsible for adherence to applicable Federal program requirements specified in the Federal award; and (5) In accordance with its agreement, uses the Federal funds to carry out a program for a public purpose specified in authorizing statute, as opposed to providing goods or services for the benefit of the pass-through entity." 2 CFR 200.332 states in part: "All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward . . . (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in ? 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the passthrough entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the passthrough entity; (x) Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; (xii) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (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. (2) All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports; (4) (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the passthrough 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 minimis indirect cost rate. (iii) 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). (5) A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient's records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward. (b) Evaluate each subrecipient's risk of noncompliance with Federal statues, regulations, and the terms and conditions of the subaward for purposes of determined the appropriate subrecipient monitoring . . . (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ? 200.521. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. . . ." Cause The system of internal controls as established by management of the County was not properly designed, nor implemented. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. The County was responsible for providing a subaward agreement, with all required elements, and monitoring the non-profit. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County design and implement a proper system of internal controls and develop policies and procedures to ensure subrecipients are provided with an adequate subaward agreement and monitored as appropriate. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2022-002 Criteria or Specific Requirement: The Code of Federal Regulations Section 200 subpart E outlines the allowability of cost provisions, including indirect costs. Specifically, 2 CFR 200.403(d) states that costs should be accorded consistent treatment to be allowable, and 200.405 defines allocable costs. Condition: During our review of allowable expenses, it was noted that indirect costs were based on the grant budget and not supported by an indirect cost pool. Cause: The Organization has not implemented a cost allocation policy to track indirect costs. Effect or Potential Effect: Indirect expenses were charged to grants and allowability was unable to be determined. Questioned Costs: $40,242. Context: All cost charged as indirect cost to the research and development cluster were based on the grant budget and not supported by allocable costs. Repeat Finding: No Recommendation: We recommend the Organization implement methodology to track overhead expenses, pool them, and allocate to each grant using a reasonable basis for allocation. Views of responsible officials: Management agrees with the finding and will implement a process to pool its overhead costs and allocate them accordingly.
Finding 2022-002 Criteria or Specific Requirement: The Code of Federal Regulations Section 200 subpart E outlines the allowability of cost provisions, including indirect costs. Specifically, 2 CFR 200.403(d) states that costs should be accorded consistent treatment to be allowable, and 200.405 defines allocable costs. Condition: During our review of allowable expenses, it was noted that indirect costs were based on the grant budget and not supported by an indirect cost pool. Cause: The Organization has not implemented a cost allocation policy to track indirect costs. Effect or Potential Effect: Indirect expenses were charged to grants and allowability was unable to be determined. Questioned Costs: $40,242. Context: All cost charged as indirect cost to the research and development cluster were based on the grant budget and not supported by allocable costs. Repeat Finding: No Recommendation: We recommend the Organization implement methodology to track overhead expenses, pool them, and allocate to each grant using a reasonable basis for allocation. Views of responsible officials: Management agrees with the finding and will implement a process to pool its overhead costs and allocate them accordingly.
Finding 2022-002 Criteria or Specific Requirement: The Code of Federal Regulations Section 200 subpart E outlines the allowability of cost provisions, including indirect costs. Specifically, 2 CFR 200.403(d) states that costs should be accorded consistent treatment to be allowable, and 200.405 defines allocable costs. Condition: During our review of allowable expenses, it was noted that indirect costs were based on the grant budget and not supported by an indirect cost pool. Cause: The Organization has not implemented a cost allocation policy to track indirect costs. Effect or Potential Effect: Indirect expenses were charged to grants and allowability was unable to be determined. Questioned Costs: $40,242. Context: All cost charged as indirect cost to the research and development cluster were based on the grant budget and not supported by allocable costs. Repeat Finding: No Recommendation: We recommend the Organization implement methodology to track overhead expenses, pool them, and allocate to each grant using a reasonable basis for allocation. Views of responsible officials: Management agrees with the finding and will implement a process to pool its overhead costs and allocate them accordingly.
Finding 2022-002 Criteria or Specific Requirement: The Code of Federal Regulations Section 200 subpart E outlines the allowability of cost provisions, including indirect costs. Specifically, 2 CFR 200.403(d) states that costs should be accorded consistent treatment to be allowable, and 200.405 defines allocable costs. Condition: During our review of allowable expenses, it was noted that indirect costs were based on the grant budget and not supported by an indirect cost pool. Cause: The Organization has not implemented a cost allocation policy to track indirect costs. Effect or Potential Effect: Indirect expenses were charged to grants and allowability was unable to be determined. Questioned Costs: $40,242. Context: All cost charged as indirect cost to the research and development cluster were based on the grant budget and not supported by allocable costs. Repeat Finding: No Recommendation: We recommend the Organization implement methodology to track overhead expenses, pool them, and allocate to each grant using a reasonable basis for allocation. Views of responsible officials: Management agrees with the finding and will implement a process to pool its overhead costs and allocate them accordingly.
Finding 2022-002 Criteria or Specific Requirement: The Code of Federal Regulations Section 200 subpart E outlines the allowability of cost provisions, including indirect costs. Specifically, 2 CFR 200.403(d) states that costs should be accorded consistent treatment to be allowable, and 200.405 defines allocable costs. Condition: During our review of allowable expenses, it was noted that indirect costs were based on the grant budget and not supported by an indirect cost pool. Cause: The Organization has not implemented a cost allocation policy to track indirect costs. Effect or Potential Effect: Indirect expenses were charged to grants and allowability was unable to be determined. Questioned Costs: $40,242. Context: All cost charged as indirect cost to the research and development cluster were based on the grant budget and not supported by allocable costs. Repeat Finding: No Recommendation: We recommend the Organization implement methodology to track overhead expenses, pool them, and allocate to each grant using a reasonable basis for allocation. Views of responsible officials: Management agrees with the finding and will implement a process to pool its overhead costs and allocate them accordingly.
Finding 2022-002 Criteria or Specific Requirement: The Code of Federal Regulations Section 200 subpart E outlines the allowability of cost provisions, including indirect costs. Specifically, 2 CFR 200.403(d) states that costs should be accorded consistent treatment to be allowable, and 200.405 defines allocable costs. Condition: During our review of allowable expenses, it was noted that indirect costs were based on the grant budget and not supported by an indirect cost pool. Cause: The Organization has not implemented a cost allocation policy to track indirect costs. Effect or Potential Effect: Indirect expenses were charged to grants and allowability was unable to be determined. Questioned Costs: $40,242. Context: All cost charged as indirect cost to the research and development cluster were based on the grant budget and not supported by allocable costs. Repeat Finding: No Recommendation: We recommend the Organization implement methodology to track overhead expenses, pool them, and allocate to each grant using a reasonable basis for allocation. Views of responsible officials: Management agrees with the finding and will implement a process to pool its overhead costs and allocate them accordingly.
Repeat of Prior Audit Finding 2021-001 Federal Program: Trans-National Crime Federal Agencies: United States Department of State- United States Bureau of International Narcotics and Law Enforcement Affairs Federal Assistance Listing Number: 19.705 Federal Award Year: December 31, 2022 Criteria: 2 CFR Part 200.303(a) of the Uniform Guidance require all non-Federal entities to establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. In addition, 2 CFR section 200.405 requires federal awards be expended only for allowable activities. Condition/Context: Panthera Corporation was unable to provide a signed contract, payment information, invoice or reconciliation to evidence allowability of the expenditures or documentation of review and approval for the following: ? For 34 out of 80 selections, no evidence of approval of the invoice or approval of signed contract could be provided (control) ? For 63 out of 80 selections, no evidence of approval of payment could be provided (control) ? For 46 out of 80 selections, no evidence of signed contract or payment support could be provided (compliance) This was not a statistically valid sample. Questioned Costs: Questioned costs were approximately $65,341. Cause: Panthera Corporation did not retain/could not retrieve the signed contract or any related support for the disbursements due to poor document retention and staffing turnover and did not follow its internal control procedures by including formal, written review of disbursement payments. Effect: Panthera Corporation has not complied with the specific requirements for activities allowed or unallowed and allowable costs/cost principles as described in the Uniform Guidance. Unallowable costs may have been charged to the federal program. Recommendation: We recommend that Panthera Corporation review its process and implement procedures that would allow management to properly maintain all required documentation on its federal expenditures. Views of Responsible Officials: Management acknowledges the finding and is in the process of attaining the proper systems to adequately track and maintain documentation including the review and approval process.
