Finding 2024-001 Significant deficiency in internal controls over compliance related to allowable costs/cost principles. Federal Agency: Department of the Treasury Program Title: COVID-19: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Numbers: CLFR-115A-4 Project Period: June 1, 2023 ‐ June 30, 2026 Criteria 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Subpart E section 2 CFR 200.406 requires that any applicable credits received by a recipient that relate to allowable costs must be credited to the Federal award by either a cost reduction or a cash refund. Condition/Context for Evaluation During the audit for the year ending December 31, 2024, we noted five instances out of 40 where the Organization charged the full costs of an expenditure to the grant and did not apply credits that were received by the Organization for early payment of the expenditure. This resulted in an overcharge to the award. Questioned Costs $78.45 Cause The Organization’s internal controls were not designed to ensure proper allocation of discounts for grant expenditures to the related award. Effect or Potential Effect Unallowable costs were charged to the grant as the costs were not net of discounts. Repeat Finding Not Applicable. Recommendation We recommend that management develop internal controls for appropriate application of credits to grant expenditures and review to ensure the appropriate costs, net of any discounts, were charged to the grant. Views of Responsible Officials of Auditee Management concurs with the finding and has provided the accompanying management corrective action.
2024 001 Activities Allowed or Unallowed and Allowable Costs/Cost Principles U.S. Department of Homeland Security: Passed through the State of New Jersey, Department of Law and Public Safety: Disaster Grants – Public Assistance (Presidentially Declared Disasters) – ALN 97.036 Federal Grant Numbers and Years State of New Jersey pass through number: UH1WX Project #2365 – Award Year 2024 (Application 696220) Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Prior Year Findings: 2023-001 Criteria Compliance – Program Specific The Federal Emergency Management Agency (FEMA), as part of the U.S. Department of Homeland Security, evaluates the eligibility of all costs claimed by the applicant. Not all costs incurred as a result of the incident are eligible. (PAPPG v4) Chapter 4, page(s) 51 54; Chapter 6, page(s) 65 & 93 95. Cost must be: • Directly tied to the performance of eligible work; • Adequately documented (2 CFR section 200.403(g)); • Reduced by all applicable credits, such as insurance proceeds and salvage values (Stafford Act section 312, 42 USC section 5155, and 2 CFR section 200.406); • Authorized and not prohibited under federal, state, territorial, tribal, or local government laws or regulations; • Consistent with applicant’s internal policies, regulations, and procedures that apply uniformly to both federal awards and other activities of the applicant; and • Necessary and reasonable to accomplish the work properly and efficiently (2 CFR section 200.403). 1. Applicant (Force Account) Labor FEMA refers to the applicant’s personnel as “force account.” FEMA reimburses force account labor based on actual hourly rates plus the cost of the employee’s actual fringe benefits. FEMA calculates the fringe benefit cost based on a percentage of the hourly pay rate. Because certain items in a benefit package are not dependent on hours worked (e.g., health insurance), the percentage for overtime is usually different than the percentage for straight time. Compliance – General Per 2 CFR Section 200.430, charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally assisted and all other activities compensated by the non federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non federal entity. Internal Control Per 2 CFR section 200.303(a), a non federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition and Context The New Jersey Turnpike Authority (the “Authority”), through the State of New Jersey, Department of Homeland Security (the State), administers the federal Disaster Grants – Public Assistance (Presidentially Declared Disasters) program and is reimbursed for eligible expenditures when a presidentially declared disaster occurs. For the Authority’s force account labor costs, the Authority utilizes manual Daily Worksheets (timesheets) as the official records for time and effort worked during an event by the Authority’s personnel. These timesheets are then entered into the Authority’s information system (PeopleSoft) for review and approval, reconciling back to the information entered on the respective timesheet. For thirteen of sixty timesheets selected for testwork, the Authority was unable to provide the timesheets as the official record for the time and effort charged to the federal program. However, the Authority successfully demonstrated through PeopleSoft system that the time and effort charged to the federal program was properly reviewed and approved and reconciled to the amounts of reimbursement requested from the State. The finding is recurring from the prior year as the corrective action plan developed by the Authority from the prior year finding was not implemented until December 2024, which is subsequent to when these expenditures were incurred by the Authority between fiscal years 2020 and 2022. Cause The Authority did not maintain and make readily available certain timesheets used as the official record for the time and effort charged to the federal program in accordance with the Uniform Guidance. Effect The Authority did not comply with 2 CFR Section 200.430 related to incorporating the physical timesheets into the official records of the Authority. Questioned Costs None as the time and effort amounts charged were determined to be allowable. Recommendation We recommend that the Authority strengthen its processes to ensure that all timesheets for disaster related events that are federally funded are maintained and are made readily available if subject to audit or other inspection in accordance with the Uniform Guidance. Views of Responsible Officials Management agrees with the finding. Beginning in December 2024, as a commitment to strengthen our processes and ensure that all physical timesheets related to FEMA-declared disaster events are properly maintained and readily accessible, management put a process in place to enhance procedures and controls for timesheets going forward to ensure full compliance with the Uniform Guidance requirements. This process was successfully implemented as of this date and for prospective periods. However, this process does not remedy the issue noted in the finding which relates to time worked from 2020-2022, which is before the process was in place. Therefore, the finding is repeated from the prior year.
Finding 2024-001 Significant deficiency in internal controls over compliance related to allowable costs/cost principles. Federal Agency: Department of the Treasury Program Title: COVID-19: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Numbers: CLFR-115A-4 Project Period: June 1, 2023 ‐ June 30, 2026 Criteria 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Subpart E section 2 CFR 200.406 requires that any applicable credits received by a recipient that relate to allowable costs must be credited to the Federal award by either a cost reduction or a cash refund. Condition/Context for Evaluation During the audit for the year ending December 31, 2024, we noted five instances out of 40 where the Organization charged the full costs of an expenditure to the grant and did not apply credits that were received by the Organization for early payment of the expenditure. This resulted in an overcharge to the award. Questioned Costs $78.45 Cause The Organization’s internal controls were not designed to ensure proper allocation of discounts for grant expenditures to the related award. Effect or Potential Effect Unallowable costs were charged to the grant as the costs were not net of discounts. Repeat Finding Not Applicable. Recommendation We recommend that management develop internal controls for appropriate application of credits to grant expenditures and review to ensure the appropriate costs, net of any discounts, were charged to the grant. Views of Responsible Officials of Auditee Management concurs with the finding and has provided the accompanying management corrective action.
2024 001 Activities Allowed or Unallowed and Allowable Costs/Cost Principles U.S. Department of Homeland Security: Passed through the State of New Jersey, Department of Law and Public Safety: Disaster Grants – Public Assistance (Presidentially Declared Disasters) – ALN 97.036 Federal Grant Numbers and Years State of New Jersey pass through number: UH1WX Project #2365 – Award Year 2024 (Application 696220) Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Prior Year Findings: 2023-001 Criteria Compliance – Program Specific The Federal Emergency Management Agency (FEMA), as part of the U.S. Department of Homeland Security, evaluates the eligibility of all costs claimed by the applicant. Not all costs incurred as a result of the incident are eligible. (PAPPG v4) Chapter 4, page(s) 51 54; Chapter 6, page(s) 65 & 93 95. Cost must be: • Directly tied to the performance of eligible work; • Adequately documented (2 CFR section 200.403(g)); • Reduced by all applicable credits, such as insurance proceeds and salvage values (Stafford Act section 312, 42 USC section 5155, and 2 CFR section 200.406); • Authorized and not prohibited under federal, state, territorial, tribal, or local government laws or regulations; • Consistent with applicant’s internal policies, regulations, and procedures that apply uniformly to both federal awards and other activities of the applicant; and • Necessary and reasonable to accomplish the work properly and efficiently (2 CFR section 200.403). 1. Applicant (Force Account) Labor FEMA refers to the applicant’s personnel as “force account.” FEMA reimburses force account labor based on actual hourly rates plus the cost of the employee’s actual fringe benefits. FEMA calculates the fringe benefit cost based on a percentage of the hourly pay rate. Because certain items in a benefit package are not dependent on hours worked (e.g., health insurance), the percentage for overtime is usually different than the percentage for straight time. Compliance – General Per 2 CFR Section 200.430, charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally assisted and all other activities compensated by the non federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non federal entity. Internal Control Per 2 CFR section 200.303(a), a non federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition and Context The New Jersey Turnpike Authority (the “Authority”), through the State of New Jersey, Department of Homeland Security (the State), administers the federal Disaster Grants – Public Assistance (Presidentially Declared Disasters) program and is reimbursed for eligible expenditures when a presidentially declared disaster occurs. For the Authority’s force account labor costs, the Authority utilizes manual Daily Worksheets (timesheets) as the official records for time and effort worked during an event by the Authority’s personnel. These timesheets are then entered into the Authority’s information system (PeopleSoft) for review and approval, reconciling back to the information entered on the respective timesheet. For thirteen of sixty timesheets selected for testwork, the Authority was unable to provide the timesheets as the official record for the time and effort charged to the federal program. However, the Authority successfully demonstrated through PeopleSoft system that the time and effort charged to the federal program was properly reviewed and approved and reconciled to the amounts of reimbursement requested from the State. The finding is recurring from the prior year as the corrective action plan developed by the Authority from the prior year finding was not implemented until December 2024, which is subsequent to when these expenditures were incurred by the Authority between fiscal years 2020 and 2022. Cause The Authority did not maintain and make readily available certain timesheets used as the official record for the time and effort charged to the federal program in accordance with the Uniform Guidance. Effect The Authority did not comply with 2 CFR Section 200.430 related to incorporating the physical timesheets into the official records of the Authority. Questioned Costs None as the time and effort amounts charged were determined to be allowable. Recommendation We recommend that the Authority strengthen its processes to ensure that all timesheets for disaster related events that are federally funded are maintained and are made readily available if subject to audit or other inspection in accordance with the Uniform Guidance. Views of Responsible Officials Management agrees with the finding. Beginning in December 2024, as a commitment to strengthen our processes and ensure that all physical timesheets related to FEMA-declared disaster events are properly maintained and readily accessible, management put a process in place to enhance procedures and controls for timesheets going forward to ensure full compliance with the Uniform Guidance requirements. This process was successfully implemented as of this date and for prospective periods. However, this process does not remedy the issue noted in the finding which relates to time worked from 2020-2022, which is before the process was in place. Therefore, the finding is repeated from the prior year.
Finding Number: 2024-005 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: U.S. Department of the Treasury COVID-19 - Homeowner Assistance Fund ALN: 21.026 Award #: Various Award Year: 10/01/2023 – 09/30/2024 Government Department/Agency: Department of Housing and Community Development (DHCD) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. 2 CFR Section 200.406(a) defines credits as transactions that offset or reduce direct or indirect costs allocable to a Federal award. Examples of such transactions are purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the recipient or subrecipient relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. Condition – During the review of benefit payments for the sixty (60) eligibility samples, we noted the following: • One payment made to the utility company where it was later determined that the homeowner was not eligible when additional information became available. • One instance where a duplicate payment was issued to the mortgage loan servicer. • One instance where the mortgage loan servicer noted the payment was no longer needed. For the conditions noted above, refunds are due to DHCD. Questioned Costs – Known amount is $42,289. Context – This is a condition identified per review of DHCD’s compliance with specified requirements using a statistically valid sample. Effect – Without adequate internal controls in place to ensure overpayments are identified and tracked by program and accounting personnel, DHCD could be noncompliant with the requirement to refund the agency for credits. Cause – DHCD did not have a process in place to identify and track credits. Recommendation – We recommend that DHCD implement a control to identify and track credits, such as refunds and duplicate payments, so that these amounts can be refunded to the agency. This includes strengthening communication between the program and accounting teams to ensure an awareness of possible refunds so adjustments can be made if necessary. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – DHCD concurs with the findings. DHCD will review and pursue repayment from these expenditures. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2024-005 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: U.S. Department of the Treasury COVID-19 - Homeowner Assistance Fund ALN: 21.026 Award #: Various Award Year: 10/01/2023 – 09/30/2024 Government Department/Agency: Department of Housing and Community Development (DHCD) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. 2 CFR Section 200.406(a) defines credits as transactions that offset or reduce direct or indirect costs allocable to a Federal award. Examples of such transactions are purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the recipient or subrecipient relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. Condition – During the review of benefit payments for the sixty (60) eligibility samples, we noted the following: • One payment made to the utility company where it was later determined that the homeowner was not eligible when additional information became available. • One instance where a duplicate payment was issued to the mortgage loan servicer. • One instance where the mortgage loan servicer noted the payment was no longer needed. For the conditions noted above, refunds are due to DHCD. Questioned Costs – Known amount is $42,289. Context – This is a condition identified per review of DHCD’s compliance with specified requirements using a statistically valid sample. Effect – Without adequate internal controls in place to ensure overpayments are identified and tracked by program and accounting personnel, DHCD could be noncompliant with the requirement to refund the agency for credits. Cause – DHCD did not have a process in place to identify and track credits. Recommendation – We recommend that DHCD implement a control to identify and track credits, such as refunds and duplicate payments, so that these amounts can be refunded to the agency. This includes strengthening communication between the program and accounting teams to ensure an awareness of possible refunds so adjustments can be made if necessary. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – DHCD concurs with the findings. DHCD will review and pursue repayment from these expenditures. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Department of Health Finding 2024 ¬– 006: ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) A Significant Deficiency and Noncompliance Exist at the Department of Health Related to Activities Allowed or Unallowed, Allowable Costs/Costs Principles Federal Grant Number(s) and Year(s): 231PA705W1003 (10/01/2022-9/30/2023), 241PA705W1003 (10/01/2023-9/30/2024) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Condition: The Pennsylvania Department of Health (DOH) administers and monitors the WIC Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) which provides assistance to low-income families for supplemental foods, education, and social services. WIC funds are received via federal grants from the United States Department of Agriculture (USDA) to meet these needs. The Pennsylvania DOH is responsible for ensuring that granted funds are used for allowable costs and grant provisions are followed. WIC administrative grant Y23172 closed on September 30, 2023. The audit procedures disclosed that the closed grant had federal revenues that exceeded federal expenditures by approximately $95 thousand. DOH indicated that a credit was identified and posted to the grant after the FNS-798 grant close out report was submitted in February 2024. The credit was largely due to overcharges of costs for a Software License Agreement that was not allowable to the grant. The adjustment to record the credit to the grant posted in June 2024. Although DOH had identified and recorded the adjustment, DOH did not update the FNS-798 grant close out report which was necessary to return the corresponding federal funds to the USDA. DOH indicated that it is in the process of generating an updated FNS-798 report to enable the funds to be returned. Criteria: 2 CFR Section 200.303, Internal controls, states: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of the Sponsoring Organizations of the Treadway Commission (COSO). Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. 2 CFR Section 200.405, Allowable costs, states: a) Allocable costs in general. A cost is allocable to a Federal award or other cost objective if the cost is assignable to that Federal award or other cost objective in accordance with the relative benefits received. This standard is met if the cost satisfies any of the following criteria: Finding 2024 ¬– 006: (continued) (1) Is incurred specifically for the Federal award; (2) Benefits both the Federal award and other work of the recipient or subrecipient and can be distributed in proportions that may be approximated using reasonable methods; or (3) Is necessary to the overall operation of the recipient or subrecipient and is assignable in part to the Federal award in accordance with these cost principles. 2 CFR Section 200.406, Applicable credits, states: (a) Applicable credits refer to transactions that offset or reduce direct or indirect costs allocable to a Federal award. Examples of such transactions are purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the recipient or subrecipient relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. Cause: DOH was not aware of the overcharges at the time of grant closeout. Management subsequently became aware of the costs and credited the federal grant expenditures but did not recognize the FNS-798 report needed adjusted to facilitate the return of the federal funds. Effect: DOH had unallowable costs expended within grant Y23172 that were not identified until after the grant was closed. The unallowable costs were later credited to the grant causing cumulative revenues to exceed cumulative expenditures for the grant. The federal funds were not properly returned to the USDA. Recommendation: We recommend that DOH implement formal policies and procedures to prevent and detect any unallowable costs to ensure timely and accurate grant close out procedures. If adjustments are necessary after a grant is closed, procedures should include amending the FNS-798 report at the time of posting the adjustments. Furthermore, DOH should submit an updated FNS-798 report and return the $95 thousand of federal funds to USDA. Agency Response: DOH agrees with this finding. Questioned Costs: None
