2024-001 U.S. Department of Health and Human Services Passed-through the Texas Department of State Health Services FFAL #93.958 Mental Health Block Grant (Federal Award) (Contract numbers HHS000502700001, HHS001108400004, HHS001204800001, and H79SM085571-01) Health Community Collaboratives (State Award – No FFAL) Allowable Costs Cash Management Non-Material Noncompliance Significant Deficiency in Internal Control Criteria: Section 2 CFR 200.414 establishes that recipients and subrecipients that do not have a current Federal negotiated indirect cost rate (including provisional rate) may elect to charge a de minimis rate of up to 10 percent of modified total direct costs (MTDC). The recipient or subrecipient is authorized to determine the appropriate rate up to this limit. When applying the de minimis rate, costs must be consistently charged as either direct or indirect costs and may not be double charged or inconsistently charged as both. The de minimis rate does not require documentation to justify its use and may be used indefinitely. Once elected, the recipient or subrecipient must use the de minimis rate for all Federal awards until the recipient or subrecipient chooses to receive a negotiated rate. Per 2 CFR 200.1, modified total direct cost (MTDC) means all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $50,000 of each subaward (regardless of the period of performance of the subawards under the award). MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs, and the portion of each subaward in excess of $50,000. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs and with the approval of the cognizant agency for indirect costs. TxGMS follow this same guidance. Condition: The Center did not exclude charges for patient care when calculating modified total direct costs (MTDC). Cause: Due to the Center improperly calculating modified total direct costs (MTDC), an indirect rate other than the 10% de minimis indirect cost rate elected by the Center and allowed under the Uniform Guidance and TxGMS was being charged to and reimbursed by the federal and state grants. Effect: Insufficient procedures and internal controls over cash management resulted in noncompliance. Questioned Costs: Mental Health Block Grant – Total known questioned costs due to error in calculating MTDC amounted to $5,139. Projected or likely questioned costs as a result of the error are approximately $39,283. Healthy Community Collaboratives - Total known questioned costs due to error in calculating MTDC amounted to $26,426. Projected or likely questioned costs as a result of the error are approximately $88,200. Context/Sampling: Mental Health Block Grant – A nonstatistical sample of 3 out of 12 reimbursement requests for the fiscal year were selected for cash management testing. For the 3 reimbursements selected, we tested approximately $843,000 of reimbursements out of total reimbursements of approximately $5,850,000. Healthy Community Collaboratives - A nonstatistical sample of 3 out of 12 reimbursement requests for the fiscal year were selected for cash management testing. For the 3 reimbursements selected, we tested approximately $949,000 of reimbursements out of total reimbursements of approximately $2,750,000. Repeat Finding from Prior Years: No. Recommendation: We recommend that the Center establish and adhere to policies and procedures, including internal controls, to ensure compliance with cash management requirements as established by 2 CFR 200.414 and 2 CFR 200.1 and TxGMS. Views of Responsible Officials: Management agrees with the finding.
2024-001 U.S. Department of Health and Human Services Passed-through the Texas Department of State Health Services FFAL #93.958 Mental Health Block Grant (Federal Award) (Contract numbers HHS000502700001, HHS001108400004, HHS001204800001, and H79SM085571-01) Health Community Collaboratives (State Award – No FFAL) Allowable Costs Cash Management Non-Material Noncompliance Significant Deficiency in Internal Control Criteria: Section 2 CFR 200.414 establishes that recipients and subrecipients that do not have a current Federal negotiated indirect cost rate (including provisional rate) may elect to charge a de minimis rate of up to 10 percent of modified total direct costs (MTDC). The recipient or subrecipient is authorized to determine the appropriate rate up to this limit. When applying the de minimis rate, costs must be consistently charged as either direct or indirect costs and may not be double charged or inconsistently charged as both. The de minimis rate does not require documentation to justify its use and may be used indefinitely. Once elected, the recipient or subrecipient must use the de minimis rate for all Federal awards until the recipient or subrecipient chooses to receive a negotiated rate. Per 2 CFR 200.1, modified total direct cost (MTDC) means all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $50,000 of each subaward (regardless of the period of performance of the subawards under the award). MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs, and the portion of each subaward in excess of $50,000. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs and with the approval of the cognizant agency for indirect costs. TxGMS follow this same guidance. Condition: The Center did not exclude charges for patient care when calculating modified total direct costs (MTDC). Cause: Due to the Center improperly calculating modified total direct costs (MTDC), an indirect rate other than the 10% de minimis indirect cost rate elected by the Center and allowed under the Uniform Guidance and TxGMS was being charged to and reimbursed by the federal and state grants. Effect: Insufficient procedures and internal controls over cash management resulted in noncompliance. Questioned Costs: Mental Health Block Grant – Total known questioned costs due to error in calculating MTDC amounted to $5,139. Projected or likely questioned costs as a result of the error are approximately $39,283. Healthy Community Collaboratives - Total known questioned costs due to error in calculating MTDC amounted to $26,426. Projected or likely questioned costs as a result of the error are approximately $88,200. Context/Sampling: Mental Health Block Grant – A nonstatistical sample of 3 out of 12 reimbursement requests for the fiscal year were selected for cash management testing. For the 3 reimbursements selected, we tested approximately $843,000 of reimbursements out of total reimbursements of approximately $5,850,000. Healthy Community Collaboratives - A nonstatistical sample of 3 out of 12 reimbursement requests for the fiscal year were selected for cash management testing. For the 3 reimbursements selected, we tested approximately $949,000 of reimbursements out of total reimbursements of approximately $2,750,000. Repeat Finding from Prior Years: No. Recommendation: We recommend that the Center establish and adhere to policies and procedures, including internal controls, to ensure compliance with cash management requirements as established by 2 CFR 200.414 and 2 CFR 200.1 and TxGMS. Views of Responsible Officials: Management agrees with the finding.