CRITERIA Per CFR 200.405 (a)(1) 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. This standard is met if the cost: (1) Is incurred specifically for the Federal award; (2) Benefits both the Federal award and other work of the non-Federal entity and can be distributed in proportions that may be approximated using reasonable methods; and (3) Is necessary to the overall operation of the non-Federal entity and is assignable in part to the Federal award in accordance with the principles in this subpart. CONDITION During our control and compliance test work over cash management, as well as reconciliation of the Schedule of Federal Expenditures (SEFA), we noted the following: - In testing two of the monthly requests for reimbursement by examining all the invoices related to the reimbursements, we found that there were amounts overbilled that totaled $25,186. - In reconciling the total expenditures on the SEFA, we found that total reimbursement requests exceeded actual expenses incurred by $186,089 (this total includes the $25,186). CAUSE Proper internal control procedures are not maintained to ensure federal reimbursement requests include only actual costs incurred vs budgeted amounts. EFFECT The Organization billed the federal government for amounts of costs that had not yet been incurred and is at-risk for noncompliance with allowable activities and allowable costs, as well as cash management requirements. QUESTIONED COSTS $186,089 CONTEXT Management?s monthly reimbursement requests for the communications and grants technical manager position was based on budgeted amounts and not actual costs incurred. RECOMMENDATION We recommend that management contact the grantor with regard to the overbilled amounts. For future reimbursement requests, only requests funds that are for direct costs incurred and for the approved 10% indirect rate. MANAGEMENT VIEW AND CORRECTIVE ACTION PLAN Corrective action has been taken. FHI has discussed this finding with grantor (USDA Department of Agriculture) as has Auditor. To date, there has been no action taken by the USDA. As of July 2023, FHI has been billing only reimbursable amounts for direct costs incurred and for the approved 10% indirect rate.
FINDING #2022-001 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES Passed through Indian Health Services Urban Indian Health Services ? 4-in-1 Programs ? CFDA #93.193 Condition: Costs benefitting other programs (in addition to the 4-in-1 Program) were not properly allocated to those benefitted programs, resulting in excess charges to the 4-in-1 Program. Criteria: 2 CFR Part 200, Subpart E ? Cost Principles at 200.405 ? Allocable Costs (c) states, in part, that costs allocable to a particular Federal program may not be charged to other Federal programs ?? to overcome fund deficiencies ? or for other reasons.? However, shifting costs that are allowable under two or more awards is permissible when done in accordance with applicable states, regulations, or award conditions. Cause: The end of the approved budget period (3/31/22) was approaching and the Organization had unspent funds remaining in the 4-in-1 Program. Effect: Costs benefitting other programs (in addition to the 4-in-1 Program) were not properly allocated to those benefitted programs, resulting in excess charges to the 4-in-1 Program. Questioned Costs: $19,323.11 Context: Out of a randomly selected sample of 25 items with a monetary value of $40,814, we noted 8 items where the supporting documentation indicated that Federal award programs, in addition to the 4-in-1 Program were benefitted from the cost incurred; however, the 4-in-1 Program was disproportionately charged for these costs. Recommendation: We recommend that the Organization strengthen its procedures to assure that costs are properly allocated to the programs receiving the benefit of the cost. In those cases where it is deemed appropriate for the Organization to shift costs from one grant to another (2 CFR 200.405 (c) and (d)), the supporting documentation should support the change.
Finding 2022-002 - Activities Allowed or Unallowed & Allowable Costs/Cost Principles (Internal Control over Compliance/Compliance) ALN No.: 93.829 - Section 223 Demonstration Programs to Improve Community Mental Health Services Award Year: January 1, 2022 ? December 31, 2022 Federal Agency: United States Department of Health and Human Services Pass Through Entity: Not applicable Criteria: 2 CFR Part 200.303(a) of the Uniform Guidance requires all non-Federal entities to establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. In addition, 2 CFR section 200.405 requires federal awards be expended only for allowable activities. Condition/Context: South Shore made a clerical error in calculating allocated payroll amount claimed for 1 selection tested out of 40 selections leading to an error of $118. The sampling method was nonstatistical sampling. Cause: There was not proper review and oversight over the individual preparing the monthly claims for reimbursement. Effect: South Shore has not complied with the specific requirements for activities allowed or unallowed and allowable costs/cost principles as described in the Uniform Guidance. Unallowable costs were charged to the federal program. Questioned Costs: None. Recommendation: South Shore should develop an internal control process for proper preparation and review of the monthly claims for reimbursement. Views of Responsible Officials: Management agrees with the recommendation and plans to put in place an appropriate internal control process.
Finding 2022-001 U.S. Department of Education Native Hawaiian Education Assistance Listing No. 84.362A Criteria ? Under Section 200.405 of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), 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. If a cost benefits two or more projects or activities in proportions that cannot be determined, the costs may be allocated on a reasonable documented basis. Under Section 200.430 of the Uniform Guidance, salaries and wages charged to federal awards must be based on records that accurately reflect the work performed. Condition ? During the audit for the year ended December 31, 2022, the bases used to allocate nonpayroll costs to two or more programs were not adequately documented. In addition, salaries and wages charged to federal awards were not based on records that accurately reflected the work performed. Cause ? The Organization did not document the basis for the allocation of nonpayroll costs to its various federal programs. The Organization did not maintain records that accurately reflected the work performed on its federal programs. Salaries and wages charged to federal awards were based on budgeted amounts. Effect or Potential Effect ? Nonpayroll costs that benefit more than one federal program may be misallocated among federal and other programs. Salaries and wages for employees who work on more than one federal program may be misallocated among federal and other programs. Questioned Costs ? Unknown. Context ? The Organization had $573,039 in nonpayroll costs and $417,366 in salaries and wages included in its federal expenditures during the year ended December 31, 2022. Recommendation ? Maintain documentation to support the allocation of nonpayroll costs between two or more programs. Maintain documentation, such as a timesheet or certified statement, to substantiate the salaries and wages charged to the federal programs that is based on the actual time worked by personnel. Responsible Official?s Response and Corrective Action Planned ? Refer to the Corrective Action Plan.