Department of Health Finding 2024 ¬– 006: ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) A Significant Deficiency and Noncompliance Exist at the Department of Health Related to Activities Allowed or Unallowed, Allowable Costs/Costs Principles Federal Grant Number(s) and Year(s): 231PA705W1003 (10/01/2022-9/30/2023), 241PA705W1003 (10/01/2023-9/30/2024) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Condition: The Pennsylvania Department of Health (DOH) administers and monitors the WIC Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) which provides assistance to low-income families for supplemental foods, education, and social services. WIC funds are received via federal grants from the United States Department of Agriculture (USDA) to meet these needs. The Pennsylvania DOH is responsible for ensuring that granted funds are used for allowable costs and grant provisions are followed. WIC administrative grant Y23172 closed on September 30, 2023. The audit procedures disclosed that the closed grant had federal revenues that exceeded federal expenditures by approximately $95 thousand. DOH indicated that a credit was identified and posted to the grant after the FNS-798 grant close out report was submitted in February 2024. The credit was largely due to overcharges of costs for a Software License Agreement that was not allowable to the grant. The adjustment to record the credit to the grant posted in June 2024. Although DOH had identified and recorded the adjustment, DOH did not update the FNS-798 grant close out report which was necessary to return the corresponding federal funds to the USDA. DOH indicated that it is in the process of generating an updated FNS-798 report to enable the funds to be returned. Criteria: 2 CFR Section 200.303, Internal controls, states: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of the Sponsoring Organizations of the Treadway Commission (COSO). Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. 2 CFR Section 200.405, Allowable costs, states: a) Allocable costs in general. A cost is allocable to a Federal award or other cost objective if the cost is assignable to that Federal award or other cost objective in accordance with the relative benefits received. This standard is met if the cost satisfies any of the following criteria: Finding 2024 ¬– 006: (continued) (1) Is incurred specifically for the Federal award; (2) Benefits both the Federal award and other work of the recipient or subrecipient and can be distributed in proportions that may be approximated using reasonable methods; or (3) Is necessary to the overall operation of the recipient or subrecipient and is assignable in part to the Federal award in accordance with these cost principles. 2 CFR Section 200.406, Applicable credits, states: (a) Applicable credits refer to transactions that offset or reduce direct or indirect costs allocable to a Federal award. Examples of such transactions are purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the recipient or subrecipient relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. Cause: DOH was not aware of the overcharges at the time of grant closeout. Management subsequently became aware of the costs and credited the federal grant expenditures but did not recognize the FNS-798 report needed adjusted to facilitate the return of the federal funds. Effect: DOH had unallowable costs expended within grant Y23172 that were not identified until after the grant was closed. The unallowable costs were later credited to the grant causing cumulative revenues to exceed cumulative expenditures for the grant. The federal funds were not properly returned to the USDA. Recommendation: We recommend that DOH implement formal policies and procedures to prevent and detect any unallowable costs to ensure timely and accurate grant close out procedures. If adjustments are necessary after a grant is closed, procedures should include amending the FNS-798 report at the time of posting the adjustments. Furthermore, DOH should submit an updated FNS-798 report and return the $95 thousand of federal funds to USDA. Agency Response: DOH agrees with this finding. Questioned Costs: None
Condition: Reconciliation of the HAF client assistance expenditures for the year ended June 30, 2023, revealed approximately $290,000 of federal funds were held by a vendor contracted to process and disburse client assistance and were reported as federal expenditures. This amount had increased to $433,522 by October 26, 2023. The funds were offset against assistance payments processed by the vendor on November 14, 2023. During the operation of the program, the vendor received refunds of client assistance that were not timely remitted to DSHA or utilized to fund assistance. A similar finding was noted during the audit of the year ended June 30, 2023. Refer to finding 2023-006. Criteria: The Uniform Guidance Cost Principles requires DSHA to offset credits against program expenditures in 2 CFR 200.406(a): Applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the Federal award as direct or indirect (F&A) costs. Examples of such transactions are purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. Questioned Costs: $433,522 Effect: The funds held by the vendor were initially recorded as program costs. Cause: DSHA was notified, by the vendor, that a credit was available to be applied to fund future assistance. The vendor did not apply the credit without DSHA’s explicit approval, which was not granted until November 14, 2023. Recommendation: We recommend DSHA review the design and implementation of internal controls to address the identified weaknesses in internal control.
2024-002 (2023-001) – Equipment and Real Property Management – Material Weakness in Internal Controls over Compliance (Repeat Finding) Federal Program Information: Funding Agency: U. S. Department of Health and Human Services Title: Head Start CFDA Number: 93.600 Federal Award Identification number: 06CH012005 Pass Through Entity: N/A Award Year: 2024 & 2023 Condition: The Organization did not conduct a physical inventory in current year or prior year and, in additional, requested reimbursement from the Department of Health and Human services for repair costs for which insurance proceeds were received. 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 entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.313(d)(2), a physical inventory of program property must be taken and the results reconciled with the property records at least once every 2 years. 2 CFR 200.406 requires that any recoveries on losses, such as insurance proceeds, be credited to the Federal award as a cost reduction or a cash refund. Questioned costs: $16,033 Effect: The Organization could dispose of, lose, or encumber federally funded equipment without following Federal guidelines. Cause: The Organization does not have policies and procedures to ensure that a physical inventory of equipment is performed at a minimum frequency of every two years. Additionally, the Entity filed a claim for damages to asset(s) purchased with Federal funds and did not offset the insurance proceeds against the repair costs charged to the Federal program, resulting in reimbursement of unallowable costs.
2024-002 (2023-001) – Equipment and Real Property Management – Material Weakness in Internal Controls over Compliance (Repeat Finding) Federal Program Information: Funding Agency: U. S. Department of Health and Human Services Title: Head Start CFDA Number: 93.600 Federal Award Identification number: 06CH012005 Pass Through Entity: N/A Award Year: 2024 & 2023 Condition: The Organization did not conduct a physical inventory in current year or prior year and, in additional, requested reimbursement from the Department of Health and Human services for repair costs for which insurance proceeds were received. 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 entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.313(d)(2), a physical inventory of program property must be taken and the results reconciled with the property records at least once every 2 years. 2 CFR 200.406 requires that any recoveries on losses, such as insurance proceeds, be credited to the Federal award as a cost reduction or a cash refund. Questioned costs: $16,033 Effect: The Organization could dispose of, lose, or encumber federally funded equipment without following Federal guidelines. Cause: The Organization does not have policies and procedures to ensure that a physical inventory of equipment is performed at a minimum frequency of every two years. Additionally, the Entity filed a claim for damages to asset(s) purchased with Federal funds and did not offset the insurance proceeds against the repair costs charged to the Federal program, resulting in reimbursement of unallowable costs.
Department of Health Finding 2024 ¬– 006: ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) A Significant Deficiency and Noncompliance Exist at the Department of Health Related to Activities Allowed or Unallowed, Allowable Costs/Costs Principles Federal Grant Number(s) and Year(s): 231PA705W1003 (10/01/2022-9/30/2023), 241PA705W1003 (10/01/2023-9/30/2024) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Condition: The Pennsylvania Department of Health (DOH) administers and monitors the WIC Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) which provides assistance to low-income families for supplemental foods, education, and social services. WIC funds are received via federal grants from the United States Department of Agriculture (USDA) to meet these needs. The Pennsylvania DOH is responsible for ensuring that granted funds are used for allowable costs and grant provisions are followed. WIC administrative grant Y23172 closed on September 30, 2023. The audit procedures disclosed that the closed grant had federal revenues that exceeded federal expenditures by approximately $95 thousand. DOH indicated that a credit was identified and posted to the grant after the FNS-798 grant close out report was submitted in February 2024. The credit was largely due to overcharges of costs for a Software License Agreement that was not allowable to the grant. The adjustment to record the credit to the grant posted in June 2024. Although DOH had identified and recorded the adjustment, DOH did not update the FNS-798 grant close out report which was necessary to return the corresponding federal funds to the USDA. DOH indicated that it is in the process of generating an updated FNS-798 report to enable the funds to be returned. Criteria: 2 CFR Section 200.303, Internal controls, states: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of the Sponsoring Organizations of the Treadway Commission (COSO). Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. 2 CFR Section 200.405, Allowable costs, states: a) Allocable costs in general. A cost is allocable to a Federal award or other cost objective if the cost is assignable to that Federal award or other cost objective in accordance with the relative benefits received. This standard is met if the cost satisfies any of the following criteria: Finding 2024 ¬– 006: (continued) (1) Is incurred specifically for the Federal award; (2) Benefits both the Federal award and other work of the recipient or subrecipient and can be distributed in proportions that may be approximated using reasonable methods; or (3) Is necessary to the overall operation of the recipient or subrecipient and is assignable in part to the Federal award in accordance with these cost principles. 2 CFR Section 200.406, Applicable credits, states: (a) Applicable credits refer to transactions that offset or reduce direct or indirect costs allocable to a Federal award. Examples of such transactions are purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the recipient or subrecipient relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. Cause: DOH was not aware of the overcharges at the time of grant closeout. Management subsequently became aware of the costs and credited the federal grant expenditures but did not recognize the FNS-798 report needed adjusted to facilitate the return of the federal funds. Effect: DOH had unallowable costs expended within grant Y23172 that were not identified until after the grant was closed. The unallowable costs were later credited to the grant causing cumulative revenues to exceed cumulative expenditures for the grant. The federal funds were not properly returned to the USDA. Recommendation: We recommend that DOH implement formal policies and procedures to prevent and detect any unallowable costs to ensure timely and accurate grant close out procedures. If adjustments are necessary after a grant is closed, procedures should include amending the FNS-798 report at the time of posting the adjustments. Furthermore, DOH should submit an updated FNS-798 report and return the $95 thousand of federal funds to USDA. Agency Response: DOH agrees with this finding. Questioned Costs: None
Department of Health Finding 2024 ¬– 006: ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) A Significant Deficiency and Noncompliance Exist at the Department of Health Related to Activities Allowed or Unallowed, Allowable Costs/Costs Principles Federal Grant Number(s) and Year(s): 231PA705W1003 (10/01/2022-9/30/2023), 241PA705W1003 (10/01/2023-9/30/2024) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Condition: The Pennsylvania Department of Health (DOH) administers and monitors the WIC Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) which provides assistance to low-income families for supplemental foods, education, and social services. WIC funds are received via federal grants from the United States Department of Agriculture (USDA) to meet these needs. The Pennsylvania DOH is responsible for ensuring that granted funds are used for allowable costs and grant provisions are followed. WIC administrative grant Y23172 closed on September 30, 2023. The audit procedures disclosed that the closed grant had federal revenues that exceeded federal expenditures by approximately $95 thousand. DOH indicated that a credit was identified and posted to the grant after the FNS-798 grant close out report was submitted in February 2024. The credit was largely due to overcharges of costs for a Software License Agreement that was not allowable to the grant. The adjustment to record the credit to the grant posted in June 2024. Although DOH had identified and recorded the adjustment, DOH did not update the FNS-798 grant close out report which was necessary to return the corresponding federal funds to the USDA. DOH indicated that it is in the process of generating an updated FNS-798 report to enable the funds to be returned. Criteria: 2 CFR Section 200.303, Internal controls, states: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of the Sponsoring Organizations of the Treadway Commission (COSO). Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. 2 CFR Section 200.405, Allowable costs, states: a) Allocable costs in general. A cost is allocable to a Federal award or other cost objective if the cost is assignable to that Federal award or other cost objective in accordance with the relative benefits received. This standard is met if the cost satisfies any of the following criteria: Finding 2024 ¬– 006: (continued) (1) Is incurred specifically for the Federal award; (2) Benefits both the Federal award and other work of the recipient or subrecipient and can be distributed in proportions that may be approximated using reasonable methods; or (3) Is necessary to the overall operation of the recipient or subrecipient and is assignable in part to the Federal award in accordance with these cost principles. 2 CFR Section 200.406, Applicable credits, states: (a) Applicable credits refer to transactions that offset or reduce direct or indirect costs allocable to a Federal award. Examples of such transactions are purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the recipient or subrecipient relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. Cause: DOH was not aware of the overcharges at the time of grant closeout. Management subsequently became aware of the costs and credited the federal grant expenditures but did not recognize the FNS-798 report needed adjusted to facilitate the return of the federal funds. Effect: DOH had unallowable costs expended within grant Y23172 that were not identified until after the grant was closed. The unallowable costs were later credited to the grant causing cumulative revenues to exceed cumulative expenditures for the grant. The federal funds were not properly returned to the USDA. Recommendation: We recommend that DOH implement formal policies and procedures to prevent and detect any unallowable costs to ensure timely and accurate grant close out procedures. If adjustments are necessary after a grant is closed, procedures should include amending the FNS-798 report at the time of posting the adjustments. Furthermore, DOH should submit an updated FNS-798 report and return the $95 thousand of federal funds to USDA. Agency Response: DOH agrees with this finding. Questioned Costs: None
Condition: Reconciliation of the HAF client assistance expenditures for the year ended June 30, 2023, revealed approximately $290,000 of federal funds were held by a vendor contracted to process and disburse client assistance and were reported as federal expenditures. This amount had increased to $433,522 by October 26, 2023. The funds were offset against assistance payments processed by the vendor on November 14, 2023. During the operation of the program, the vendor received refunds of client assistance that were not timely remitted to DSHA or utilized to fund assistance. A similar finding was noted during the audit of the year ended June 30, 2023. Refer to finding 2023-006. Criteria: The Uniform Guidance Cost Principles requires DSHA to offset credits against program expenditures in 2 CFR 200.406(a): Applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the Federal award as direct or indirect (F&A) costs. Examples of such transactions are purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. Questioned Costs: $433,522 Effect: The funds held by the vendor were initially recorded as program costs. Cause: DSHA was notified, by the vendor, that a credit was available to be applied to fund future assistance. The vendor did not apply the credit without DSHA’s explicit approval, which was not granted until November 14, 2023. Recommendation: We recommend DSHA review the design and implementation of internal controls to address the identified weaknesses in internal control.