FINDING 2022-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Subrecipient Monitoring Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number or Year (or Other Identifying Number): CY2021 Compliance Requirement: Subrecipient Monitoring Audit Findings: Material Weakness, Modified Opinion Condition and Context The City received a total State and Local Fiscal Recovery Funds (SLFRF) allocation of $18,042,360. The City enlisted a non-profit, Heart City Health Center, Inc., to assist with public health information and paid them $50,000. The payment was made under the Responding to Public Health and Economic Impacts of COVID-19 eligible use category. Documentation to support the payment included an invoice from the Heart City Health Center, Inc., Board of Works Resolution 21-R-19, and Ordinance 5861. The Board of Works approved Resolution 21-R-19 on December 28, 2021. The resolution states in part, "Heart City Health Center is a separate legal entity from the City of Elkhart and as a separate legal entity, requires the formation of a subrecipient agreement to transfer funds from the City's ARPA Coronavirus State and Local Fiscal Recovery Funds allocation to Heart City Health . . . now, therefore be it resolved, the Board of Public Works approves Heart City Health Center Inc. as a subrecipient of fifty thousand dollars in ARPA state and local fiscal recovery funds, and authorizes the Department of Law to prepare an appropriates subrecipient agreement for execution by the Board of Works and Heart City Health Center Inc. for the purposes approved herein . . ." The City provided SLFRF award funds to the Heart City Health Center, Inc. to carry out a program on the City's behalf, making the Heart City Health Center, Inc. a subrecipient of the City, as noted in their resolution, and, therefore, subject to subrecipient monitoring. The City was unable provide a copy of the subaward agreement or other supporting documentation to show evaluation of the subrecipient's risk of noncompliance or monitoring activities demonstrating compliance with the subrecipient monitoring requirement. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.331(a) states in part: "Subrecipients. A subaward is for the purpose of carrying out a portion of a Federal award and creates a Federal assistance relationship with the subrecipient. . . . Characteristics which support the classification of the non-Federal entity as a subrecipient include when the non- Federal entity: (1) Determines who is eligible to receive what Federal assistance; (2) Has its performance measured in relation to whether objectives of a Federal program were met; (3) Has responsibility for programmatic decision-making; (4) Is responsible for adherence to applicable Federal program requirements specified in the Federal award; and . . ." 2 CFR 200.332 states in part: "All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward . . . (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in ? 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the passthrough entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the passthrough entity; (x) Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; (xii) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (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. (2) All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports; (4) (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the passthrough 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 minimis 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). (5) A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient's records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward. . . . (b) Evaluate each subrecipient's risk of noncompliance with Federal statues, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring . . . (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the passthrough entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ? 200.521. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. . . ." Cause The system of internal controls as established by management of the City was not properly designed nor implemented. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. The City was responsible for providing a subaward agreement and monitoring the nonprofit. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City design and implement a proper system of internal controls and develop policies and procedures to ensure subrecipients are provided with an adequate subaward agreement and monitored as appropriate. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
#2022-006 - 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 major program expenditures selected for testing, certain costs charged to the major program appear to be under-allocated, while others appear to be over-allocated to the major program. 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 5 of the 40 expenditures selected for testing, costs were divided arbitrarily when charged to grants. No documented support for the allocation methodology was present. Effect: Expenditures that involve an allocation of costs between grants are not 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: MARR will retain a CPA consultant to recommend to management the establishment of procedures and controls allocate costs between grants based on actual costs attributed to grant and the particular expenditure allowed by the grant. All such allocations will be supported by activity-level substantiation and be reviewed. Documentation of the allocation methodology, review and approval will be maintained in writing.
#2022-006 - 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 major program expenditures selected for testing, certain costs charged to the major program appear to be under-allocated, while others appear to be over-allocated to the major program. 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 5 of the 40 expenditures selected for testing, costs were divided arbitrarily when charged to grants. No documented support for the allocation methodology was present. Effect: Expenditures that involve an allocation of costs between grants are not 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: MARR will retain a CPA consultant to recommend to management the establishment of procedures and controls allocate costs between grants based on actual costs attributed to grant and the particular expenditure allowed by the grant. All such allocations will be supported by activity-level substantiation and be reviewed. Documentation of the allocation methodology, review and approval will be maintained in writing.
Federal Agency: Department of Justice Federal Assistance Listing Numbers: 16.756, 16.726 Programs: Court Appointed Special Advocates, Juvenile Mentoring Program Award/Pass-Through Entity Identifying Numbers: 2018-CH-BX-K001, 15PJDP-21-GK-02762-CASA, 2019-MU-FX-0004, 2020-JU-FX-0028 Criteria: The Uniform Guidance in 2 CFR §200.332 details requirements for pass-through entities in regard to subrecipient monitoring and management. Per 2 CFR §200.332, Requirements for Pass-Through Entities: “All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the federal award and subaward. Required information includes: (1) Federal award identification. i. Subrecipient name (which must match the name associated with its unique entity identifier); ii. Subrecipient’s unique entity identifier; iii. Federal Award Identification Number (FAIN); iv. Federal Award Date (see the definition of federal award date in §200.1 of this part) of award to the recipient by the federal agency; v. Subaward Period of Performance Start and End Date; vi. Subaward Budget Period Start and End Date; vii. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; viii. Total Amount of Federal Funds Obligated to the subrecipient by the pass through entity, including the current financial obligation; ix. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; x. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); xi. Name of federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xii. Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance Listings Number at time of disbursement; 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. (2) All requirements imposed by the pass-through entity on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the terms and conditions of the federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the federal awarding agency, including identification of any required financial and performance reports; (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 minimis 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). (5) A requirement that the subrecipient permits the pass-through entity and auditors to have access to the subrecipient’s records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward.” Condition: National CASA/GAL’s subrecipient agreements do not contain a level of specificity to fully comply with federal subrecipient regulations. During our testing of subrecipient monitoring, we selected 20 subrecipient awards within Court Appointed Special Advocates and 17 subrecipient awards within the Juvenile Mentoring Program. For all awards tested, National CASA/GAL’s subaward agreements did not comply with 2 CFR §200.332, Requirements for Pass-Through Entities, as they do not contain a specific scope of work or project description. Cause: National CASA/GAL did not have the proper policies and procedures in place to ensure subaward agreements complied to relevant federal regulation, and that all required elements are located in subaward agreements, and not in the application or by reference to other documents. Effect or Potential Effect: Without adequate controls in place to ensure conformity with subaward requirements, grantees may not ensure compliance with any award special conditions or revised budgets agreed upon at contract implementation. Questioned Costs: None. Context: This is a condition identified per review of National CASA/GAL’s compliance with specified requirements using a non-statistically valid sample. For the Court Appointed Special Advocates Program, the population consisted of 100 subawards made totaling to $1,471,827 provided to subrecipients in 2022. The sample consisted of 20 subawards totaling $410,352 provided to subrecipients in 2022. For the Juvenile Mentoring Program, the population consisted of 83 subawards totaling to $2,339,039 provided to subrecipients in 2022. The sample consisted of 17 subawards totaling $441,399 provided to subrecipients in 2022. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend establishing and maintaining written policies and procedures to ensure subaward agreements conform to the requirements outlined in 2 CFR §200.332. Views of Responsible Officials: Management agrees that subrecipient agreements in place in 2022 did not fully comply with 2 CFR §200.332. Updates were made to the policies and procedures as well to ensure subaward files contain the requisite components. Management has additionally implemented a Grant Master File Checklist to ensure compliance with terms and conditions required in subaward agreements.
Federal Agency: Department of Justice Federal Assistance Listing Numbers: 16.756, 16.726 Programs: Court Appointed Special Advocates, Juvenile Mentoring Program Award/Pass-Through Entity Identifying Numbers: 2018-CH-BX-K001, 15PJDP-21-GK-02762-CASA, 2019-MU-FX-0004, 2020-JU-FX-0028 Criteria: The Uniform Guidance in 2 CFR §200.332 details requirements for pass-through entities in regard to subrecipient monitoring and management. Per 2 CFR §200.332, Requirements for Pass-Through Entities: “All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the federal award and subaward. Required information includes: (1) Federal award identification. i. Subrecipient name (which must match the name associated with its unique entity identifier); ii. Subrecipient’s unique entity identifier; iii. Federal Award Identification Number (FAIN); iv. Federal Award Date (see the definition of federal award date in §200.1 of this part) of award to the recipient by the federal agency; v. Subaward Period of Performance Start and End Date; vi. Subaward Budget Period Start and End Date; vii. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; viii. Total Amount of Federal Funds Obligated to the subrecipient by the pass through entity, including the current financial obligation; ix. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; x. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); xi. Name of federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xii. Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance Listings Number at time of disbursement; 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. (2) All requirements imposed by the pass-through entity on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the terms and conditions of the federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the federal awarding agency, including identification of any required financial and performance reports; (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 minimis 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). (5) A requirement that the subrecipient permits the pass-through entity and auditors to have access to the subrecipient’s records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward.” Condition: National CASA/GAL’s subrecipient agreements do not contain a level of specificity to fully comply with federal subrecipient regulations. During our testing of subrecipient monitoring, we selected 20 subrecipient awards within Court Appointed Special Advocates and 17 subrecipient awards within the Juvenile Mentoring Program. For all awards tested, National CASA/GAL’s subaward agreements did not comply with 2 CFR §200.332, Requirements for Pass-Through Entities, as they do not contain a specific scope of work or project description. Cause: National CASA/GAL did not have the proper policies and procedures in place to ensure subaward agreements complied to relevant federal regulation, and that all required elements are located in subaward agreements, and not in the application or by reference to other documents. Effect or Potential Effect: Without adequate controls in place to ensure conformity with subaward requirements, grantees may not ensure compliance with any award special conditions or revised budgets agreed upon at contract implementation. Questioned Costs: None. Context: This is a condition identified per review of National CASA/GAL’s compliance with specified requirements using a non-statistically valid sample. For the Court Appointed Special Advocates Program, the population consisted of 100 subawards made totaling to $1,471,827 provided to subrecipients in 2022. The sample consisted of 20 subawards totaling $410,352 provided to subrecipients in 2022. For the Juvenile Mentoring Program, the population consisted of 83 subawards totaling to $2,339,039 provided to subrecipients in 2022. The sample consisted of 17 subawards totaling $441,399 provided to subrecipients in 2022. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend establishing and maintaining written policies and procedures to ensure subaward agreements conform to the requirements outlined in 2 CFR §200.332. Views of Responsible Officials: Management agrees that subrecipient agreements in place in 2022 did not fully comply with 2 CFR §200.332. Updates were made to the policies and procedures as well to ensure subaward files contain the requisite components. Management has additionally implemented a Grant Master File Checklist to ensure compliance with terms and conditions required in subaward agreements.
Federal Agency: Department of Justice Federal Assistance Listing Numbers: 16.756, 16.726 Programs: Court Appointed Special Advocates, Juvenile Mentoring Program Award/Pass-Through Entity Identifying Numbers: 2018-CH-BX-K001, 15PJDP-21-GK-02762-CASA, 2019-MU-FX-0004, 2020-JU-FX-0028 Criteria: The Uniform Guidance in 2 CFR §200.332 details requirements for pass-through entities in regard to subrecipient monitoring and management. Per 2 CFR §200.332, Requirements for Pass-Through Entities: “All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the federal award and subaward. Required information includes: (1) Federal award identification. i. Subrecipient name (which must match the name associated with its unique entity identifier); ii. Subrecipient’s unique entity identifier; iii. Federal Award Identification Number (FAIN); iv. Federal Award Date (see the definition of federal award date in §200.1 of this part) of award to the recipient by the federal agency; v. Subaward Period of Performance Start and End Date; vi. Subaward Budget Period Start and End Date; vii. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; viii. Total Amount of Federal Funds Obligated to the subrecipient by the pass through entity, including the current financial obligation; ix. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; x. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); xi. Name of federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xii. Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance Listings Number at time of disbursement; 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. (2) All requirements imposed by the pass-through entity on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the terms and conditions of the federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the federal awarding agency, including identification of any required financial and performance reports; (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 minimis 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). (5) A requirement that the subrecipient permits the pass-through entity and auditors to have access to the subrecipient’s records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward.” Condition: National CASA/GAL’s subrecipient agreements do not contain a level of specificity to fully comply with federal subrecipient regulations. During our testing of subrecipient monitoring, we selected 20 subrecipient awards within Court Appointed Special Advocates and 17 subrecipient awards within the Juvenile Mentoring Program. For all awards tested, National CASA/GAL’s subaward agreements did not comply with 2 CFR §200.332, Requirements for Pass-Through Entities, as they do not contain a specific scope of work or project description. Cause: National CASA/GAL did not have the proper policies and procedures in place to ensure subaward agreements complied to relevant federal regulation, and that all required elements are located in subaward agreements, and not in the application or by reference to other documents. Effect or Potential Effect: Without adequate controls in place to ensure conformity with subaward requirements, grantees may not ensure compliance with any award special conditions or revised budgets agreed upon at contract implementation. Questioned Costs: None. Context: This is a condition identified per review of National CASA/GAL’s compliance with specified requirements using a non-statistically valid sample. For the Court Appointed Special Advocates Program, the population consisted of 100 subawards made totaling to $1,471,827 provided to subrecipients in 2022. The sample consisted of 20 subawards totaling $410,352 provided to subrecipients in 2022. For the Juvenile Mentoring Program, the population consisted of 83 subawards totaling to $2,339,039 provided to subrecipients in 2022. The sample consisted of 17 subawards totaling $441,399 provided to subrecipients in 2022. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend establishing and maintaining written policies and procedures to ensure subaward agreements conform to the requirements outlined in 2 CFR §200.332. Views of Responsible Officials: Management agrees that subrecipient agreements in place in 2022 did not fully comply with 2 CFR §200.332. Updates were made to the policies and procedures as well to ensure subaward files contain the requisite components. Management has additionally implemented a Grant Master File Checklist to ensure compliance with terms and conditions required in subaward agreements.
Federal Agency: Department of Justice Federal Assistance Listing Numbers: 16.756, 16.726 Programs: Court Appointed Special Advocates, Juvenile Mentoring Program Award/Pass-Through Entity Identifying Numbers: 2018-CH-BX-K001, 15PJDP-21-GK-02762-CASA, 2019-MU-FX-0004, 2020-JU-FX-0028 Criteria: The Uniform Guidance in 2 CFR §200.332 details requirements for pass-through entities in regard to subrecipient monitoring and management. Per 2 CFR §200.332, Requirements for Pass-Through Entities: “All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the federal award and subaward. Required information includes: (1) Federal award identification. i. Subrecipient name (which must match the name associated with its unique entity identifier); ii. Subrecipient’s unique entity identifier; iii. Federal Award Identification Number (FAIN); iv. Federal Award Date (see the definition of federal award date in §200.1 of this part) of award to the recipient by the federal agency; v. Subaward Period of Performance Start and End Date; vi. Subaward Budget Period Start and End Date; vii. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; viii. Total Amount of Federal Funds Obligated to the subrecipient by the pass through entity, including the current financial obligation; ix. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; x. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); xi. Name of federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xii. Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance Listings Number at time of disbursement; 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. (2) All requirements imposed by the pass-through entity on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the terms and conditions of the federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the federal awarding agency, including identification of any required financial and performance reports; (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 minimis 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). (5) A requirement that the subrecipient permits the pass-through entity and auditors to have access to the subrecipient’s records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward.” Condition: National CASA/GAL’s subrecipient agreements do not contain a level of specificity to fully comply with federal subrecipient regulations. During our testing of subrecipient monitoring, we selected 20 subrecipient awards within Court Appointed Special Advocates and 17 subrecipient awards within the Juvenile Mentoring Program. For all awards tested, National CASA/GAL’s subaward agreements did not comply with 2 CFR §200.332, Requirements for Pass-Through Entities, as they do not contain a specific scope of work or project description. Cause: National CASA/GAL did not have the proper policies and procedures in place to ensure subaward agreements complied to relevant federal regulation, and that all required elements are located in subaward agreements, and not in the application or by reference to other documents. Effect or Potential Effect: Without adequate controls in place to ensure conformity with subaward requirements, grantees may not ensure compliance with any award special conditions or revised budgets agreed upon at contract implementation. Questioned Costs: None. Context: This is a condition identified per review of National CASA/GAL’s compliance with specified requirements using a non-statistically valid sample. For the Court Appointed Special Advocates Program, the population consisted of 100 subawards made totaling to $1,471,827 provided to subrecipients in 2022. The sample consisted of 20 subawards totaling $410,352 provided to subrecipients in 2022. For the Juvenile Mentoring Program, the population consisted of 83 subawards totaling to $2,339,039 provided to subrecipients in 2022. The sample consisted of 17 subawards totaling $441,399 provided to subrecipients in 2022. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend establishing and maintaining written policies and procedures to ensure subaward agreements conform to the requirements outlined in 2 CFR §200.332. Views of Responsible Officials: Management agrees that subrecipient agreements in place in 2022 did not fully comply with 2 CFR §200.332. Updates were made to the policies and procedures as well to ensure subaward files contain the requisite components. Management has additionally implemented a Grant Master File Checklist to ensure compliance with terms and conditions required in subaward agreements.