2024-002 (2023-001) – Equipment and Real Property Management – Material Weakness in Internal Controls over Compliance (Repeat Finding) Federal Program Information: Funding Agency: U. S. Department of Health and Human Services Title: Head Start CFDA Number: 93.600 Federal Award Identification number: 06CH012005 Pass Through Entity: N/A Award Year: 2024 & 2023 Condition: The Organization did not conduct a physical inventory in current year or prior year and, in additional, requested reimbursement from the Department of Health and Human services for repair costs for which insurance proceeds were received. 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 entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.313(d)(2), a physical inventory of program property must be taken and the results reconciled with the property records at least once every 2 years. 2 CFR 200.406 requires that any recoveries on losses, such as insurance proceeds, be credited to the Federal award as a cost reduction or a cash refund. Questioned costs: $16,033 Effect: The Organization could dispose of, lose, or encumber federally funded equipment without following Federal guidelines. Cause: The Organization does not have policies and procedures to ensure that a physical inventory of equipment is performed at a minimum frequency of every two years. Additionally, the Entity filed a claim for damages to asset(s) purchased with Federal funds and did not offset the insurance proceeds against the repair costs charged to the Federal program, resulting in reimbursement of unallowable costs.
2024-002 (2023-001) – Equipment and Real Property Management – Material Weakness in Internal Controls over Compliance (Repeat Finding) Federal Program Information: Funding Agency: U. S. Department of Health and Human Services Title: Head Start CFDA Number: 93.600 Federal Award Identification number: 06CH012005 Pass Through Entity: N/A Award Year: 2024 & 2023 Condition: The Organization did not conduct a physical inventory in current year or prior year and, in additional, requested reimbursement from the Department of Health and Human services for repair costs for which insurance proceeds were received. 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 entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.313(d)(2), a physical inventory of program property must be taken and the results reconciled with the property records at least once every 2 years. 2 CFR 200.406 requires that any recoveries on losses, such as insurance proceeds, be credited to the Federal award as a cost reduction or a cash refund. Questioned costs: $16,033 Effect: The Organization could dispose of, lose, or encumber federally funded equipment without following Federal guidelines. Cause: The Organization does not have policies and procedures to ensure that a physical inventory of equipment is performed at a minimum frequency of every two years. Additionally, the Entity filed a claim for damages to asset(s) purchased with Federal funds and did not offset the insurance proceeds against the repair costs charged to the Federal program, resulting in reimbursement of unallowable costs.
2023 001 Activities Allowed or Unallowed and Allowable Costs/ Cost Principles U.S. Department of Homeland Security: Passed through the State of New Jersey, Department of Law and Public Safety: Disaster Grants – Public Assistance (Presidentially Declared Disasters) – ALN 97.036 Federal Grant Numbers and Years State of New Jersey pass-through number: UH1WX Project Worksheet #1822 – October 5, 2021 to March 5, 2022 (Application 553330) Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Prior Year Findings: None Criteria Compliance – Program Specific The Federal Emergency Management Agency (FEMA), as part of the U.S. Department of Homeland Security, evaluates the eligibility of all costs claimed by the applicant. Not all costs incurred as a result of the incident are eligible. (PAPPG v4) Chapter 4, page(s) 51-54; Chapter 6, page(s) 65 & 93-95. Cost must be: • Directly tied to the performance of eligible work; • Adequately documented (2 CFR section 200.403(g)); • Reduced by all applicable credits, such as insurance proceeds and salvage values (Stafford Act section 312, 42 USC section 5155, and 2 CFR section 200.406); • Authorized and not prohibited under federal, state, territorial, tribal, or local government laws or regulations; • Consistent with applicant’s internal policies, regulations, and procedures that apply uniformly to both federal awards and other activities of the applicant; and • Necessary and reasonable to accomplish the work properly and efficiently (2 CFR section 200.403). 1. Applicant (Force Account) Labor FEMA refers to the applicant’s personnel as “force account.” FEMA reimburses force account labor based on actual hourly rates plus the cost of the employee’s actual fringe benefits. FEMA calculates the fringe benefit cost based on a percentage of the hourly pay rate. Because certain items in a benefit package are not dependent on hours worked (e.g., health insurance), the percentage for overtime is usually different than the percentage for straight-time. Compliance – General Per 2 CFR Section 200.430, charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally assisted and all other activities compensated by the non-federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-federal entity. Internal Control Per 2 CFR section 200.303(a), a non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition and Context The New Jersey Turnpike Authority (the “Authority”), through the State of New Jersey, Department of Homeland Security (the State), administers the federal Disaster Grants – Public Assistance (Presidentially Declared Disasters) program and is reimbursed for eligible expenditures when a presidentially declared disaster occurs. For the Authority’s force account labor costs, the Authority utilizes manual Daily Worksheets (timesheets) as the official records for time and effort worked during an event by the Authority’s personnel. These timesheets are then entered into the Authority’s information system (PeopleSoft) for review and approval, reconciling back to the information entered on the respective timesheet. For two of forty timesheets selected for testwork, the Authority was unable to provide the timesheets as the official record for the time and effort charged to the federal program. However, the Authority successfully demonstrated through PeopleSoft system that the time and effort charged to the federal program was properly reviewed and approved and reconciled to the amounts of reimbursement requested from the State. Cause The Authority did not maintain and make readily available certain timesheets used as the official record for the time and effort charged to the federal program in accordance with the Uniform Guidance. Effect The Authority did not comply with 2 CFR Section 200.430 related to incorporating the physical timesheets into the official records of the Authority. Questioned Costs None as the time and effort amounts charged were determined to be allowable. Recommendation We recommend that the Authority strengthen its processes to ensure that all timesheets for disaster related events that are federally funded are maintained and are made readily available if subject to audit or other inspection in accordance with the Uniform Guidance. Views of Responsible Officials Management agrees with the finding. We are committed to strengthening our processes to ensure that all physical timesheets related to FEMA-declared disaster events are properly maintained and readily accessible. To achieve this, we will implement enhanced procedures and controls to ensure full compliance with the Uniform Guidance requirements.
2023-001 Finding – Federal Award Type: Allowable Costs – Significant Deficiency in Internal Control Over Compliance. Identification of Federal Program: Head Start Cluster: AL Number: 93.600 Head Start Criteria / Requirement: Allowable costs per 2 CFR section 200.406(a) Applicable Credits, states that to the extent that credits are received related to allowable costs, they must be credited to the Federal award either as a cost reduction or a cash refund, as appropriate. The cost principles define credits as purchase discounts, rebates or allowances, recoveries on losses, insurance refunds, and adjustments of overpayments. Condition / Context: During the audit it was brought to our attention that Oregon Child Development Coalition, Inc. earns rewards on a credit card used in purchasing goods and services utilizing federal dollars. Although the credit card account is held in the Organization’s name, the individual card is issued utilizing the employee’s name. Per inquiry, it was noted that these rewards had not been credited as a reduction of costs charged to federal programs. The amount associated with the rebates has been determined to not be material for the year ended December 31, 2023. Cause: Oregon Child Development Coalition’s Credit Card Policy does not address rebates associated with earned rewards points on credit cards. Policies and procedures are not in place to ensure that the Organization is appropriately applying credits as a reduction of federal costs. Effect: Failure to maintain sufficient policies and procedures for credit cards rebates may result in non‐compliance with the provisions of applicable requirements of the federal award. Questioned Costs: none Recommendation: The Organization should establish more defined written policies and procedures regarding credit card rebates that are in line with Uniform Guidance requirements, as well as establish organizational controls to ensure that such policies and procedures are being followed. Management’s response: Management understands that a significant deficiency in internal controls over compliance has been identified. We concur with the finding and initiated a Corrective Action Plan to address it. We place the utmost importance on the summary of the auditor’s results and are working to improve the strength of our internal controls over compliance.
2023 001 Activities Allowed or Unallowed and Allowable Costs/ Cost Principles U.S. Department of Homeland Security: Passed through the State of New Jersey, Department of Law and Public Safety: Disaster Grants – Public Assistance (Presidentially Declared Disasters) – ALN 97.036 Federal Grant Numbers and Years State of New Jersey pass-through number: UH1WX Project Worksheet #1822 – October 5, 2021 to March 5, 2022 (Application 553330) Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Prior Year Findings: None Criteria Compliance – Program Specific The Federal Emergency Management Agency (FEMA), as part of the U.S. Department of Homeland Security, evaluates the eligibility of all costs claimed by the applicant. Not all costs incurred as a result of the incident are eligible. (PAPPG v4) Chapter 4, page(s) 51-54; Chapter 6, page(s) 65 & 93-95. Cost must be: • Directly tied to the performance of eligible work; • Adequately documented (2 CFR section 200.403(g)); • Reduced by all applicable credits, such as insurance proceeds and salvage values (Stafford Act section 312, 42 USC section 5155, and 2 CFR section 200.406); • Authorized and not prohibited under federal, state, territorial, tribal, or local government laws or regulations; • Consistent with applicant’s internal policies, regulations, and procedures that apply uniformly to both federal awards and other activities of the applicant; and • Necessary and reasonable to accomplish the work properly and efficiently (2 CFR section 200.403). 1. Applicant (Force Account) Labor FEMA refers to the applicant’s personnel as “force account.” FEMA reimburses force account labor based on actual hourly rates plus the cost of the employee’s actual fringe benefits. FEMA calculates the fringe benefit cost based on a percentage of the hourly pay rate. Because certain items in a benefit package are not dependent on hours worked (e.g., health insurance), the percentage for overtime is usually different than the percentage for straight-time. Compliance – General Per 2 CFR Section 200.430, charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally assisted and all other activities compensated by the non-federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-federal entity. Internal Control Per 2 CFR section 200.303(a), a non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition and Context The New Jersey Turnpike Authority (the “Authority”), through the State of New Jersey, Department of Homeland Security (the State), administers the federal Disaster Grants – Public Assistance (Presidentially Declared Disasters) program and is reimbursed for eligible expenditures when a presidentially declared disaster occurs. For the Authority’s force account labor costs, the Authority utilizes manual Daily Worksheets (timesheets) as the official records for time and effort worked during an event by the Authority’s personnel. These timesheets are then entered into the Authority’s information system (PeopleSoft) for review and approval, reconciling back to the information entered on the respective timesheet. For two of forty timesheets selected for testwork, the Authority was unable to provide the timesheets as the official record for the time and effort charged to the federal program. However, the Authority successfully demonstrated through PeopleSoft system that the time and effort charged to the federal program was properly reviewed and approved and reconciled to the amounts of reimbursement requested from the State. Cause The Authority did not maintain and make readily available certain timesheets used as the official record for the time and effort charged to the federal program in accordance with the Uniform Guidance. Effect The Authority did not comply with 2 CFR Section 200.430 related to incorporating the physical timesheets into the official records of the Authority. Questioned Costs None as the time and effort amounts charged were determined to be allowable. Recommendation We recommend that the Authority strengthen its processes to ensure that all timesheets for disaster related events that are federally funded are maintained and are made readily available if subject to audit or other inspection in accordance with the Uniform Guidance. Views of Responsible Officials Management agrees with the finding. We are committed to strengthening our processes to ensure that all physical timesheets related to FEMA-declared disaster events are properly maintained and readily accessible. To achieve this, we will implement enhanced procedures and controls to ensure full compliance with the Uniform Guidance requirements.
2023-001 Finding – Federal Award Type: Allowable Costs – Significant Deficiency in Internal Control Over Compliance. Identification of Federal Program: Head Start Cluster: AL Number: 93.600 Head Start Criteria / Requirement: Allowable costs per 2 CFR section 200.406(a) Applicable Credits, states that to the extent that credits are received related to allowable costs, they must be credited to the Federal award either as a cost reduction or a cash refund, as appropriate. The cost principles define credits as purchase discounts, rebates or allowances, recoveries on losses, insurance refunds, and adjustments of overpayments. Condition / Context: During the audit it was brought to our attention that Oregon Child Development Coalition, Inc. earns rewards on a credit card used in purchasing goods and services utilizing federal dollars. Although the credit card account is held in the Organization’s name, the individual card is issued utilizing the employee’s name. Per inquiry, it was noted that these rewards had not been credited as a reduction of costs charged to federal programs. The amount associated with the rebates has been determined to not be material for the year ended December 31, 2023. Cause: Oregon Child Development Coalition’s Credit Card Policy does not address rebates associated with earned rewards points on credit cards. Policies and procedures are not in place to ensure that the Organization is appropriately applying credits as a reduction of federal costs. Effect: Failure to maintain sufficient policies and procedures for credit cards rebates may result in non‐compliance with the provisions of applicable requirements of the federal award. Questioned Costs: none Recommendation: The Organization should establish more defined written policies and procedures regarding credit card rebates that are in line with Uniform Guidance requirements, as well as establish organizational controls to ensure that such policies and procedures are being followed. Management’s response: Management understands that a significant deficiency in internal controls over compliance has been identified. We concur with the finding and initiated a Corrective Action Plan to address it. We place the utmost importance on the summary of the auditor’s results and are working to improve the strength of our internal controls over compliance.
United States Department of the Treasury Reference Number: 2023-006 Program: 21.026 COVID-19 Homeowner Assistance Fund Program Federal Award Number: HAF0034 Type of Finding: Noncompliance; Significant Deficiency in Internal Controls over Compliance Compliance Requirement: Allowable Cost Condition: Reconciliation of the HAF client assistance expenditures for the year ended June 30, 2023, revealed approximately $290,000 of federal funds were held by a vendor and were reported as federal expenditures. During the operation of the program, the vendor received refunds that were not timely remitted to DSHA or utilized to fund assistance. Criteria: The Uniform Guidance Cost Principles requires DSHA to offset credits against program expenditures in 2 CFR 200.406(a): Applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the Federal award as direct or indirect (F&A) costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. Questioned Costs: $290,000. The funds held by the vendor were initially recorded as program costs. During the audit of the year ended June 30, 2023, program costs and revenue were reduced by an audit adjusting journal entry for the amount held by DSHA’s vendor. Effect: Unallowed costs were recorded to the Homeowner Assistance Fund Program during the year ended June 30, 2023. Cause: DSHA was notified by the vendor that a credit was available to be applied to fund future assistance. The vendor did not apply the credit without DSHA’s explicit approval. Recommendation: We recommend DSHA review the design and implementation of internal controls to address the identified weaknesses in internal control.
United States Department of the Treasury Reference Number: 2023-006 Program: 21.026 COVID-19 Homeowner Assistance Fund Program Federal Award Number: HAF0034 Type of Finding: Noncompliance; Significant Deficiency in Internal Controls over Compliance Compliance Requirement: Allowable Cost Condition: Reconciliation of the HAF client assistance expenditures for the year ended June 30, 2023, revealed approximately $290,000 of federal funds were held by a vendor and were reported as federal expenditures. During the operation of the program, the vendor received refunds that were not timely remitted to DSHA or utilized to fund assistance. Criteria: The Uniform Guidance Cost Principles requires DSHA to offset credits against program expenditures in 2 CFR 200.406(a): Applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the Federal award as direct or indirect (F&A) costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. Questioned Costs: $290,000. The funds held by the vendor were initially recorded as program costs. During the audit of the year ended June 30, 2023, program costs and revenue were reduced by an audit adjusting journal entry for the amount held by DSHA’s vendor. Effect: Unallowed costs were recorded to the Homeowner Assistance Fund Program during the year ended June 30, 2023. Cause: DSHA was notified by the vendor that a credit was available to be applied to fund future assistance. The vendor did not apply the credit without DSHA’s explicit approval. Recommendation: We recommend DSHA review the design and implementation of internal controls to address the identified weaknesses in internal control.