Repeat of Prior Audit Finding 2021-001 Federal Program: Trans-National Crime Federal Agency: United States Department of State - United States Bureau of International Narcotics and Law Enforcement Affairs Federal Assistance Listing Number: 19.705 Federal Award Year: December 31, 2022 Criteria: 2 CFR Part 200.303(a) of the Uniform Guidance require all non-Federal entities to establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. In addition, 2 CFR section 200.405 requires federal awards be expended only for allowable activities. Condition/Context: Panthera Corporation was unable to provide a signed contract, payment information, invoice or reconciliation to evidence allowability of the expenditures or documentation of review and approval for the following: • For 34 out of 80 selections, no evidence of approval of the invoice or approval of signed contract could be provided (control). • For 63 out of 80 selections, no evidence of approval of payment could be provided (control). • For 46 out of 80 selections, no evidence of signed contract or payment support could be provided (compliance). This was not a statistically valid sample. Questioned Costs: Questioned costs were approximately $65,341. Cause: Panthera Corporation did not retain/could not retrieve the signed contract or any related support for the disbursements due to poor document retention and staffing turnover and did not follow its internal control procedures by including formal, written review of disbursement payments. Effect: Panthera Corporation has not complied with the specific requirements for activities allowed or unallowed and allowable costs/cost principles as described in the Uniform Guidance. Unallowable costs may have been charged to the federal program. Recommendation: We recommend that Panthera Corporation review its process and implement procedures that would allow management to properly maintain all required documentation on its federal expenditures. Views of Responsible Officials: Management acknowledges the finding and is in the process of attaining the proper systems to adequately track and maintain documentation including the review and approval process.
Finding 2022-003 ? Unallowable Use of Public Housing Program Funds (Noncompliance/Other Matter) Public Housing Program ? Assistance Listing No. 14.850a, Grant Period: Year-End December 31, 2022 Criteria The cost principles in 2 CFR Part 200, Sub-part E of the Uniform Guidance describe allowable and unallowable uses of federal award program subsidies. Parts 200.403 and 200.405 prohibit the use of federal award program subsidies to fund expenditures outside of the applicable federal award program. Specifically, the Public Housing Programs subsidies and reserves cannot be used to fund expenditures and/or deficits of other federal or non-federal programs, except through allowable Management, Book-keeping and Service Fees. Condition and Perspective During 2022, the Authority?s Public Housing Program loaned the Central Office Cost Center (COCC) $668,552. This amount was payable back to the Public Housing Program as of December 31, 2022.Questioned Costs ? None noted Cause Lack of non-federal funds available to finance non-federal expenditures. Effect Non-compliance with federal Allowable Cost requirements. Recommendation We recommend that the Authority limit funding the COCC from the Public Housing Program, to allowable Fees only as specified in the Uniform Guidance and applicable HUD literature. Management?s Response The Authority will limit funding the COCC from the Public Housing Program, to allowable Fees only. The Authority?s Executive Director, Trey George, has assumed the responsibility of executing this corrective action as of November 1, 2023.
Finding Number: 2022-002 Finding Type: Federal award finding Federal Assistance Listing No.: 64.033 Program Name: VA Supportive Services for Veteran Families Program Federal Agency: U.S. Department of Veterans Affairs Pass-Through Entity: Transition Projects, Inc. Grant Number: SSVF 19-ZZ-127 Federal Award Year: 2022 through 2023 Control Deficiency Type: Significant deficiency over compliance Instance of Noncompliance: Yes Compliance Requirement: Allowable costs/cost principles Questioned Costs: None Repeat Finding: No Criteria: In accordance with Title 38, U.S. Code of Federal Regulations, Part 62, Supportive Services for Veteran Families Program, grantees may use up to 10 percent of supportive services grant funds for administrative costs that are allowable, allocable, and reasonable in conducting the work under the supportive services grant. The determination of allowable costs must be made in accordance with the applicable Federal Cost Principles set forth in 2 CFR Part 200. Condition: While the organization had sufficient allocable administrative costs in excess of the amount charged, we noted that such costs were charged at a fixed monthly rate, rather than the amount of allowable administrative costs. Cause: The organization did not have policies and procedures over cost principles establishing the determination of allowable costs in accordance with 2 CFR 200.405 and other applicable Federal Cost Principles. Effect: The organization did not fully comply with the allowable cost principles specified in the Code of Federal Regulations. As a result, there may be charges to awards that were not properly allocated, do not have ad-equate support, and/or were not accorded consistent treatment. Questioned Costs: No known or likely questioned costs greater than $25,000. Audit Recommendation: We recommend that the organization implement procedures over the administration of federal awards, including establishing written policies and procedures to ensure compliance with Uniform Guidance cost principles. Management?s Response: Throughout 2022, MPD had a policy of allocating all administrative cost to departments based on employee head count. Within each department managing grants, administrative costs were then allocated down to each grant based on the number of FTE funded by each program. The headcount calculation was set at the beginning of the year and was not updated during the year, leading to the same overhead allocation month after month. As of April 1, 2023, MPD has adopted a new written policy for administrative cost allocation. Costs that are not allowable for federal grants are flagged both on timecards and on purchasing transactions with a subaccount code that segregates them from overhead allocations. Costs related to facilities ? rent, equipment leases, office insurance, shared supplies, depreciation, etc. ? are now allocated to departments based on the square footage occupancy of each department, calculated using the guidance referenced in 2 CFR 200. Administrative costs that serve the entire organization such as Human Resources, Accounting, outsourced IT support, etc., are allocated to each department based on headcount, as we consider the number of personnel per department to be the best estimate of supporting services required by each team. The Payroll Specialist generates a current employee roster by department at the end of each month, which is used to update the administrative allocation. Once all costs have been allocated to the department level, both facilities and administrative costs are allocated down to individual grants based on the proportion of total wage costs assigned to each grant within the department for that month.
FINDING 2022-005 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Subrecipient Monitoring Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2022 Compliance Requirement: Subrecipient Monitoring Audit Findings: Material Weakness, Modified Opinion Condition and Context The County received a total State and Local Fiscal Recovery Funds (SLFRF) allocation of $13,177,707. During the audit period, the County provided subawards of SLFRF funds to other entities. As a pass-through entity, the County must: 1. Identify the award and the applicable requirements to each subrecipient. 2. Evaluate each subrecipient's risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward. 3. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purpose, complies with the terms and conditions of the subaward, and achieves performance goals. Subawards, totaling $2,503,400, were provided to four different entities. Three of the subrecipient agreements associated with the subawards were selected for testing. For the three agreements tested, the following information was incomplete or missing: 1. The subrecipients unique entity identifier. 2. The federal award identification number (FAIN). 3. The federal award date of award to the recipient by the federal agency. 4. The name of the federal awarding agency, pass-through entity (auditee), and contact information for awarding official of the pass-through entity (auditee). 5. The Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance Listings Number at time of disbursement. Furthermore, the County did not have an evaluation of the subrecipients' risk of noncompliance or monitoring activities demonstrating compliance with the subrecipient monitoring requirement. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.331(a) states: "Subrecipients. A subaward is for the purpose of carrying out a portion of a Federal award and creates a Federal assistance relationship with the subrecipient. See definition for Subaward in ? 200.1 of this part. Characteristics which support the classification of the non-Federal entity as a subrecipient include when the non-Federal entity: (1) Determines who is eligible to receive what Federal assistance; (2) Has its performance measured in relation to whether objectives of a Federal program were met; (3) Has responsibility for programmatic decision-making; (4) Is responsible for adherence to applicable Federal program requirements specified in the Federal award; and (5) In accordance with its agreement, uses the Federal funds to carry out a program for a public purpose specified in authorizing statute, as opposed to providing goods or services for the benefit of the pass-through entity." 2 CFR 200.332 states in part: "All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward . . . (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in ? 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the passthrough entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the passthrough entity; (x) Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; (xii) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (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. (2) All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports; (4) (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the passthrough 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 minimis indirect cost rate. (iii) 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). (5) A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient's records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward. (b) Evaluate each subrecipient's risk of noncompliance with Federal statues, regulations, and the terms and conditions of the subaward for purposes of determined the appropriate subrecipient monitoring . . . (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ? 200.521. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. . . ." Cause The system of internal controls as established by management of the County was not properly designed, nor implemented. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. The County was responsible for providing a subaward agreement, with all required elements, and monitoring the non-profit. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County design and implement a proper system of internal controls and develop policies and procedures to ensure subrecipients are provided with an adequate subaward agreement and monitored as appropriate. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2022-002 Criteria or Specific Requirement: The Code of Federal Regulations Section 200 subpart E outlines the allowability of cost provisions, including indirect costs. Specifically, 2 CFR 200.403(d) states that costs should be accorded consistent treatment to be allowable, and 200.405 defines allocable costs. Condition: During our review of allowable expenses, it was noted that indirect costs were based on the grant budget and not supported by an indirect cost pool. Cause: The Organization has not implemented a cost allocation policy to track indirect costs. Effect or Potential Effect: Indirect expenses were charged to grants and allowability was unable to be determined. Questioned Costs: $40,242. Context: All cost charged as indirect cost to the research and development cluster were based on the grant budget and not supported by allocable costs. Repeat Finding: No Recommendation: We recommend the Organization implement methodology to track overhead expenses, pool them, and allocate to each grant using a reasonable basis for allocation. Views of responsible officials: Management agrees with the finding and will implement a process to pool its overhead costs and allocate them accordingly.