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.241 Program: Housing Opportunities for Persons with AIDS, COVID-19 Housing Opportunities for Persons with AIDS Award/Pass-Through Entity Identifying Numbers: 558951 Criteria: The Uniform Guidance in 2 CFR §200.406 requires that non-Federal entities receiving Federal awards must reduce the funds requested by any applicable credits. Per 2 CFR §200.406 Applicable Credits: “(a) Applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the Federal award as direct or indirect (F&A) costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate.” Condition: During our testing over nonpayroll costs, for one out of 60 selections, the Village requested reimbursement for an eligible expenditure. However, the item was reimbursed by the vendor through a credit to the Village’s account from an item previously reimbursed. The original credit was required to be returned to the grantor upon receipt. Cause: The Village did not maintain internal control procedures to ensure that credits reduced the funds requested. Effect or Potential Effect: The Village charged through expenditures that were not appropriately reduced by vendor credits, which could result in disallowances or costs reimbursed in excess of costs incurred. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Village’s compliance with specified requirements not using a statistically valid sample. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend the Village implements internal controls to ensure any credits are not requested for reimbursement or are refunded, as appropriate, to the Federal agency. Views of Responsible Officials: Management agrees with the finding. Management will enhance and enforce existing policies over the proper treatment of credit memos obtained and the timely return of funds to the grantor.
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.241 Program: Housing Opportunities for Persons with AIDS, COVID-19 Housing Opportunities for Persons with AIDS Award/Pass-Through Entity Identifying Numbers: 558951 Criteria: The Uniform Guidance in 2 CFR §200.406 requires that non-Federal entities receiving Federal awards must reduce the funds requested by any applicable credits. Per 2 CFR §200.406 Applicable Credits: “(a) Applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the Federal award as direct or indirect (F&A) costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate.” Condition: During our testing over nonpayroll costs, for one out of 60 selections, the Village requested reimbursement for an eligible expenditure. However, the item was reimbursed by the vendor through a credit to the Village’s account from an item previously reimbursed. The original credit was required to be returned to the grantor upon receipt. Cause: The Village did not maintain internal control procedures to ensure that credits reduced the funds requested. Effect or Potential Effect: The Village charged through expenditures that were not appropriately reduced by vendor credits, which could result in disallowances or costs reimbursed in excess of costs incurred. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Village’s compliance with specified requirements not using a statistically valid sample. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend the Village implements internal controls to ensure any credits are not requested for reimbursement or are refunded, as appropriate, to the Federal agency. Views of Responsible Officials: Management agrees with the finding. Management will enhance and enforce existing policies over the proper treatment of credit memos obtained and the timely return of funds to the grantor.
Finding 2022-001: Noncompliance over activities allowed or unallowed, allowable costs/cost principles, and period of performance related to amounts reimbursed for project worksheets. Identification of the federal program: Assistance Listing Number 97.036: ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) ? U.S. Department of Homeland Security ? Federal award identification number: o Application titles: ? 662759 ? Emergency Work Group #2 ? 662754 ? Emergency Work Group #2 o Application numbers: ? PA-06-LA-4611-PW-01437 ? PA-06-LA-4611-PW-01457 ? Federal award year: o August 29, 2021 to October 10, 2021 o October 11, 2021 to April 17, 2022 ? Pass-through entity ? State of Louisiana Governor?s Office of Homeland Security and Emergency Preparedness Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR, Part 200, Section 200.84 ? Questioned costs states a questioned cost as either (a) which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for funds used to match Federal funds; (b) where the costs, at the time of the audit, are not supported by adequate documentation; or (c) where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. 2 CFR, Part 200, Section 200.406 ? Applicable credits states (a) applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the Federal award as direct or indirect costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. The Office of Management and Budget Compliance Supplement states the Federal Emergency Management Agency (FEMA) evaluates the eligibility of all costs claimed by the applicant. Not all costs incurred as a result of the incident are eligible. Costs must be: reduced by all applicable credits. Condition: During our testing over expenditures reimbursed by FEMA, we observed reported expenditures in the project worksheets were not reduced by all applicable credits resulting in an overstatement of the amount reimbursed by FEMA. Cause: Certain expenditures in the project worksheets submitted to FEMA for reimbursement were not reduced by all applicable credits. Effect or potential effect: Management was reimbursement by FEMA for expenditures that were not reduced by all applicable credits. Questioned costs: $99,285 ? Assistance Listing Number 97.036 ? Federal award identification number: o Application titles: ? 662759 ? Emergency Work Group #2 ? 662754 ? Emergency Work Group #2 o Application numbers: ? PA-06-LA-4611-PW-01437 ? PA-06-LA-4611-PW-01457 Questioned costs were computed by calculating the difference between the impacted expenditures submitted to FEMA in the amount of $923,105 and the expenditures value after reducing for all applicable credits in the amount of $823,820 resulting in $99,285. Context: During our testing over activities allowed or unallowed, allowable costs/cost principles, and period of performance, we obtained a listing of expenditures submitted for reimbursement to FEMA for the impacted project worksheets and observed 130 expenditures in the listing for a total value of $923,105 (total value factoring in the cost share was $888,900). We selected a sample of 21 for testing over activities allowed or unallowed and allowable costs/cost principals and a sample of 24 for testing over period of performance. There were certain expenditures identified in the sample selected that were not reduced for all applicable credits (i.e., the vendor provided a credit back to the entity for a previously paid invoice). Management evaluated the entire population of expenditures, and it was identified that $99,285 was the difference between the submitted expenditures value to FEMA and the expenditures value after reducing for all applicable credits. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that management refund the questioned costs to FEMA and ensure future project worksheets are reduced for all applicable credits. Views of responsible officials: Ochsner will reach out to FEMA/GOHSEP to self-report the issue and ask that these PWs be moved to closeout (this can be done because both PWs have been paid in full). Ochsner will also work with FEMA/GOHSEP to refund the total overpayment of $99,285 ? either via direct payment or reduction of future reimbursement under Ochsner?s other outstanding PWs with FEMA for COVID-19 and Hurricane Ida. For future FEMA claims, Ochsner will continue to work to ensure that PWs are reduced for all applicable credits using the most accurate information available ? either at the time the PWs are submitted or during closeout.
Finding 2022-001: Noncompliance over activities allowed or unallowed, allowable costs/cost principles, and period of performance related to amounts reimbursed for project worksheets. Identification of the federal program: Assistance Listing Number 97.036: ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) ? U.S. Department of Homeland Security ? Federal award identification number: o Application titles: ? 662759 ? Emergency Work Group #2 ? 662754 ? Emergency Work Group #2 o Application numbers: ? PA-06-LA-4611-PW-01437 ? PA-06-LA-4611-PW-01457 ? Federal award year: o August 29, 2021 to October 10, 2021 o October 11, 2021 to April 17, 2022 ? Pass-through entity ? State of Louisiana Governor?s Office of Homeland Security and Emergency Preparedness Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR, Part 200, Section 200.84 ? Questioned costs states a questioned cost as either (a) which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for funds used to match Federal funds; (b) where the costs, at the time of the audit, are not supported by adequate documentation; or (c) where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. 2 CFR, Part 200, Section 200.406 ? Applicable credits states (a) applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the Federal award as direct or indirect costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. The Office of Management and Budget Compliance Supplement states the Federal Emergency Management Agency (FEMA) evaluates the eligibility of all costs claimed by the applicant. Not all costs incurred as a result of the incident are eligible. Costs must be: reduced by all applicable credits. Condition: During our testing over expenditures reimbursed by FEMA, we observed reported expenditures in the project worksheets were not reduced by all applicable credits resulting in an overstatement of the amount reimbursed by FEMA. Cause: Certain expenditures in the project worksheets submitted to FEMA for reimbursement were not reduced by all applicable credits. Effect or potential effect: Management was reimbursement by FEMA for expenditures that were not reduced by all applicable credits. Questioned costs: $99,285 ? Assistance Listing Number 97.036 ? Federal award identification number: o Application titles: ? 662759 ? Emergency Work Group #2 ? 662754 ? Emergency Work Group #2 o Application numbers: ? PA-06-LA-4611-PW-01437 ? PA-06-LA-4611-PW-01457 Questioned costs were computed by calculating the difference between the impacted expenditures submitted to FEMA in the amount of $923,105 and the expenditures value after reducing for all applicable credits in the amount of $823,820 resulting in $99,285. Context: During our testing over activities allowed or unallowed, allowable costs/cost principles, and period of performance, we obtained a listing of expenditures submitted for reimbursement to FEMA for the impacted project worksheets and observed 130 expenditures in the listing for a total value of $923,105 (total value factoring in the cost share was $888,900). We selected a sample of 21 for testing over activities allowed or unallowed and allowable costs/cost principals and a sample of 24 for testing over period of performance. There were certain expenditures identified in the sample selected that were not reduced for all applicable credits (i.e., the vendor provided a credit back to the entity for a previously paid invoice). Management evaluated the entire population of expenditures, and it was identified that $99,285 was the difference between the submitted expenditures value to FEMA and the expenditures value after reducing for all applicable credits. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that management refund the questioned costs to FEMA and ensure future project worksheets are reduced for all applicable credits. Views of responsible officials: Ochsner will reach out to FEMA/GOHSEP to self-report the issue and ask that these PWs be moved to closeout (this can be done because both PWs have been paid in full). Ochsner will also work with FEMA/GOHSEP to refund the total overpayment of $99,285 ? either via direct payment or reduction of future reimbursement under Ochsner?s other outstanding PWs with FEMA for COVID-19 and Hurricane Ida. For future FEMA claims, Ochsner will continue to work to ensure that PWs are reduced for all applicable credits using the most accurate information available ? either at the time the PWs are submitted or during closeout.
Finding 2022-001: Noncompliance over activities allowed or unallowed, allowable costs/cost principles, and period of performance related to amounts reimbursed for project worksheets. Identification of the federal program: Assistance Listing Number 97.036: ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) ? U.S. Department of Homeland Security ? Federal award identification number: o Application titles: ? 662759 ? Emergency Work Group #2 ? 662754 ? Emergency Work Group #2 o Application numbers: ? PA-06-LA-4611-PW-01437 ? PA-06-LA-4611-PW-01457 ? Federal award year: o August 29, 2021 to October 10, 2021 o October 11, 2021 to April 17, 2022 ? Pass-through entity ? State of Louisiana Governor?s Office of Homeland Security and Emergency Preparedness Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR, Part 200, Section 200.84 ? Questioned costs states a questioned cost as either (a) which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for funds used to match Federal funds; (b) where the costs, at the time of the audit, are not supported by adequate documentation; or (c) where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. 2 CFR, Part 200, Section 200.406 ? Applicable credits states (a) applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the Federal award as direct or indirect costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. The Office of Management and Budget Compliance Supplement states the Federal Emergency Management Agency (FEMA) evaluates the eligibility of all costs claimed by the applicant. Not all costs incurred as a result of the incident are eligible. Costs must be: reduced by all applicable credits. Condition: During our testing over expenditures reimbursed by FEMA, we observed reported expenditures in the project worksheets were not reduced by all applicable credits resulting in an overstatement of the amount reimbursed by FEMA. Cause: Certain expenditures in the project worksheets submitted to FEMA for reimbursement were not reduced by all applicable credits. Effect or potential effect: Management was reimbursement by FEMA for expenditures that were not reduced by all applicable credits. Questioned costs: $99,285 ? Assistance Listing Number 97.036 ? Federal award identification number: o Application titles: ? 662759 ? Emergency Work Group #2 ? 662754 ? Emergency Work Group #2 o Application numbers: ? PA-06-LA-4611-PW-01437 ? PA-06-LA-4611-PW-01457 Questioned costs were computed by calculating the difference between the impacted expenditures submitted to FEMA in the amount of $923,105 and the expenditures value after reducing for all applicable credits in the amount of $823,820 resulting in $99,285. Context: During our testing over activities allowed or unallowed, allowable costs/cost principles, and period of performance, we obtained a listing of expenditures submitted for reimbursement to FEMA for the impacted project worksheets and observed 130 expenditures in the listing for a total value of $923,105 (total value factoring in the cost share was $888,900). We selected a sample of 21 for testing over activities allowed or unallowed and allowable costs/cost principals and a sample of 24 for testing over period of performance. There were certain expenditures identified in the sample selected that were not reduced for all applicable credits (i.e., the vendor provided a credit back to the entity for a previously paid invoice). Management evaluated the entire population of expenditures, and it was identified that $99,285 was the difference between the submitted expenditures value to FEMA and the expenditures value after reducing for all applicable credits. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that management refund the questioned costs to FEMA and ensure future project worksheets are reduced for all applicable credits. Views of responsible officials: Ochsner will reach out to FEMA/GOHSEP to self-report the issue and ask that these PWs be moved to closeout (this can be done because both PWs have been paid in full). Ochsner will also work with FEMA/GOHSEP to refund the total overpayment of $99,285 ? either via direct payment or reduction of future reimbursement under Ochsner?s other outstanding PWs with FEMA for COVID-19 and Hurricane Ida. For future FEMA claims, Ochsner will continue to work to ensure that PWs are reduced for all applicable credits using the most accurate information available ? either at the time the PWs are submitted or during closeout.
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.241 Program: Housing Opportunities for Persons with AIDS, COVID-19 Housing Opportunities for Persons with AIDS Award/Pass-Through Entity Identifying Numbers: 558951 Criteria: The Uniform Guidance in 2 CFR §200.406 requires that non-Federal entities receiving Federal awards must reduce the funds requested by any applicable credits. Per 2 CFR §200.406 Applicable Credits: “(a) Applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the Federal award as direct or indirect (F&A) costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate.” Condition: During our testing over nonpayroll costs, for one out of 60 selections, the Village requested reimbursement for an eligible expenditure. However, the item was reimbursed by the vendor through a credit to the Village’s account from an item previously reimbursed. The original credit was required to be returned to the grantor upon receipt. Cause: The Village did not maintain internal control procedures to ensure that credits reduced the funds requested. Effect or Potential Effect: The Village charged through expenditures that were not appropriately reduced by vendor credits, which could result in disallowances or costs reimbursed in excess of costs incurred. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Village’s compliance with specified requirements not using a statistically valid sample. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend the Village implements internal controls to ensure any credits are not requested for reimbursement or are refunded, as appropriate, to the Federal agency. Views of Responsible Officials: Management agrees with the finding. Management will enhance and enforce existing policies over the proper treatment of credit memos obtained and the timely return of funds to the grantor.
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.241 Program: Housing Opportunities for Persons with AIDS, COVID-19 Housing Opportunities for Persons with AIDS Award/Pass-Through Entity Identifying Numbers: 558951 Criteria: The Uniform Guidance in 2 CFR §200.406 requires that non-Federal entities receiving Federal awards must reduce the funds requested by any applicable credits. Per 2 CFR §200.406 Applicable Credits: “(a) Applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the Federal award as direct or indirect (F&A) costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate.” Condition: During our testing over nonpayroll costs, for one out of 60 selections, the Village requested reimbursement for an eligible expenditure. However, the item was reimbursed by the vendor through a credit to the Village’s account from an item previously reimbursed. The original credit was required to be returned to the grantor upon receipt. Cause: The Village did not maintain internal control procedures to ensure that credits reduced the funds requested. Effect or Potential Effect: The Village charged through expenditures that were not appropriately reduced by vendor credits, which could result in disallowances or costs reimbursed in excess of costs incurred. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Village’s compliance with specified requirements not using a statistically valid sample. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend the Village implements internal controls to ensure any credits are not requested for reimbursement or are refunded, as appropriate, to the Federal agency. Views of Responsible Officials: Management agrees with the finding. Management will enhance and enforce existing policies over the proper treatment of credit memos obtained and the timely return of funds to the grantor.
Finding 2022-001: Noncompliance over activities allowed or unallowed, allowable costs/cost principles, and period of performance related to amounts reimbursed for project worksheets. Identification of the federal program: Assistance Listing Number 97.036: ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) ? U.S. Department of Homeland Security ? Federal award identification number: o Application titles: ? 662759 ? Emergency Work Group #2 ? 662754 ? Emergency Work Group #2 o Application numbers: ? PA-06-LA-4611-PW-01437 ? PA-06-LA-4611-PW-01457 ? Federal award year: o August 29, 2021 to October 10, 2021 o October 11, 2021 to April 17, 2022 ? Pass-through entity ? State of Louisiana Governor?s Office of Homeland Security and Emergency Preparedness Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR, Part 200, Section 200.84 ? Questioned costs states a questioned cost as either (a) which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for funds used to match Federal funds; (b) where the costs, at the time of the audit, are not supported by adequate documentation; or (c) where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. 2 CFR, Part 200, Section 200.406 ? Applicable credits states (a) applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the Federal award as direct or indirect costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. The Office of Management and Budget Compliance Supplement states the Federal Emergency Management Agency (FEMA) evaluates the eligibility of all costs claimed by the applicant. Not all costs incurred as a result of the incident are eligible. Costs must be: reduced by all applicable credits. Condition: During our testing over expenditures reimbursed by FEMA, we observed reported expenditures in the project worksheets were not reduced by all applicable credits resulting in an overstatement of the amount reimbursed by FEMA. Cause: Certain expenditures in the project worksheets submitted to FEMA for reimbursement were not reduced by all applicable credits. Effect or potential effect: Management was reimbursement by FEMA for expenditures that were not reduced by all applicable credits. Questioned costs: $99,285 ? Assistance Listing Number 97.036 ? Federal award identification number: o Application titles: ? 662759 ? Emergency Work Group #2 ? 662754 ? Emergency Work Group #2 o Application numbers: ? PA-06-LA-4611-PW-01437 ? PA-06-LA-4611-PW-01457 Questioned costs were computed by calculating the difference between the impacted expenditures submitted to FEMA in the amount of $923,105 and the expenditures value after reducing for all applicable credits in the amount of $823,820 resulting in $99,285. Context: During our testing over activities allowed or unallowed, allowable costs/cost principles, and period of performance, we obtained a listing of expenditures submitted for reimbursement to FEMA for the impacted project worksheets and observed 130 expenditures in the listing for a total value of $923,105 (total value factoring in the cost share was $888,900). We selected a sample of 21 for testing over activities allowed or unallowed and allowable costs/cost principals and a sample of 24 for testing over period of performance. There were certain expenditures identified in the sample selected that were not reduced for all applicable credits (i.e., the vendor provided a credit back to the entity for a previously paid invoice). Management evaluated the entire population of expenditures, and it was identified that $99,285 was the difference between the submitted expenditures value to FEMA and the expenditures value after reducing for all applicable credits. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that management refund the questioned costs to FEMA and ensure future project worksheets are reduced for all applicable credits. Views of responsible officials: Ochsner will reach out to FEMA/GOHSEP to self-report the issue and ask that these PWs be moved to closeout (this can be done because both PWs have been paid in full). Ochsner will also work with FEMA/GOHSEP to refund the total overpayment of $99,285 ? either via direct payment or reduction of future reimbursement under Ochsner?s other outstanding PWs with FEMA for COVID-19 and Hurricane Ida. For future FEMA claims, Ochsner will continue to work to ensure that PWs are reduced for all applicable credits using the most accurate information available ? either at the time the PWs are submitted or during closeout.
Finding 2022-001: Noncompliance over activities allowed or unallowed, allowable costs/cost principles, and period of performance related to amounts reimbursed for project worksheets. Identification of the federal program: Assistance Listing Number 97.036: ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) ? U.S. Department of Homeland Security ? Federal award identification number: o Application titles: ? 662759 ? Emergency Work Group #2 ? 662754 ? Emergency Work Group #2 o Application numbers: ? PA-06-LA-4611-PW-01437 ? PA-06-LA-4611-PW-01457 ? Federal award year: o August 29, 2021 to October 10, 2021 o October 11, 2021 to April 17, 2022 ? Pass-through entity ? State of Louisiana Governor?s Office of Homeland Security and Emergency Preparedness Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR, Part 200, Section 200.84 ? Questioned costs states a questioned cost as either (a) which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for funds used to match Federal funds; (b) where the costs, at the time of the audit, are not supported by adequate documentation; or (c) where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. 2 CFR, Part 200, Section 200.406 ? Applicable credits states (a) applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the Federal award as direct or indirect costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. The Office of Management and Budget Compliance Supplement states the Federal Emergency Management Agency (FEMA) evaluates the eligibility of all costs claimed by the applicant. Not all costs incurred as a result of the incident are eligible. Costs must be: reduced by all applicable credits. Condition: During our testing over expenditures reimbursed by FEMA, we observed reported expenditures in the project worksheets were not reduced by all applicable credits resulting in an overstatement of the amount reimbursed by FEMA. Cause: Certain expenditures in the project worksheets submitted to FEMA for reimbursement were not reduced by all applicable credits. Effect or potential effect: Management was reimbursement by FEMA for expenditures that were not reduced by all applicable credits. Questioned costs: $99,285 ? Assistance Listing Number 97.036 ? Federal award identification number: o Application titles: ? 662759 ? Emergency Work Group #2 ? 662754 ? Emergency Work Group #2 o Application numbers: ? PA-06-LA-4611-PW-01437 ? PA-06-LA-4611-PW-01457 Questioned costs were computed by calculating the difference between the impacted expenditures submitted to FEMA in the amount of $923,105 and the expenditures value after reducing for all applicable credits in the amount of $823,820 resulting in $99,285. Context: During our testing over activities allowed or unallowed, allowable costs/cost principles, and period of performance, we obtained a listing of expenditures submitted for reimbursement to FEMA for the impacted project worksheets and observed 130 expenditures in the listing for a total value of $923,105 (total value factoring in the cost share was $888,900). We selected a sample of 21 for testing over activities allowed or unallowed and allowable costs/cost principals and a sample of 24 for testing over period of performance. There were certain expenditures identified in the sample selected that were not reduced for all applicable credits (i.e., the vendor provided a credit back to the entity for a previously paid invoice). Management evaluated the entire population of expenditures, and it was identified that $99,285 was the difference between the submitted expenditures value to FEMA and the expenditures value after reducing for all applicable credits. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that management refund the questioned costs to FEMA and ensure future project worksheets are reduced for all applicable credits. Views of responsible officials: Ochsner will reach out to FEMA/GOHSEP to self-report the issue and ask that these PWs be moved to closeout (this can be done because both PWs have been paid in full). Ochsner will also work with FEMA/GOHSEP to refund the total overpayment of $99,285 ? either via direct payment or reduction of future reimbursement under Ochsner?s other outstanding PWs with FEMA for COVID-19 and Hurricane Ida. For future FEMA claims, Ochsner will continue to work to ensure that PWs are reduced for all applicable credits using the most accurate information available ? either at the time the PWs are submitted or during closeout.
Finding 2022-001: Noncompliance over activities allowed or unallowed, allowable costs/cost principles, and period of performance related to amounts reimbursed for project worksheets. Identification of the federal program: Assistance Listing Number 97.036: ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) ? U.S. Department of Homeland Security ? Federal award identification number: o Application titles: ? 662759 ? Emergency Work Group #2 ? 662754 ? Emergency Work Group #2 o Application numbers: ? PA-06-LA-4611-PW-01437 ? PA-06-LA-4611-PW-01457 ? Federal award year: o August 29, 2021 to October 10, 2021 o October 11, 2021 to April 17, 2022 ? Pass-through entity ? State of Louisiana Governor?s Office of Homeland Security and Emergency Preparedness Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR, Part 200, Section 200.84 ? Questioned costs states a questioned cost as either (a) which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for funds used to match Federal funds; (b) where the costs, at the time of the audit, are not supported by adequate documentation; or (c) where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. 2 CFR, Part 200, Section 200.406 ? Applicable credits states (a) applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the Federal award as direct or indirect costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. The Office of Management and Budget Compliance Supplement states the Federal Emergency Management Agency (FEMA) evaluates the eligibility of all costs claimed by the applicant. Not all costs incurred as a result of the incident are eligible. Costs must be: reduced by all applicable credits. Condition: During our testing over expenditures reimbursed by FEMA, we observed reported expenditures in the project worksheets were not reduced by all applicable credits resulting in an overstatement of the amount reimbursed by FEMA. Cause: Certain expenditures in the project worksheets submitted to FEMA for reimbursement were not reduced by all applicable credits. Effect or potential effect: Management was reimbursement by FEMA for expenditures that were not reduced by all applicable credits. Questioned costs: $99,285 ? Assistance Listing Number 97.036 ? Federal award identification number: o Application titles: ? 662759 ? Emergency Work Group #2 ? 662754 ? Emergency Work Group #2 o Application numbers: ? PA-06-LA-4611-PW-01437 ? PA-06-LA-4611-PW-01457 Questioned costs were computed by calculating the difference between the impacted expenditures submitted to FEMA in the amount of $923,105 and the expenditures value after reducing for all applicable credits in the amount of $823,820 resulting in $99,285. Context: During our testing over activities allowed or unallowed, allowable costs/cost principles, and period of performance, we obtained a listing of expenditures submitted for reimbursement to FEMA for the impacted project worksheets and observed 130 expenditures in the listing for a total value of $923,105 (total value factoring in the cost share was $888,900). We selected a sample of 21 for testing over activities allowed or unallowed and allowable costs/cost principals and a sample of 24 for testing over period of performance. There were certain expenditures identified in the sample selected that were not reduced for all applicable credits (i.e., the vendor provided a credit back to the entity for a previously paid invoice). Management evaluated the entire population of expenditures, and it was identified that $99,285 was the difference between the submitted expenditures value to FEMA and the expenditures value after reducing for all applicable credits. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that management refund the questioned costs to FEMA and ensure future project worksheets are reduced for all applicable credits. Views of responsible officials: Ochsner will reach out to FEMA/GOHSEP to self-report the issue and ask that these PWs be moved to closeout (this can be done because both PWs have been paid in full). Ochsner will also work with FEMA/GOHSEP to refund the total overpayment of $99,285 ? either via direct payment or reduction of future reimbursement under Ochsner?s other outstanding PWs with FEMA for COVID-19 and Hurricane Ida. For future FEMA claims, Ochsner will continue to work to ensure that PWs are reduced for all applicable credits using the most accurate information available ? either at the time the PWs are submitted or during closeout.
2022-002 ? Insurance payments not fully deducted from FEMA funding Cluster: Not applicable Grantor: U.S. Department of Homeland Security Award Names: COVID-19 Disaster Grants - Public Assistance (Presidentially Declared Disasters) Award Year: January 20, 2020 ? July 1, 2022 Award Number: 4496DR-MA Assistance Listing Numbers: 97.036 Pass-through entity: Massachusetts Emergency Management Agency (?MEMA?) Criteria FEMA guidance indicates that costs incurred as a result of an incident must be reduced by all applicable credits, such as insurance proceeds and salvage values (Stafford Act section 312, 42 USC section 5155 and 2 CFR section 200.406) Condition Through our testing of 60 direct costs associated with the System?s FEMA projects that were obligated in fiscal year 2022, 6 transactions totaling $1.4M were tested related to COVID-19 PCR tests that were purchased by the System from 2 vendors. These tests were administered to patients and System personnel and to the extent eligible, they were billed to the patients? or employees? third-party insurance company. As such, when compiling information for their FEMA application, the System completed an analysis showing total PCR tests purchased and the associated cost and deducted third-party insurance payments received associated with these PCR tests. The System calculated the third-party insurance deduction by developing an average third-party insurance payment rate per test. When performing our review of the average third-party insurance payment calculation, we noted management inappropriately included employee PCR tests not subject to reimbursement in the calculation of the average rate per test. As a result, management used an estimated average rate per test of $79 to calculate the third-party insurance deduction instead of an estimated average rate per test of $84. The impact of the change in average rate per test results in the System understating the third-party insurance payments by approximately $218,000. Cause Management?s review of the calculation did not identify the formula error in the calculation of the average payment rate per reimbursed PCR test. Effect The System?s FEMA application was overstated, resulting in an overpayment by FEMA related to the System?s PCR tests. Questioned Costs $218,000 Recommendation We recommend that management enhance their controls over the review of their third-party insurance payment calculation to ensure the accuracy of the information provided to FEMA. Additionally, we understand management continues to have conversations with MEMA over different aspects of the third-party insurance payment calculation and we recommend through those discussions the System, along with MEMA and FEMA, as applicable, determine whether there are any amounts that should be reimbursed to FEMA. Management?s Views and Corrective Action Plan Management?s Views and Corrective Action Plan are included at the end of this report after the summary schedule of prior audit findings and status.