Finding 2022-002 Criteria or Specific Requirement: The Code of Federal Regulations Section 200 subpart E outlines the allowability of cost provisions, including indirect costs. Specifically, 2 CFR 200.403(d) states that costs should be accorded consistent treatment to be allowable, and 200.405 defines allocable costs. Condition: During our review of allowable expenses, it was noted that indirect costs were based on the grant budget and not supported by an indirect cost pool. Cause: The Organization has not implemented a cost allocation policy to track indirect costs. Effect or Potential Effect: Indirect expenses were charged to grants and allowability was unable to be determined. Questioned Costs: $40,242. Context: All cost charged as indirect cost to the research and development cluster were based on the grant budget and not supported by allocable costs. Repeat Finding: No Recommendation: We recommend the Organization implement methodology to track overhead expenses, pool them, and allocate to each grant using a reasonable basis for allocation. Views of responsible officials: Management agrees with the finding and will implement a process to pool its overhead costs and allocate them accordingly.
Finding 2022-002 Criteria or Specific Requirement: The Code of Federal Regulations Section 200 subpart E outlines the allowability of cost provisions, including indirect costs. Specifically, 2 CFR 200.403(d) states that costs should be accorded consistent treatment to be allowable, and 200.405 defines allocable costs. Condition: During our review of allowable expenses, it was noted that indirect costs were based on the grant budget and not supported by an indirect cost pool. Cause: The Organization has not implemented a cost allocation policy to track indirect costs. Effect or Potential Effect: Indirect expenses were charged to grants and allowability was unable to be determined. Questioned Costs: $40,242. Context: All cost charged as indirect cost to the research and development cluster were based on the grant budget and not supported by allocable costs. Repeat Finding: No Recommendation: We recommend the Organization implement methodology to track overhead expenses, pool them, and allocate to each grant using a reasonable basis for allocation. Views of responsible officials: Management agrees with the finding and will implement a process to pool its overhead costs and allocate them accordingly.
Finding 2022-002 Criteria or Specific Requirement: The Code of Federal Regulations Section 200 subpart E outlines the allowability of cost provisions, including indirect costs. Specifically, 2 CFR 200.403(d) states that costs should be accorded consistent treatment to be allowable, and 200.405 defines allocable costs. Condition: During our review of allowable expenses, it was noted that indirect costs were based on the grant budget and not supported by an indirect cost pool. Cause: The Organization has not implemented a cost allocation policy to track indirect costs. Effect or Potential Effect: Indirect expenses were charged to grants and allowability was unable to be determined. Questioned Costs: $40,242. Context: All cost charged as indirect cost to the research and development cluster were based on the grant budget and not supported by allocable costs. Repeat Finding: No Recommendation: We recommend the Organization implement methodology to track overhead expenses, pool them, and allocate to each grant using a reasonable basis for allocation. Views of responsible officials: Management agrees with the finding and will implement a process to pool its overhead costs and allocate them accordingly.
Finding 2022-002 Criteria or Specific Requirement: The Code of Federal Regulations Section 200 subpart E outlines the allowability of cost provisions, including indirect costs. Specifically, 2 CFR 200.403(d) states that costs should be accorded consistent treatment to be allowable, and 200.405 defines allocable costs. Condition: During our review of allowable expenses, it was noted that indirect costs were based on the grant budget and not supported by an indirect cost pool. Cause: The Organization has not implemented a cost allocation policy to track indirect costs. Effect or Potential Effect: Indirect expenses were charged to grants and allowability was unable to be determined. Questioned Costs: $40,242. Context: All cost charged as indirect cost to the research and development cluster were based on the grant budget and not supported by allocable costs. Repeat Finding: No Recommendation: We recommend the Organization implement methodology to track overhead expenses, pool them, and allocate to each grant using a reasonable basis for allocation. Views of responsible officials: Management agrees with the finding and will implement a process to pool its overhead costs and allocate them accordingly.
Finding 2022-002 Criteria or Specific Requirement: The Code of Federal Regulations Section 200 subpart E outlines the allowability of cost provisions, including indirect costs. Specifically, 2 CFR 200.403(d) states that costs should be accorded consistent treatment to be allowable, and 200.405 defines allocable costs. Condition: During our review of allowable expenses, it was noted that indirect costs were based on the grant budget and not supported by an indirect cost pool. Cause: The Organization has not implemented a cost allocation policy to track indirect costs. Effect or Potential Effect: Indirect expenses were charged to grants and allowability was unable to be determined. Questioned Costs: $40,242. Context: All cost charged as indirect cost to the research and development cluster were based on the grant budget and not supported by allocable costs. Repeat Finding: No Recommendation: We recommend the Organization implement methodology to track overhead expenses, pool them, and allocate to each grant using a reasonable basis for allocation. Views of responsible officials: Management agrees with the finding and will implement a process to pool its overhead costs and allocate them accordingly.
Repeat of Prior Audit Finding 2021-001 Federal Program: Trans-National Crime Federal Agencies: United States Department of State- United States Bureau of International Narcotics and Law Enforcement Affairs Federal Assistance Listing Number: 19.705 Federal Award Year: December 31, 2022 Criteria: 2 CFR Part 200.303(a) of the Uniform Guidance require all non-Federal entities to establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. In addition, 2 CFR section 200.405 requires federal awards be expended only for allowable activities. Condition/Context: Panthera Corporation was unable to provide a signed contract, payment information, invoice or reconciliation to evidence allowability of the expenditures or documentation of review and approval for the following: ? For 34 out of 80 selections, no evidence of approval of the invoice or approval of signed contract could be provided (control) ? For 63 out of 80 selections, no evidence of approval of payment could be provided (control) ? For 46 out of 80 selections, no evidence of signed contract or payment support could be provided (compliance) This was not a statistically valid sample. Questioned Costs: Questioned costs were approximately $65,341. Cause: Panthera Corporation did not retain/could not retrieve the signed contract or any related support for the disbursements due to poor document retention and staffing turnover and did not follow its internal control procedures by including formal, written review of disbursement payments. Effect: Panthera Corporation has not complied with the specific requirements for activities allowed or unallowed and allowable costs/cost principles as described in the Uniform Guidance. Unallowable costs may have been charged to the federal program. Recommendation: We recommend that Panthera Corporation review its process and implement procedures that would allow management to properly maintain all required documentation on its federal expenditures. Views of Responsible Officials: Management acknowledges the finding and is in the process of attaining the proper systems to adequately track and maintain documentation including the review and approval process.