Statement of Condition: We found issues with 22 of the 60 expenses reviewed, totaling $18,363.61 that were either incorrectly charged to the program or the invoice could not be located. The following table provides specific details on the noted exceptions/questioned costs. Criteria: Financial records, supporting documents and all other non-Federal entity records pertinent to a Federal Award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of submission of the quarterly or annual report, respectively. Further, 2 CFR 200 Subpart E, Cost Principles section 200.406 Applicable credits states “Applicable credits refer to transactions that offset or reduce direct or indirect costs allocable to a federal award. To the extent that such credits accruing to or received by the recipient relate to allowable costs, they must be credited to the Federal award as either a cost reduction or cash refund, as appropriate.” Effect of Condition: Failure to ensure only allowable and properly supported expenses are charged to the program reduces funding availability for allowable grant activities. Cause of Condition: With respect to those invoices that could not be located, the organization internal audit department reviewed those invoices as part of their audit and the documents could not be located for this audit. In regard to the unallowable expenditures, these relate to gifts in kind, and management was unaware of the regulations relating to applicable credits when filling out the SF-425. Recommendation: As previously recommended by the OBO, the organization should update policies and procedures surrounding the award programs cost allowability to ensure unallowable costs are not charged to the program. Further, it should provide training to staff on updated policies, Federal and Grant Per Diem Program cost allowability requirements, proper expense documentation and retention procedures. Views of Responsible Officials: The organization agrees with the finding. Please refer to corrective action plan on page 47. FY 2022 Expenses Sample # GL Expense Description Issue Questioned Costs 10 Food and Beverage Lack of supporting documentation $333.17 11 Food and Beverage Lack of supporting documentation $277.73 25-44 Specific Assistance to Individuals Unallowable expenditures $17,752.71 Total $18,363.61
2022-002 ? Insurance payments not fully deducted from FEMA funding Cluster: Not applicable Grantor: U.S. Department of Homeland Security Award Names: COVID-19 Disaster Grants - Public Assistance (Presidentially Declared Disasters) Award Year: January 20, 2020 ? July 1, 2022 Award Number: 4496DR-MA Assistance Listing Numbers: 97.036 Pass-through entity: Massachusetts Emergency Management Agency (?MEMA?) Criteria FEMA guidance indicates that costs incurred as a result of an incident must be reduced by all applicable credits, such as insurance proceeds and salvage values (Stafford Act section 312, 42 USC section 5155 and 2 CFR section 200.406) Condition Through our testing of 60 direct costs associated with the System?s FEMA projects that were obligated in fiscal year 2022, 6 transactions totaling $1.4M were tested related to COVID-19 PCR tests that were purchased by the System from 2 vendors. These tests were administered to patients and System personnel and to the extent eligible, they were billed to the patients? or employees? third-party insurance company. As such, when compiling information for their FEMA application, the System completed an analysis showing total PCR tests purchased and the associated cost and deducted third-party insurance payments received associated with these PCR tests. The System calculated the third-party insurance deduction by developing an average third-party insurance payment rate per test. When performing our review of the average third-party insurance payment calculation, we noted management inappropriately included employee PCR tests not subject to reimbursement in the calculation of the average rate per test. As a result, management used an estimated average rate per test of $79 to calculate the third-party insurance deduction instead of an estimated average rate per test of $84. The impact of the change in average rate per test results in the System understating the third-party insurance payments by approximately $218,000. Cause Management?s review of the calculation did not identify the formula error in the calculation of the average payment rate per reimbursed PCR test. Effect The System?s FEMA application was overstated, resulting in an overpayment by FEMA related to the System?s PCR tests. Questioned Costs $218,000 Recommendation We recommend that management enhance their controls over the review of their third-party insurance payment calculation to ensure the accuracy of the information provided to FEMA. Additionally, we understand management continues to have conversations with MEMA over different aspects of the third-party insurance payment calculation and we recommend through those discussions the System, along with MEMA and FEMA, as applicable, determine whether there are any amounts that should be reimbursed to FEMA. Management?s Views and Corrective Action Plan Management?s Views and Corrective Action Plan are included at the end of this report after the summary schedule of prior audit findings and status.
Statement of Condition: We found issues with 22 of the 60 expenses reviewed, totaling $18,363.61 that were either incorrectly charged to the program or the invoice could not be located. The following table provides specific details on the noted exceptions/questioned costs. Criteria: Financial records, supporting documents and all other non-Federal entity records pertinent to a Federal Award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of submission of the quarterly or annual report, respectively. Further, 2 CFR 200 Subpart E, Cost Principles section 200.406 Applicable credits states “Applicable credits refer to transactions that offset or reduce direct or indirect costs allocable to a federal award. To the extent that such credits accruing to or received by the recipient relate to allowable costs, they must be credited to the Federal award as either a cost reduction or cash refund, as appropriate.” Effect of Condition: Failure to ensure only allowable and properly supported expenses are charged to the program reduces funding availability for allowable grant activities. Cause of Condition: With respect to those invoices that could not be located, the organization internal audit department reviewed those invoices as part of their audit and the documents could not be located for this audit. In regard to the unallowable expenditures, these relate to gifts in kind, and management was unaware of the regulations relating to applicable credits when filling out the SF-425. Recommendation: As previously recommended by the OBO, the organization should update policies and procedures surrounding the award programs cost allowability to ensure unallowable costs are not charged to the program. Further, it should provide training to staff on updated policies, Federal and Grant Per Diem Program cost allowability requirements, proper expense documentation and retention procedures. Views of Responsible Officials: The organization agrees with the finding. Please refer to corrective action plan on page 47. FY 2022 Expenses Sample # GL Expense Description Issue Questioned Costs 10 Food and Beverage Lack of supporting documentation $333.17 11 Food and Beverage Lack of supporting documentation $277.73 25-44 Specific Assistance to Individuals Unallowable expenditures $17,752.71 Total $18,363.61
Assistance listing program: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) Assistance Listing Number: 84.425F Award identification number: P425F204999 Award period: September 29, 2020 to June 30, 2023 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control / Compliance Finding Type: Material Weakness Compliance requirement: Allowed Cost / Cost Principles Condition and context In testing compliance and internal controls over cost allowability / cost principles, we selected a sample of ten (10) transactions which amounted to $445,522 of HEERF Institutional aid funds expenditures. Our sample was a statistically valid sample. During our expenditure test, we noted the following deficiencies: a) In one transaction of a sample of ten (10) disbursements (10%) the vendor quote was not available for examination. The transaction amounted to $5,899. The Institution indicated that they followed the micro purchase threshold of $10,000 as defined in 48CFR Part 2, subpart 2.1. However, this determination was not properly documented. b) In two (2) transactions of our sample (20%) the cost per quote did not agree with the amount of the invoice. The amount invoiced in excess of the quote cost was $1,090. c) In three (3) transactions of our sample (30%) we did not find documentation that the equipment was received (date and the employee who received the item). We inquired the Institution?s Management about this matter, and they explained that the Institution does not have a formal procedure or form to document the receipt of goods. Management confirmed and represented us that the items were properly received. d) In one transaction of our sample (10%) the expenditure was related to the amount of lost revenue claimed by the Institution in the fiscal year 2021-22. Upon examination of the Institution analysis, we noted that the lost revenue was not properly determined because the following situations: 1. For the loss of revenue calculation, the Institution used the unaudited figures for the fiscal year ended July 31, 2021. 2. We noted that the Institution considered in its analysis revenue that was not in accordance with the program guidelines (transactions that were not reimbursable under the HEERF grant program). 3. We noted that the lost revenue determined by the Institution was incorrectly determined (lost revenue claimed was understated by approximately $80,000) as result of the net effect of the deficiencies 1 and 2, above. Criteria 2 CFR 200.302 (b) (3) and (7) require records that identify adequately the source and application of funds for federally funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income, and interest and be supported by source documentation. Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award. 2 CFR 200.303 (a) to (d) establish that the non-Federal entity must: (a) 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. 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. 2 CFR 200.400 (a) to (d) establish that the application of these cost principles is based on the fundamental premises that: (a) The non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices. (b) The non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. (c) The non-Federal entity, in recognition of its own unique combination of staff, facilities, and experience, has the primary responsibility for employing whatever form of sound organization and management techniques may be necessary in order to assure proper and efficient administration of the Federal award. (d) The application of these cost principles should require no significant changes in the internal accounting policies and practices of the non-Federal entity. However, the accounting practices of the non-Federal entity must be consistent with these cost principles and support the accumulation of costs as required by the principles and must provide for adequate documentation to support costs charged to the Federal awards. 2 CFR 200.403, related to factors affecting allowability of cost, (c) and (g) establish that except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity, and be adequately documented. 2 CFR 200.404 establishes that a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award; (b) the restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award; (c) market prices for comparable goods or services for the geographic area; (d) whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government; and (e) whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost. 2 CFR 200.406 (a) establishes that applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the Federal awards as direct or indirect (F&A) costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. 2 CFR 200.334 establishes that financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. 2 CFR 200.337 (a) establishes that the Federal awarding agency, Inspectors General, the Comptroller General of the United States, and the pass-through entity, or any of their authorized representatives, must have the right of access to any documents, papers, or other records of the non-Federal entity which are pertinent to the Federal award, in order to make audits, examinations, excerpts, and transcripts. The right also includes timely and reasonable access to the non-Federal entity's personnel for the purpose of interview and discussion related to such documents. The Higher Education Emergency Relief Fund (HEERF I, II, and III) Lost Revenue Frequently Asked Questions (FAQs) published on March 19, 2021, in question number four establishes that sources of lost revenue that are not reimbursable under the HEERF grant programs include the following: capital outlays associated with facilities related to athletics (including fees assessed for capital athletic facility construction), acquisition of real property (including bond revenue), contributions or donations to the institution, marketing or recruitment activities, revenue related to sectarian instruction or religious worship, alcohol sales, and investment income (including endowment and quasi-endowment revenue. Cause The cause of the deficiencies noted were the result of the following situations: a) Lack of written policies and procedures did not provide the Institution?s personnel responsible for the purchasing process a guidance on how to perform and document the purchase transactions under this federal program. b) The vendor invoice was not compared to the quote and no inquiries were made and/or documented explaining the cause of the difference. c) The Institution does not have formal and written procedures to document when materials and/or equipment are received by the Institution?s personnel. d) The Institution management did not consult or requested assistance from the Department of Education program coordinator to ascertain that the request was properly performed and to clarify questions related to the allowable revenue to be considered in the analysis. Also, the Institution failed to review the financial figures of the audited trial balance for 2021. Effect Noncompliance with the above-mentioned requirements could lead to administrative actions by the grantor. It could also be interpreted as a failure to manage federal awards in compliance with laws, regulations, and provisions of contracts and grant agreements. Also, the above conditions could result in the reimbursement of federal funds to the grantors for those disbursements not properly supported and reviewed by the Institution?s management. Questioned costs Refer to finding 2022-010. Identification as a Repeat Finding No repeated finding. Recommendations We recommend the Institution to establish adequate procedures and controls, which shall consider, among others, the following: ? Maintain adequate documentation to support the allowability of its expenditures. ? Purchases must be properly documented to provide the appropriate audit trail of the transactions and allow proper review of the transactions. Adequate documentation should be sufficient to explain the Institution?s analysis and determination. ? Improve its policies and procedures, and internal controls to incorporate the comparison of the vendor invoices with the quotes after the invoice is received to ascertain that expenses and liabilities are properly recorded. Instruct personnel of accounts payable to contact the vendor when discrepancies are identified and document in writing the inquiry performed, the results, and conclusions. ? Implement a formal process with receiving reports or checklist where upon receipt of equipment and/or materials purchased could detail description, amount received, date of receipt, and a reference to the invoice. Copies of the receiving reports and invoices should then be forwarded to the accounting department for processing. Payment of a vendor?s invoice should not be made unless a copy of a receiving report is attached. ? The Institution management should review the Loss of Revenue claims and/or analysis performed by any employee or consultant that was designated to perform such a task. The Institution?s management should verify and ascertain that the analysis performed using the Institution?s financial information agree with the Institution?s audited financial statements. ? The Institution?s management should consult with the US Department of Education program coordinator when questions or concerns arise, especially if management is not familiar with program regulations and/or the federal program is new. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
Assistance listing program: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) Assistance Listing Number: 84.425F Award identification number: P425F204999 Award period: September 29, 2020 to June 30, 2023 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control / Compliance Finding Type: Material Weakness Compliance requirement: Allowed Cost / Cost Principles Condition and context In testing compliance and internal controls over cost allowability / cost principles, we selected a sample of ten (10) transactions which amounted to $445,522 of HEERF Institutional aid funds expenditures. Our sample was a statistically valid sample. During our expenditure test, we noted the following deficiencies: a) In one transaction of a sample of ten (10) disbursements (10%) the vendor quote was not available for examination. The transaction amounted to $5,899. The Institution indicated that they followed the micro purchase threshold of $10,000 as defined in 48CFR Part 2, subpart 2.1. However, this determination was not properly documented. b) In two (2) transactions of our sample (20%) the cost per quote did not agree with the amount of the invoice. The amount invoiced in excess of the quote cost was $1,090. c) In three (3) transactions of our sample (30%) we did not find documentation that the equipment was received (date and the employee who received the item). We inquired the Institution?s Management about this matter, and they explained that the Institution does not have a formal procedure or form to document the receipt of goods. Management confirmed and represented us that the items were properly received. d) In one transaction of our sample (10%) the expenditure was related to the amount of lost revenue claimed by the Institution in the fiscal year 2021-22. Upon examination of the Institution analysis, we noted that the lost revenue was not properly determined because the following situations: 1. For the loss of revenue calculation, the Institution used the unaudited figures for the fiscal year ended July 31, 2021. 2. We noted that the Institution considered in its analysis revenue that was not in accordance with the program guidelines (transactions that were not reimbursable under the HEERF grant program). 3. We noted that the lost revenue determined by the Institution was incorrectly determined (lost revenue claimed was understated by approximately $80,000) as result of the net effect of the deficiencies 1 and 2, above. Criteria 2 CFR 200.302 (b) (3) and (7) require records that identify adequately the source and application of funds for federally funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income, and interest and be supported by source documentation. Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award. 2 CFR 200.303 (a) to (d) establish that the non-Federal entity must: (a) 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. 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. 2 CFR 200.400 (a) to (d) establish that the application of these cost principles is based on the fundamental premises that: (a) The non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices. (b) The non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. (c) The non-Federal entity, in recognition of its own unique combination of staff, facilities, and experience, has the primary responsibility for employing whatever form of sound organization and management techniques may be necessary in order to assure proper and efficient administration of the Federal award. (d) The application of these cost principles should require no significant changes in the internal accounting policies and practices of the non-Federal entity. However, the accounting practices of the non-Federal entity must be consistent with these cost principles and support the accumulation of costs as required by the principles and must provide for adequate documentation to support costs charged to the Federal awards. 2 CFR 200.403, related to factors affecting allowability of cost, (c) and (g) establish that except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity, and be adequately documented. 2 CFR 200.404 establishes that a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award; (b) the restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award; (c) market prices for comparable goods or services for the geographic area; (d) whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government; and (e) whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost. 2 CFR 200.406 (a) establishes that applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the Federal awards as direct or indirect (F&A) costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. 2 CFR 200.334 establishes that financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. 