CRITERIA Per CFR 200.405 (a)(1) 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. This standard is met if the cost: (1) Is incurred specifically for the Federal award; (2) Benefits both the Federal award and other work of the non-Federal entity and can be distributed in proportions that may be approximated using reasonable methods; and (3) Is necessary to the overall operation of the non-Federal entity and is assignable in part to the Federal award in accordance with the principles in this subpart. CONDITION During our control and compliance test work over cash management, as well as reconciliation of the Schedule of Federal Expenditures (SEFA), we noted the following: - In testing two of the monthly requests for reimbursement by examining all the invoices related to the reimbursements, we found that there were amounts overbilled that totaled $25,186. - In reconciling the total expenditures on the SEFA, we found that total reimbursement requests exceeded actual expenses incurred by $186,089 (this total includes the $25,186). CAUSE Proper internal control procedures are not maintained to ensure federal reimbursement requests include only actual costs incurred vs budgeted amounts. EFFECT The Organization billed the federal government for amounts of costs that had not yet been incurred and is at-risk for noncompliance with allowable activities and allowable costs, as well as cash management requirements. QUESTIONED COSTS $186,089 CONTEXT Management?s monthly reimbursement requests for the communications and grants technical manager position was based on budgeted amounts and not actual costs incurred. RECOMMENDATION We recommend that management contact the grantor with regard to the overbilled amounts. For future reimbursement requests, only requests funds that are for direct costs incurred and for the approved 10% indirect rate. MANAGEMENT VIEW AND CORRECTIVE ACTION PLAN Corrective action has been taken. FHI has discussed this finding with grantor (USDA Department of Agriculture) as has Auditor. To date, there has been no action taken by the USDA. As of July 2023, FHI has been billing only reimbursable amounts for direct costs incurred and for the approved 10% indirect rate.
FINDING #2022-001 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES Passed through Indian Health Services Urban Indian Health Services ? 4-in-1 Programs ? CFDA #93.193 Condition: Costs benefitting other programs (in addition to the 4-in-1 Program) were not properly allocated to those benefitted programs, resulting in excess charges to the 4-in-1 Program. Criteria: 2 CFR Part 200, Subpart E ? Cost Principles at 200.405 ? Allocable Costs (c) states, in part, that costs allocable to a particular Federal program may not be charged to other Federal programs ?? to overcome fund deficiencies ? or for other reasons.? However, shifting costs that are allowable under two or more awards is permissible when done in accordance with applicable states, regulations, or award conditions. Cause: The end of the approved budget period (3/31/22) was approaching and the Organization had unspent funds remaining in the 4-in-1 Program. Effect: Costs benefitting other programs (in addition to the 4-in-1 Program) were not properly allocated to those benefitted programs, resulting in excess charges to the 4-in-1 Program. Questioned Costs: $19,323.11 Context: Out of a randomly selected sample of 25 items with a monetary value of $40,814, we noted 8 items where the supporting documentation indicated that Federal award programs, in addition to the 4-in-1 Program were benefitted from the cost incurred; however, the 4-in-1 Program was disproportionately charged for these costs. Recommendation: We recommend that the Organization strengthen its procedures to assure that costs are properly allocated to the programs receiving the benefit of the cost. In those cases where it is deemed appropriate for the Organization to shift costs from one grant to another (2 CFR 200.405 (c) and (d)), the supporting documentation should support the change.
Finding 2022-002 - Activities Allowed or Unallowed & Allowable Costs/Cost Principles (Internal Control over Compliance/Compliance) ALN No.: 93.829 - Section 223 Demonstration Programs to Improve Community Mental Health Services Award Year: January 1, 2022 ? December 31, 2022 Federal Agency: United States Department of Health and Human Services Pass Through Entity: Not applicable Criteria: 2 CFR Part 200.303(a) of the Uniform Guidance requires all non-Federal entities to establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. In addition, 2 CFR section 200.405 requires federal awards be expended only for allowable activities. Condition/Context: South Shore made a clerical error in calculating allocated payroll amount claimed for 1 selection tested out of 40 selections leading to an error of $118. The sampling method was nonstatistical sampling. Cause: There was not proper review and oversight over the individual preparing the monthly claims for reimbursement. Effect: South Shore has not complied with the specific requirements for activities allowed or unallowed and allowable costs/cost principles as described in the Uniform Guidance. Unallowable costs were charged to the federal program. Questioned Costs: None. Recommendation: South Shore should develop an internal control process for proper preparation and review of the monthly claims for reimbursement. Views of Responsible Officials: Management agrees with the recommendation and plans to put in place an appropriate internal control process.
Finding 2022-001 U.S. Department of Education Native Hawaiian Education Assistance Listing No. 84.362A Criteria ? Under Section 200.405 of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), 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. If a cost benefits two or more projects or activities in proportions that cannot be determined, the costs may be allocated on a reasonable documented basis. Under Section 200.430 of the Uniform Guidance, salaries and wages charged to federal awards must be based on records that accurately reflect the work performed. Condition ? During the audit for the year ended December 31, 2022, the bases used to allocate nonpayroll costs to two or more programs were not adequately documented. In addition, salaries and wages charged to federal awards were not based on records that accurately reflected the work performed. Cause ? The Organization did not document the basis for the allocation of nonpayroll costs to its various federal programs. The Organization did not maintain records that accurately reflected the work performed on its federal programs. Salaries and wages charged to federal awards were based on budgeted amounts. Effect or Potential Effect ? Nonpayroll costs that benefit more than one federal program may be misallocated among federal and other programs. Salaries and wages for employees who work on more than one federal program may be misallocated among federal and other programs. Questioned Costs ? Unknown. Context ? The Organization had $573,039 in nonpayroll costs and $417,366 in salaries and wages included in its federal expenditures during the year ended December 31, 2022. Recommendation ? Maintain documentation to support the allocation of nonpayroll costs between two or more programs. Maintain documentation, such as a timesheet or certified statement, to substantiate the salaries and wages charged to the federal programs that is based on the actual time worked by personnel. Responsible Official?s Response and Corrective Action Planned ? Refer to the Corrective Action Plan.
FINDING 2022-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Subrecipient Monitoring Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number or Year (or Other Identifying Number): CY2021 Compliance Requirement: Subrecipient Monitoring Audit Findings: Material Weakness, Modified Opinion Condition and Context The City received a total State and Local Fiscal Recovery Funds (SLFRF) allocation of $18,042,360. The City enlisted a non-profit, Heart City Health Center, Inc., to assist with public health information and paid them $50,000. The payment was made under the Responding to Public Health and Economic Impacts of COVID-19 eligible use category. Documentation to support the payment included an invoice from the Heart City Health Center, Inc., Board of Works Resolution 21-R-19, and Ordinance 5861. The Board of Works approved Resolution 21-R-19 on December 28, 2021. The resolution states in part, "Heart City Health Center is a separate legal entity from the City of Elkhart and as a separate legal entity, requires the formation of a subrecipient agreement to transfer funds from the City's ARPA Coronavirus State and Local Fiscal Recovery Funds allocation to Heart City Health . . . now, therefore be it resolved, the Board of Public Works approves Heart City Health Center Inc. as a subrecipient of fifty thousand dollars in ARPA state and local fiscal recovery funds, and authorizes the Department of Law to prepare an appropriates subrecipient agreement for execution by the Board of Works and Heart City Health Center Inc. for the purposes approved herein . . ." The City provided SLFRF award funds to the Heart City Health Center, Inc. to carry out a program on the City's behalf, making the Heart City Health Center, Inc. a subrecipient of the City, as noted in their resolution, and, therefore, subject to subrecipient monitoring. The City was unable provide a copy of the subaward agreement or other supporting documentation to show evaluation of the subrecipient's risk of noncompliance or monitoring activities demonstrating compliance with the subrecipient monitoring requirement. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.331(a) states in part: "Subrecipients. A subaward is for the purpose of carrying out a portion of a Federal award and creates a Federal assistance relationship with the subrecipient. . . . Characteristics which support the classification of the non-Federal entity as a subrecipient include when the non- Federal entity: (1) Determines who is eligible to receive what Federal assistance; (2) Has its performance measured in relation to whether objectives of a Federal program were met; (3) Has responsibility for programmatic decision-making; (4) Is responsible for adherence to applicable Federal program requirements specified in the Federal award; and . . ." 2 CFR 200.332 states in part: "All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward . . . (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in ? 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the passthrough entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the passthrough entity; (x) Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; (xii) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (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. (2) All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports; (4) (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the passthrough 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 minimis 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). (5) A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient's records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward. . . . (b) Evaluate each subrecipient's risk of noncompliance with Federal statues, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring . . . (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the passthrough entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ? 200.521. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. . . ." Cause The system of internal controls as established by management of the City was not properly designed nor implemented. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. The City was responsible for providing a subaward agreement and monitoring the nonprofit. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City design and implement a proper system of internal controls and develop policies and procedures to ensure subrecipients are provided with an adequate subaward agreement and monitored as appropriate. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
#2022-006 - 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 major program expenditures selected for testing, certain costs charged to the major program appear to be under-allocated, while others appear to be over-allocated to the major program. 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 5 of the 40 expenditures selected for testing, costs were divided arbitrarily when charged to grants. No documented support for the allocation methodology was present. Effect: Expenditures that involve an allocation of costs between grants are not 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: MARR will retain a CPA consultant to recommend to management the establishment of procedures and controls allocate costs between grants based on actual costs attributed to grant and the particular expenditure allowed by the grant. All such allocations will be supported by activity-level substantiation and be reviewed. Documentation of the allocation methodology, review and approval will be maintained in writing.