2 CFR 200.337 (a) establishes that the Federal awarding agency, Inspectors General, the Comptroller General of the United States, and the pass-through entity, or any of their authorized representatives, must have the right of access to any documents, papers, or other records of the non-Federal entity which are pertinent to the Federal award, in order to make audits, examinations, excerpts, and transcripts. The right also includes timely and reasonable access to the non-Federal entity's personnel for the purpose of interview and discussion related to such documents. The Higher Education Emergency Relief Fund (HEERF I, II, and III) Lost Revenue Frequently Asked Questions (FAQs) published on March 19, 2021, in question number four establishes that sources of lost revenue that are not reimbursable under the HEERF grant programs include the following: capital outlays associated with facilities related to athletics (including fees assessed for capital athletic facility construction), acquisition of real property (including bond revenue), contributions or donations to the institution, marketing or recruitment activities, revenue related to sectarian instruction or religious worship, alcohol sales, and investment income (including endowment and quasi-endowment revenue. Cause The cause of the deficiencies noted were the result of the following situations: a) Lack of written policies and procedures did not provide the Institution?s personnel responsible for the purchasing process a guidance on how to perform and document the purchase transactions under this federal program. b) The vendor invoice was not compared to the quote and no inquiries were made and/or documented explaining the cause of the difference. c) The Institution does not have formal and written procedures to document when materials and/or equipment are received by the Institution?s personnel. d) The Institution management did not consult or requested assistance from the Department of Education program coordinator to ascertain that the request was properly performed and to clarify questions related to the allowable revenue to be considered in the analysis. Also, the Institution failed to review the financial figures of the audited trial balance for 2021. Effect Noncompliance with the above-mentioned requirements could lead to administrative actions by the grantor. It could also be interpreted as a failure to manage federal awards in compliance with laws, regulations, and provisions of contracts and grant agreements. Also, the above conditions could result in the reimbursement of federal funds to the grantors for those disbursements not properly supported and reviewed by the Institution?s management. Questioned costs Refer to finding 2022-010. Identification as a Repeat Finding No repeated finding. Recommendations We recommend the Institution to establish adequate procedures and controls, which shall consider, among others, the following: ? Maintain adequate documentation to support the allowability of its expenditures. ? Purchases must be properly documented to provide the appropriate audit trail of the transactions and allow proper review of the transactions. Adequate documentation should be sufficient to explain the Institution?s analysis and determination. ? Improve its policies and procedures, and internal controls to incorporate the comparison of the vendor invoices with the quotes after the invoice is received to ascertain that expenses and liabilities are properly recorded. Instruct personnel of accounts payable to contact the vendor when discrepancies are identified and document in writing the inquiry performed, the results, and conclusions. ? Implement a formal process with receiving reports or checklist where upon receipt of equipment and/or materials purchased could detail description, amount received, date of receipt, and a reference to the invoice. Copies of the receiving reports and invoices should then be forwarded to the accounting department for processing. Payment of a vendor?s invoice should not be made unless a copy of a receiving report is attached. ? The Institution management should review the Loss of Revenue claims and/or analysis performed by any employee or consultant that was designated to perform such a task. The Institution?s management should verify and ascertain that the analysis performed using the Institution?s financial information agree with the Institution?s audited financial statements. ? The Institution?s management should consult with the US Department of Education program coordinator when questions or concerns arise, especially if management is not familiar with program regulations and/or the federal program is new. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
2022-001 Federal Agency: U.S. Small Business Administration Federal Program Title: Shuttered Venue Operators Grant Assistance Listing Number: 59.075 Award Period: July 1, 2021 ? June 30, 2022 Type of Finding: Other Matter and Significant Deficiency over Internal Control over Compliance Criteria: Funds applied to the SVOG award must follow 2 CFR 200 Subpart E, Cost Principles. Within 200.406 of the cost principles, it states: Applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the federal award as direct or indirect (F&A) costs. To the extent that such credits accruing to or received by the nonfederal entity relate to allowable costs, they must be credited to the federal award either as a cost reduction or cash refund, as appropriate. Condition: Carolina Ballet received reimbursement for the full amount of an expenditure for which they received a discount. Questioned costs: None. Context: During our testing of 60 samples, CLA noted 1 item listed on Carolina Ballet?s supporting detail of expenditures internally allocated to the SVOG grant funding which did not reflect as net of an early payment discount of approximately $4,400. This resulted in the supporting detail of expenditures documentation provided to CLA being $4,400 less than the reported total for the line item. Carolina Ballet did have and submit once this was noted, additional allowable expenditures with supporting documentation available that could have been included on the supporting detail of expenditures to cover the amount of credit/discount that caused the difference. Cause: Carolina Ballet did not have a process in place to ensure any credit amounts were not applied to the grant. Effect: Carolina Ballet could apply an ineligible expenditure to the grant. Repeat Finding: No Recommendation: We recommend management implement a process to ensure expenditures applied to the grant are net of applicable credits (discounts). Views of responsible officials: Carolina Ballet management?s opinion is there were no deficiencies in internal control over compliance around oversight of allowable expenditures allocated to the SVOG grant funding. The finding is not a result of intentional inclusion of nonallowable expenditures, or a lack of internal control or oversight of expenditures. Carolina Ballet acknowledges the line-item transaction included in the supporting detail provided to the auditors resulted in the finding stating supporting detail submitted by Carolina Ballet staff did not reflect a discount which was applied at the time of payment for the allowable expenditure. This occurred due to Carolina Ballet?s internal process of recording an anticipated early payment discount/credit for this specific vendor in QuickBooks as a separate transaction, which subsequently did not reflect the net amount of the payment in the system report exported and used for data extraction. Due to the early payment discount credit not being applied in the SVOG line-item calculations, Carolina Ballet?s supporting detail did not include an additional allowable expenditure of the same type to cover the discount credit inadvertently omitted. Carolina Ballet submitted documentation to the auditors supporting the fact additional allocable expenditures (reflecting net amount) were available for inclusion in the detail over the amount of the discount on the transaction. Regarding the Cause in the finding noted above: There was an internal control process in place executed by the previous accounting management during the period covered by the grant to monitor expenses and make purchases in accordance with the planned use for the grant funding and to ensure they were allowable. There is internal evidence of this including the fact that the Director of Accounting during the grant period provided oversight for outgoing payments and applicable credits at Carolina Ballet. This same general process continues to exist currently. The CEO of Carolina Ballet approved and signed off on all payments for the listed expenditures, including review of credits applied during the grant period. There was a calculation error of a line-item amount referred to in the finding due to exclusion of an early payment discount credit for this single expenditure in the detail, such that Carolina Ballet didn?t include an additional eligible and allowable expenditure under the grant funding. This was an error in the detail listing, not a lack of internal control processes over the grant funded expenditures and credits. There were other credits applied to this payment, that were appropriate for consideration as payment that should not have and were not applied to the expenditure amount.
(1) Summary of Auditors? Results a. Type of report issued on whether the financial statements were prepared in accordance with generally accepted accounting principles: Unmodified b. Internal control deficiencies over financial reporting disclosed by the audit of the financial statements: ? Material weaknesses: No ? Significant deficiencies: None Reported c. Noncompliance material to the financial statements: No d. Internal control deficiencies over major programs disclosed by the audit: ? Material weaknesses: Yes ? Finding No. 2022-001 ? Significant deficiencies: None reported e. Type of report issued on compliance for major programs: Unmodified ? COVID-19 Testing for the Uninsured ? ALN 93.461 Qualified ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) ? ALN 97.036 f. Audit findings that are required to be reported in accordance with 2 CFR 200.516(a): Yes ? Finding No. 2022-001 g. Major programs: ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) ? ALN 97.036 ? COVID-19 Testing for the Uninsured ? ALN 93.461 h. Dollar threshold used to distinguish between Type A and Type B programs: $750,000 i. Auditee qualified as a low-risk auditee: No (2) Findings Relating to the Financial Statements Reported in Accordance with Government Auditing Standards None (3) Findings and Questioned Costs Relating to Federal Awards Finding 2022-001 Federal Agency: Department of Homeland Security Program Name: Disaster Grants ? Public Assistance (Presidentially Declared Disasters) Assistance Listing Number: 97.036 Federal Award Year: 7/1/2021 ? 6/30/2022 Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs, Special Tests and Provisions Criteria The terms and conditions for recipients of Disaster Grants ? Public Assistance (Presidentially Declared Disasters include the following: ? The Funds are utilized to perform emergency work, which is defined as ?Work that must be done immediately to save lives, protect improved property, protect public health and safety, or avert or lessen the threat of a major disaster? ? FEMA defines the eligibility of costs based on the following factors: ? Directly tied to the performance of eligible work ? Adequately documented (2 CFR section 200.403(g)) ? Reduced by all applicable credits, such as insurance proceeds and salvage values (Stafford Act section 312, 42 USC section 5155, and 2 CFR section 200.406) ? Authorized and not prohibited under federal, state, territorial, tribal, or local government laws or regulations ? Consistent with applicant?s internal policies, regulations, and procedures that apply uniformly to both federal awards and other activities of the applicant ? Necessary and reasonable to accomplish the work properly and efficient (2 CFR Section 200.403) ? For large projects, the subrecipient must make an accounting to the state. In submitting the accounting the entity is required to certify that reported costs were incurred in performance of eligible work, that the approved work was completed, that the project is in compliance with the provisions of the EMA-State Agreement. 2 CFR Section 200.406 states: Applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the Federal award as direct or indirect (F&A) costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. Condition, Including Perspective Meritus Medical Center, Inc. received Disaster Grant ? Public Assistance (Presidentially Declared Disasters) (referred to hereafter as the ?Program?) funds for the purpose of continuing to be able to adequately staff nurses as a result of the COVID-19 pandemic. Meritus Medical Center, Inc. originally reported approximately $3.8 million of funds received from the Program related to nursing costs directly related to COVID-19. Meritus Medical Center, Inc. identified that the report the Company used to identify contract nursing costs for nurses that had treated COVID-19 patients was incorrectly including certain costs that were not related to COVID-19. As a result, management updated the report parameters, which resulted in the identification of $572,189 of expenses originally submitted for reimbursement and received by the Company that were not allowable costs. Meritus Medical Center, Inc. is responsible for establishing controls to ensure the accuracy of eligible expenses reported to the award agency. There was a material weakness in internal controls related to identifying eligible nurses, which caused a material amount of unallowable expenses to be requested for reimbursement and received. Cause and Effect Management did not properly review the report parameters used to ensure accurate reporting of the eligible nurses for reimbursements. As such, this caused the Company to request and receive reimbursement for unallowable expenses. Questioned Costs The questioned costs are $572,189. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding This was not a repeat finding in the prior year. Recommendation We recommend that the Company establish controls to ensure that the expenses reported to the awarding agency only include allowable amounts. View of Responsible Officials Management agrees with the findings and has established controls to review report parameters and perform additional test work to ensure that only eligible expenses are reported to the awarding agency.
2022-001 Federal Agency: U.S. Small Business Administration Federal Program Title: Shuttered Venue Operators Grant Assistance Listing Number: 59.075 Award Period: July 1, 2022 ? June 30, 2022 Type of Finding: Other Matter and Significant Deficiency over Internal Control over Compliance Criteria: Funds applied to the SVOG award must follow 2 CFR 200 Subpart E, Cost Principles. Within 200.406 of the cost principles, it states: Applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the federal award as direct or indirect (F&A) costs. To the extent that such credits accruing to or received by the nonfederal entity relate to allowable costs, they must be credited to the federal award either as a cost reduction or cash refund, as appropriate. Condition: Marbles Kids Museum applied a $75 expenditure to the grant for which they were later refunded. Questioned costs: None Context: During our testing of 60 samples, we noted one item for a $76 expenditure that was returned and refunded to Marbles Kids Museum, however this expenditure was applied to the grant. Extrapolated to the entire population, an estimated $1,263 of expenditures would be incorrectly applied to the grant. Management has asserted this is the only instance of this issue. Cause: Marbles Kids Museum did not have a process in place to ensure credit amounts were not applied to the grant. Effect: Marbles Kids Museum could apply an ineligible expenditure to the grant. Repeat Finding: No Recommendation: We recommend management implement a process to ensure expenditures applied to the grant are net of applicable credits. Views of responsible officials: We agree with the auditor?s findings and have taken the following actions to improve our procedures. Federal grants awarded to Marbles Kids Museum are typically monitored by a team ? including individuals from accounting, development, and the learning and exhibits department ? which meets regularly to discuss progress on the grant and review expenses which are recorded under a unique account in the general ledger system. The Shuttered Venue Operators Grant differed from our usual federal grants in several respects: It allowed expenses that were incurred up to 15 months prior to the date of the award; the grant was not for a specific program but to cover specific operational costs to sustain the organization through the COVID-19 pandemic; and the grant was managed by the accounting department. The expense in question was for two items totaling $75 with one item being returned later for $38. We brought the error to the attention of the auditors as soon as it was discovered. Going forward all federal grants will be reviewed by a group consisting of at least two departments familiar with the expenses, with one department being the accounting department. In addition, all credits from vendors that are used for federal grants will be reviewed to confirm they are not related to items originally purchased for a federal grant. If the credit is related to an expense allocated to a federal grant the credit will be netted against the expense.
2022-001 Federal Agency: U.S. Small Business Administration Federal Program Title: Shuttered Venue Operators Grant Assistance Listing Number: 59.075 Award Period: July 1, 2021 ? June 30, 2022 Type of Finding: Other Matter and Significant Deficiency over Internal Control over Compliance Criteria: Funds applied to the SVOG award must follow 2 CFR 200 Subpart E, Cost Principles. Within 200.406 of the cost principles, it states: Applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the federal award as direct or indirect (F&A) costs. To the extent that such credits accruing to or received by the nonfederal entity relate to allowable costs, they must be credited to the federal award either as a cost reduction or cash refund, as appropriate. Condition: Carolina Ballet received reimbursement for the full amount of an expenditure for which they received a discount. Questioned costs: None. Context: During our testing of 60 samples, CLA noted 1 item listed on Carolina Ballet?s supporting detail of expenditures internally allocated to the SVOG grant funding which did not reflect as net of an early payment discount of approximately $4,400. This resulted in the supporting detail of expenditures documentation provided to CLA being $4,400 less than the reported total for the line item. Carolina Ballet did have and submit once this was noted, additional allowable expenditures with supporting documentation available that could have been included on the supporting detail of expenditures to cover the amount of credit/discount that caused the difference. Cause: Carolina Ballet did not have a process in place to ensure any credit amounts were not applied to the grant. Effect: Carolina Ballet could apply an ineligible expenditure to the grant. Repeat Finding: No Recommendation: We recommend management implement a process to ensure expenditures applied to the grant are net of applicable credits (discounts). Views of responsible officials: Carolina Ballet management?s opinion is there were no deficiencies in internal control over compliance around oversight of allowable expenditures allocated to the SVOG grant funding. The finding is not a result of intentional inclusion of nonallowable expenditures, or a lack of internal control or oversight of expenditures. Carolina Ballet acknowledges the line-item transaction included in the supporting detail provided to the auditors resulted in the finding stating supporting detail submitted by Carolina Ballet staff did not reflect a discount which was applied at the time of payment for the allowable expenditure. This occurred due to Carolina Ballet?s internal process of recording an anticipated early payment discount/credit for this specific vendor in QuickBooks as a separate transaction, which subsequently did not reflect the net amount of the payment in the system report exported and used for data extraction. Due to the early payment discount credit not being applied in the SVOG line-item calculations, Carolina Ballet?s supporting detail did not include an additional allowable expenditure of the same type to cover the discount credit inadvertently omitted. Carolina Ballet submitted documentation to the auditors supporting the fact additional allocable expenditures (reflecting net amount) were available for inclusion in the detail over the amount of the discount on the transaction. Regarding the Cause in the finding noted above: There was an internal control process in place executed by the previous accounting management during the period covered by the grant to monitor expenses and make purchases in accordance with the planned use for the grant funding and to ensure they were allowable. There is internal evidence of this including the fact that the Director of Accounting during the grant period provided oversight for outgoing payments and applicable credits at Carolina Ballet. This same general process continues to exist currently. The CEO of Carolina Ballet approved and signed off on all payments for the listed expenditures, including review of credits applied during the grant period. There was a calculation error of a line-item amount referred to in the finding due to exclusion of an early payment discount credit for this single expenditure in the detail, such that Carolina Ballet didn?t include an additional eligible and allowable expenditure under the grant funding. This was an error in the detail listing, not a lack of internal control processes over the grant funded expenditures and credits. There were other credits applied to this payment, that were appropriate for consideration as payment that should not have and were not applied to the expenditure amount.
(1) Summary of Auditors? Results a. Type of report issued on whether the financial statements were prepared in accordance with generally accepted accounting principles: Unmodified b. Internal control deficiencies over financial reporting disclosed by the audit of the financial statements: ? Material weaknesses: No ? Significant deficiencies: None Reported c. Noncompliance material to the financial statements: No d. Internal control deficiencies over major programs disclosed by the audit: ? Material weaknesses: Yes ? Finding No. 2022-001 ? Significant deficiencies: None reported e. Type of report issued on compliance for major programs: Unmodified ? COVID-19 Testing for the Uninsured ? ALN 93.461 Qualified ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) ? ALN 97.036 f. Audit findings that are required to be reported in accordance with 2 CFR 200.516(a): Yes ? Finding No. 2022-001 g. Major programs: ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) ? ALN 97.036 ? COVID-19 Testing for the Uninsured ? ALN 93.461 h. Dollar threshold used to distinguish between Type A and Type B programs: $750,000 i. Auditee qualified as a low-risk auditee: No (2) Findings Relating to the Financial Statements Reported in Accordance with Government Auditing Standards None (3) Findings and Questioned Costs Relating to Federal Awards Finding 2022-001 Federal Agency: Department of Homeland Security Program Name: Disaster Grants ? Public Assistance (Presidentially Declared Disasters) Assistance Listing Number: 97.036 Federal Award Year: 7/1/2021 ? 6/30/2022 Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs, Special Tests and Provisions Criteria The terms and conditions for recipients of Disaster Grants ? Public Assistance (Presidentially Declared Disasters include the following: ? The Funds are utilized to perform emergency work, which is defined as ?Work that must be done immediately to save lives, protect improved property, protect public health and safety, or avert or lessen the threat of a major disaster? ? FEMA defines the eligibility of costs based on the following factors: ? Directly tied to the performance of eligible work ? Adequately documented (2 CFR section 200.403(g)) ? Reduced by all applicable credits, such as insurance proceeds and salvage values (Stafford Act section 312, 42 USC section 5155, and 2 CFR section 200.406) ? Authorized and not prohibited under federal, state, territorial, tribal, or local government laws or regulations ? Consistent with applicant?s internal policies, regulations, and procedures that apply uniformly to both federal awards and other activities of the applicant ? Necessary and reasonable to accomplish the work properly and efficient (2 CFR Section 200.403) ? For large projects, the subrecipient must make an accounting to the state. In submitting the accounting the entity is required to certify that reported costs were incurred in performance of eligible work, that the approved work was completed, that the project is in compliance with the provisions of the EMA-State Agreement. 2 CFR Section 200.406 states: Applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the Federal award as direct or indirect (F&A) costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. Condition, Including Perspective Meritus Medical Center, Inc. received Disaster Grant ? Public Assistance (Presidentially Declared Disasters) (referred to hereafter as the ?Program?) funds for the purpose of continuing to be able to adequately staff nurses as a result of the COVID-19 pandemic. Meritus Medical Center, Inc. originally reported approximately $3.8 million of funds received from the Program related to nursing costs directly related to COVID-19. Meritus Medical Center, Inc. identified that the report the Company used to identify contract nursing costs for nurses that had treated COVID-19 patients was incorrectly including certain costs that were not related to COVID-19. As a result, management updated the report parameters, which resulted in the identification of $572,189 of expenses originally submitted for reimbursement and received by the Company that were not allowable costs. Meritus Medical Center, Inc. is responsible for establishing controls to ensure the accuracy of eligible expenses reported to the award agency. There was a material weakness in internal controls related to identifying eligible nurses, which caused a material amount of unallowable expenses to be requested for reimbursement and received. Cause and Effect Management did not properly review the report parameters used to ensure accurate reporting of the eligible nurses for reimbursements. As such, this caused the Company to request and receive reimbursement for unallowable expenses. Questioned Costs The questioned costs are $572,189. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding This was not a repeat finding in the prior year. Recommendation We recommend that the Company establish controls to ensure that the expenses reported to the awarding agency only include allowable amounts. View of Responsible Officials Management agrees with the findings and has established controls to review report parameters and perform additional test work to ensure that only eligible expenses are reported to the awarding agency.
2022-001 Federal Agency: U.S. Small Business Administration Federal Program Title: Shuttered Venue Operators Grant Assistance Listing Number: 59.075 Award Period: July 1, 2022 ? June 30, 2022 Type of Finding: Other Matter and Significant Deficiency over Internal Control over Compliance Criteria: Funds applied to the SVOG award must follow 2 CFR 200 Subpart E, Cost Principles. Within 200.406 of the cost principles, it states: Applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the federal award as direct or indirect (F&A) costs. To the extent that such credits accruing to or received by the nonfederal entity relate to allowable costs, they must be credited to the federal award either as a cost reduction or cash refund, as appropriate. Condition: Marbles Kids Museum applied a $75 expenditure to the grant for which they were later refunded. Questioned costs: None Context: During our testing of 60 samples, we noted one item for a $76 expenditure that was returned and refunded to Marbles Kids Museum, however this expenditure was applied to the grant. Extrapolated to the entire population, an estimated $1,263 of expenditures would be incorrectly applied to the grant. Management has asserted this is the only instance of this issue. Cause: Marbles Kids Museum did not have a process in place to ensure credit amounts were not applied to the grant. Effect: Marbles Kids Museum could apply an ineligible expenditure to the grant. Repeat Finding: No Recommendation: We recommend management implement a process to ensure expenditures applied to the grant are net of applicable credits. Views of responsible officials: We agree with the auditor?s findings and have taken the following actions to improve our procedures. Federal grants awarded to Marbles Kids Museum are typically monitored by a team ? including individuals from accounting, development, and the learning and exhibits department ? which meets regularly to discuss progress on the grant and review expenses which are recorded under a unique account in the general ledger system. The Shuttered Venue Operators Grant differed from our usual federal grants in several respects: It allowed expenses that were incurred up to 15 months prior to the date of the award; the grant was not for a specific program but to cover specific operational costs to sustain the organization through the COVID-19 pandemic; and the grant was managed by the accounting department. The expense in question was for two items totaling $75 with one item being returned later for $38. We brought the error to the attention of the auditors as soon as it was discovered. Going forward all federal grants will be reviewed by a group consisting of at least two departments familiar with the expenses, with one department being the accounting department. In addition, all credits from vendors that are used for federal grants will be reviewed to confirm they are not related to items originally purchased for a federal grant. If the credit is related to an expense allocated to a federal grant the credit will be netted against the expense.
2020-108 Lack of Controls over Costs Submitted for Reimbursement (initially reported 2020) Assistance Listing Number: 93.224 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Compliance Requirement: Activities Allowed, Allowable Costs and Period of Performance Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020) Finding Type: Significant Deficiency in Internal Control Known Questioned Costs: $0 Condition: The Organization included an invoice for reimbursement under the program for which a vendor credit memo for the full amount of the invoice had been received due to miscoding of the credit memo to the correct COVID-19 class on the general ledger. In addition, the Organization did not include an applicable invoice for COVID-19 expenses for reimbursement due to the same miscoding of the COVID-19 class to the general ledger. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Under compliance requirements for allowable costs 2 CFR section 200.405(a)(1) costs should be incurred specifically for the federal award, and 2 CFR section 200.406(a) to the extent credits accruing or received by the nonfederal entity relate to allowable costs, they must be credited to the federal award program either as a cost reduction or cash refund as appropriate. Cause: The Organization did not apply the credit memo or the invoice to the correct general ledger classification resulting in the credit memo and invoice being incorrectly included or not included in the reimbursement request. Effect: The Organization is not applying for reimbursement with the correct supporting documentation which could lead to a loss of grant funding. Recommendation: The Organization should review the posting of any credit memos or applicable invoices to ensure they are posted to the correct account/classification so that only allowable costs which were incurred during the period of performance are included on any reimbursement requests. Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. Management understands the importance of reviewing the posting of credit memos or applicable invoices to ensure they are posted correctly. We will update our policy to include a process for review of credit memos prior to posting. The planned corrective action for this finding is currently in the process of development, approval, and implementation.
2020-108 Lack of Controls over Costs Submitted for Reimbursement (initially reported 2020) Assistance Listing Number: 93.224 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Compliance Requirement: Activities Allowed, Allowable Costs and Period of Performance Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020) Finding Type: Significant Deficiency in Internal Control Known Questioned Costs: $0 Condition: The Organization included an invoice for reimbursement under the program for which a vendor credit memo for the full amount of the invoice had been received due to miscoding of the credit memo to the correct COVID-19 class on the general ledger. In addition, the Organization did not include an applicable invoice for COVID-19 expenses for reimbursement due to the same miscoding of the COVID-19 class to the general ledger. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Under compliance requirements for allowable costs 2 CFR section 200.405(a)(1) costs should be incurred specifically for the federal award, and 2 CFR section 200.406(a) to the extent credits accruing or received by the nonfederal entity relate to allowable costs, they must be credited to the federal award program either as a cost reduction or cash refund as appropriate. Cause: The Organization did not apply the credit memo or the invoice to the correct general ledger classification resulting in the credit memo and invoice being incorrectly included or not included in the reimbursement request. Effect: The Organization is not applying for reimbursement with the correct supporting documentation which could lead to a loss of grant funding. Recommendation: The Organization should review the posting of any credit memos or applicable invoices to ensure they are posted to the correct account/classification so that only allowable costs which were incurred during the period of performance are included on any reimbursement requests. Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. Management understands the importance of reviewing the posting of credit memos or applicable invoices to ensure they are posted correctly. We will update our policy to include a process for review of credit memos prior to posting. The planned corrective action for this finding is currently in the process of development, approval, and implementation.
2020-108 Lack of Controls over Costs Submitted for Reimbursement (initially reported 2020) Assistance Listing Number: 93.224 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Compliance Requirement: Activities Allowed, Allowable Costs and Period of Performance Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020) Finding Type: Significant Deficiency in Internal Control Known Questioned Costs: $0 Condition: The Organization included an invoice for reimbursement under the program for which a vendor credit memo for the full amount of the invoice had been received due to miscoding of the credit memo to the correct COVID-19 class on the general ledger. In addition, the Organization did not include an applicable invoice for COVID-19 expenses for reimbursement due to the same miscoding of the COVID-19 class to the general ledger. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Under compliance requirements for allowable costs 2 CFR section 200.405(a)(1) costs should be incurred specifically for the federal award, and 2 CFR section 200.406(a) to the extent credits accruing or received by the nonfederal entity relate to allowable costs, they must be credited to the federal award program either as a cost reduction or cash refund as appropriate. Cause: The Organization did not apply the credit memo or the invoice to the correct general ledger classification resulting in the credit memo and invoice being incorrectly included or not included in the reimbursement request. Effect: The Organization is not applying for reimbursement with the correct supporting documentation which could lead to a loss of grant funding. Recommendation: The Organization should review the posting of any credit memos or applicable invoices to ensure they are posted to the correct account/classification so that only allowable costs which were incurred during the period of performance are included on any reimbursement requests. Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. Management understands the importance of reviewing the posting of credit memos or applicable invoices to ensure they are posted correctly. We will update our policy to include a process for review of credit memos prior to posting. The planned corrective action for this finding is currently in the process of development, approval, and implementation.
2020-108 Lack of Controls over Costs Submitted for Reimbursement (initially reported 2020) Assistance Listing Number: 93.224 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Compliance Requirement: Activities Allowed, Allowable Costs and Period of Performance Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020) Finding Type: Significant Deficiency in Internal Control Known Questioned Costs: $0 Condition: The Organization included an invoice for reimbursement under the program for which a vendor credit memo for the full amount of the invoice had been received due to miscoding of the credit memo to the correct COVID-19 class on the general ledger. In addition, the Organization did not include an applicable invoice for COVID-19 expenses for reimbursement due to the same miscoding of the COVID-19 class to the general ledger. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Under compliance requirements for allowable costs 2 CFR section 200.405(a)(1) costs should be incurred specifically for the federal award, and 2 CFR section 200.406(a) to the extent credits accruing or received by the nonfederal entity relate to allowable costs, they must be credited to the federal award program either as a cost reduction or cash refund as appropriate. Cause: The Organization did not apply the credit memo or the invoice to the correct general ledger classification resulting in the credit memo and invoice being incorrectly included or not included in the reimbursement request. Effect: The Organization is not applying for reimbursement with the correct supporting documentation which could lead to a loss of grant funding. Recommendation: The Organization should review the posting of any credit memos or applicable invoices to ensure they are posted to the correct account/classification so that only allowable costs which were incurred during the period of performance are included on any reimbursement requests. Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. Management understands the importance of reviewing the posting of credit memos or applicable invoices to ensure they are posted correctly. We will update our policy to include a process for review of credit memos prior to posting. The planned corrective action for this finding is currently in the process of development, approval, and implementation.
2020-108 Lack of Controls over Costs Submitted for Reimbursement (initially reported 2020) Assistance Listing Number: 93.224 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Compliance Requirement: Activities Allowed, Allowable Costs and Period of Performance Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020) Finding Type: Significant Deficiency in Internal Control Known Questioned Costs: $0 Condition: The Organization included an invoice for reimbursement under the program for which a vendor credit memo for the full amount of the invoice had been received due to miscoding of the credit memo to the correct COVID-19 class on the general ledger. In addition, the Organization did not include an applicable invoice for COVID-19 expenses for reimbursement due to the same miscoding of the COVID-19 class to the general ledger. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Under compliance requirements for allowable costs 2 CFR section 200.405(a)(1) costs should be incurred specifically for the federal award, and 2 CFR section 200.406(a) to the extent credits accruing or received by the nonfederal entity relate to allowable costs, they must be credited to the federal award program either as a cost reduction or cash refund as appropriate. Cause: The Organization did not apply the credit memo or the invoice to the correct general ledger classification resulting in the credit memo and invoice being incorrectly included or not included in the reimbursement request. Effect: The Organization is not applying for reimbursement with the correct supporting documentation which could lead to a loss of grant funding. Recommendation: The Organization should review the posting of any credit memos or applicable invoices to ensure they are posted to the correct account/classification so that only allowable costs which were incurred during the period of performance are included on any reimbursement requests. Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. Management understands the importance of reviewing the posting of credit memos or applicable invoices to ensure they are posted correctly. We will update our policy to include a process for review of credit memos prior to posting. The planned corrective action for this finding is currently in the process of development, approval, and implementation.
2020-108 Lack of Controls over Costs Submitted for Reimbursement (initially reported 2020) Assistance Listing Number: 93.224 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Compliance Requirement: Activities Allowed, Allowable Costs and Period of Performance Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020) Finding Type: Significant Deficiency in Internal Control Known Questioned Costs: $0 Condition: The Organization included an invoice for reimbursement under the program for which a vendor credit memo for the full amount of the invoice had been received due to miscoding of the credit memo to the correct COVID-19 class on the general ledger. In addition, the Organization did not include an applicable invoice for COVID-19 expenses for reimbursement due to the same miscoding of the COVID-19 class to the general ledger. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Under compliance requirements for allowable costs 2 CFR section 200.405(a)(1) costs should be incurred specifically for the federal award, and 2 CFR section 200.406(a) to the extent credits accruing or received by the nonfederal entity relate to allowable costs, they must be credited to the federal award program either as a cost reduction or cash refund as appropriate. Cause: The Organization did not apply the credit memo or the invoice to the correct general ledger classification resulting in the credit memo and invoice being incorrectly included or not included in the reimbursement request. Effect: The Organization is not applying for reimbursement with the correct supporting documentation which could lead to a loss of grant funding. Recommendation: The Organization should review the posting of any credit memos or applicable invoices to ensure they are posted to the correct account/classification so that only allowable costs which were incurred during the period of performance are included on any reimbursement requests. Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. Management understands the importance of reviewing the posting of credit memos or applicable invoices to ensure they are posted correctly. We will update our policy to include a process for review of credit memos prior to posting. The planned corrective action for this finding is currently in the process of development, approval, and implementation.