#2022-006 - 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 major program expenditures selected for testing, certain costs charged to the major program appear to be under-allocated, while others appear to be over-allocated to the major program. 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 5 of the 40 expenditures selected for testing, costs were divided arbitrarily when charged to grants. No documented support for the allocation methodology was present. Effect: Expenditures that involve an allocation of costs between grants are not 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: MARR will retain a CPA consultant to recommend to management the establishment of procedures and controls allocate costs between grants based on actual costs attributed to grant and the particular expenditure allowed by the grant. All such allocations will be supported by activity-level substantiation and be reviewed. Documentation of the allocation methodology, review and approval will be maintained in writing.
Federal Agency: Department of Justice Federal Assistance Listing Numbers: 16.756, 16.726 Programs: Court Appointed Special Advocates, Juvenile Mentoring Program Award/Pass-Through Entity Identifying Numbers: 2018-CH-BX-K001, 15PJDP-21-GK-02762-CASA, 2019-MU-FX-0004, 2020-JU-FX-0028 Criteria: The Uniform Guidance in 2 CFR §200.332 details requirements for pass-through entities in regard to subrecipient monitoring and management. Per 2 CFR §200.332, Requirements for Pass-Through Entities: “All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the federal award and subaward. Required information includes: (1) Federal award identification. i. Subrecipient name (which must match the name associated with its unique entity identifier); ii. Subrecipient’s unique entity identifier; iii. Federal Award Identification Number (FAIN); iv. Federal Award Date (see the definition of federal award date in §200.1 of this part) of award to the recipient by the federal agency; v. Subaward Period of Performance Start and End Date; vi. Subaward Budget Period Start and End Date; vii. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; viii. Total Amount of Federal Funds Obligated to the subrecipient by the pass through entity, including the current financial obligation; ix. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; x. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); xi. Name of federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xii. Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance Listings Number at time of disbursement; 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. (2) All requirements imposed by the pass-through entity on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the terms and conditions of the federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the federal awarding agency, including identification of any required financial and performance reports; (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 minimis 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). (5) A requirement that the subrecipient permits the pass-through entity and auditors to have access to the subrecipient’s records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward.” Condition: National CASA/GAL’s subrecipient agreements do not contain a level of specificity to fully comply with federal subrecipient regulations. During our testing of subrecipient monitoring, we selected 20 subrecipient awards within Court Appointed Special Advocates and 17 subrecipient awards within the Juvenile Mentoring Program. For all awards tested, National CASA/GAL’s subaward agreements did not comply with 2 CFR §200.332, Requirements for Pass-Through Entities, as they do not contain a specific scope of work or project description. Cause: National CASA/GAL did not have the proper policies and procedures in place to ensure subaward agreements complied to relevant federal regulation, and that all required elements are located in subaward agreements, and not in the application or by reference to other documents. Effect or Potential Effect: Without adequate controls in place to ensure conformity with subaward requirements, grantees may not ensure compliance with any award special conditions or revised budgets agreed upon at contract implementation. Questioned Costs: None. Context: This is a condition identified per review of National CASA/GAL’s compliance with specified requirements using a non-statistically valid sample. For the Court Appointed Special Advocates Program, the population consisted of 100 subawards made totaling to $1,471,827 provided to subrecipients in 2022. The sample consisted of 20 subawards totaling $410,352 provided to subrecipients in 2022. For the Juvenile Mentoring Program, the population consisted of 83 subawards totaling to $2,339,039 provided to subrecipients in 2022. The sample consisted of 17 subawards totaling $441,399 provided to subrecipients in 2022. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend establishing and maintaining written policies and procedures to ensure subaward agreements conform to the requirements outlined in 2 CFR §200.332. Views of Responsible Officials: Management agrees that subrecipient agreements in place in 2022 did not fully comply with 2 CFR §200.332. Updates were made to the policies and procedures as well to ensure subaward files contain the requisite components. Management has additionally implemented a Grant Master File Checklist to ensure compliance with terms and conditions required in subaward agreements.
Federal Agency: Department of Justice Federal Assistance Listing Numbers: 16.756, 16.726 Programs: Court Appointed Special Advocates, Juvenile Mentoring Program Award/Pass-Through Entity Identifying Numbers: 2018-CH-BX-K001, 15PJDP-21-GK-02762-CASA, 2019-MU-FX-0004, 2020-JU-FX-0028 Criteria: The Uniform Guidance in 2 CFR §200.332 details requirements for pass-through entities in regard to subrecipient monitoring and management. Per 2 CFR §200.332, Requirements for Pass-Through Entities: “All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the federal award and subaward. Required information includes: (1) Federal award identification. i. Subrecipient name (which must match the name associated with its unique entity identifier); ii. Subrecipient’s unique entity identifier; iii. Federal Award Identification Number (FAIN); iv. Federal Award Date (see the definition of federal award date in §200.1 of this part) of award to the recipient by the federal agency; v. Subaward Period of Performance Start and End Date; vi. Subaward Budget Period Start and End Date; vii. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; viii. Total Amount of Federal Funds Obligated to the subrecipient by the pass through entity, including the current financial obligation; ix. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; x. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); xi. Name of federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xii. Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance Listings Number at time of disbursement; 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. (2) All requirements imposed by the pass-through entity on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the terms and conditions of the federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the federal awarding agency, including identification of any required financial and performance reports; (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 minimis 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). (5) A requirement that the subrecipient permits the pass-through entity and auditors to have access to the subrecipient’s records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward.” Condition: National CASA/GAL’s subrecipient agreements do not contain a level of specificity to fully comply with federal subrecipient regulations. During our testing of subrecipient monitoring, we selected 20 subrecipient awards within Court Appointed Special Advocates and 17 subrecipient awards within the Juvenile Mentoring Program. For all awards tested, National CASA/GAL’s subaward agreements did not comply with 2 CFR §200.332, Requirements for Pass-Through Entities, as they do not contain a specific scope of work or project description. Cause: National CASA/GAL did not have the proper policies and procedures in place to ensure subaward agreements complied to relevant federal regulation, and that all required elements are located in subaward agreements, and not in the application or by reference to other documents. Effect or Potential Effect: Without adequate controls in place to ensure conformity with subaward requirements, grantees may not ensure compliance with any award special conditions or revised budgets agreed upon at contract implementation. Questioned Costs: None. Context: This is a condition identified per review of National CASA/GAL’s compliance with specified requirements using a non-statistically valid sample. For the Court Appointed Special Advocates Program, the population consisted of 100 subawards made totaling to $1,471,827 provided to subrecipients in 2022. The sample consisted of 20 subawards totaling $410,352 provided to subrecipients in 2022. For the Juvenile Mentoring Program, the population consisted of 83 subawards totaling to $2,339,039 provided to subrecipients in 2022. The sample consisted of 17 subawards totaling $441,399 provided to subrecipients in 2022. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend establishing and maintaining written policies and procedures to ensure subaward agreements conform to the requirements outlined in 2 CFR §200.332. Views of Responsible Officials: Management agrees that subrecipient agreements in place in 2022 did not fully comply with 2 CFR §200.332. Updates were made to the policies and procedures as well to ensure subaward files contain the requisite components. Management has additionally implemented a Grant Master File Checklist to ensure compliance with terms and conditions required in subaward agreements.