2024-001 U.S. Department of Health and Human Services Passed-through the Texas Department of State Health Services FFAL #93.958 Mental Health Block Grant (Federal Award) (Contract numbers HHS000502700001, HHS001108400004, HHS001204800001, and H79SM085571-01) Health Community Collaboratives (State Award – No FFAL) Allowable Costs Cash Management Non-Material Noncompliance Significant Deficiency in Internal Control Criteria: Section 2 CFR 200.414 establishes that recipients and subrecipients that do not have a current Federal negotiated indirect cost rate (including provisional rate) may elect to charge a de minimis rate of up to 10 percent of modified total direct costs (MTDC). The recipient or subrecipient is authorized to determine the appropriate rate up to this limit. When applying the de minimis rate, costs must be consistently charged as either direct or indirect costs and may not be double charged or inconsistently charged as both. The de minimis rate does not require documentation to justify its use and may be used indefinitely. Once elected, the recipient or subrecipient must use the de minimis rate for all Federal awards until the recipient or subrecipient chooses to receive a negotiated rate. Per 2 CFR 200.1, modified total direct cost (MTDC) means all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $50,000 of each subaward (regardless of the period of performance of the subawards under the award). MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs, and the portion of each subaward in excess of $50,000. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs and with the approval of the cognizant agency for indirect costs. TxGMS follow this same guidance. Condition: The Center did not exclude charges for patient care when calculating modified total direct costs (MTDC). Cause: Due to the Center improperly calculating modified total direct costs (MTDC), an indirect rate other than the 10% de minimis indirect cost rate elected by the Center and allowed under the Uniform Guidance and TxGMS was being charged to and reimbursed by the federal and state grants. Effect: Insufficient procedures and internal controls over cash management resulted in noncompliance. Questioned Costs: Mental Health Block Grant – Total known questioned costs due to error in calculating MTDC amounted to $5,139. Projected or likely questioned costs as a result of the error are approximately $39,283. Healthy Community Collaboratives - Total known questioned costs due to error in calculating MTDC amounted to $26,426. Projected or likely questioned costs as a result of the error are approximately $88,200. Context/Sampling: Mental Health Block Grant – A nonstatistical sample of 3 out of 12 reimbursement requests for the fiscal year were selected for cash management testing. For the 3 reimbursements selected, we tested approximately $843,000 of reimbursements out of total reimbursements of approximately $5,850,000. Healthy Community Collaboratives - A nonstatistical sample of 3 out of 12 reimbursement requests for the fiscal year were selected for cash management testing. For the 3 reimbursements selected, we tested approximately $949,000 of reimbursements out of total reimbursements of approximately $2,750,000. Repeat Finding from Prior Years: No. Recommendation: We recommend that the Center establish and adhere to policies and procedures, including internal controls, to ensure compliance with cash management requirements as established by 2 CFR 200.414 and 2 CFR 200.1 and TxGMS. Views of Responsible Officials: Management agrees with the finding.
2024-001 U.S. Department of Health and Human Services Passed-through the Texas Department of State Health Services FFAL #93.958 Mental Health Block Grant (Federal Award) (Contract numbers HHS000502700001, HHS001108400004, HHS001204800001, and H79SM085571-01) Health Community Collaboratives (State Award – No FFAL) Allowable Costs Cash Management Non-Material Noncompliance Significant Deficiency in Internal Control Criteria: Section 2 CFR 200.414 establishes that recipients and subrecipients that do not have a current Federal negotiated indirect cost rate (including provisional rate) may elect to charge a de minimis rate of up to 10 percent of modified total direct costs (MTDC). The recipient or subrecipient is authorized to determine the appropriate rate up to this limit. When applying the de minimis rate, costs must be consistently charged as either direct or indirect costs and may not be double charged or inconsistently charged as both. The de minimis rate does not require documentation to justify its use and may be used indefinitely. Once elected, the recipient or subrecipient must use the de minimis rate for all Federal awards until the recipient or subrecipient chooses to receive a negotiated rate. Per 2 CFR 200.1, modified total direct cost (MTDC) means all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $50,000 of each subaward (regardless of the period of performance of the subawards under the award). MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs, and the portion of each subaward in excess of $50,000. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs and with the approval of the cognizant agency for indirect costs. TxGMS follow this same guidance. Condition: The Center did not exclude charges for patient care when calculating modified total direct costs (MTDC). Cause: Due to the Center improperly calculating modified total direct costs (MTDC), an indirect rate other than the 10% de minimis indirect cost rate elected by the Center and allowed under the Uniform Guidance and TxGMS was being charged to and reimbursed by the federal and state grants. Effect: Insufficient procedures and internal controls over cash management resulted in noncompliance. Questioned Costs: Mental Health Block Grant – Total known questioned costs due to error in calculating MTDC amounted to $5,139. Projected or likely questioned costs as a result of the error are approximately $39,283. Healthy Community Collaboratives - Total known questioned costs due to error in calculating MTDC amounted to $26,426. Projected or likely questioned costs as a result of the error are approximately $88,200. Context/Sampling: Mental Health Block Grant – A nonstatistical sample of 3 out of 12 reimbursement requests for the fiscal year were selected for cash management testing. For the 3 reimbursements selected, we tested approximately $843,000 of reimbursements out of total reimbursements of approximately $5,850,000. Healthy Community Collaboratives - A nonstatistical sample of 3 out of 12 reimbursement requests for the fiscal year were selected for cash management testing. For the 3 reimbursements selected, we tested approximately $949,000 of reimbursements out of total reimbursements of approximately $2,750,000. Repeat Finding from Prior Years: No. Recommendation: We recommend that the Center establish and adhere to policies and procedures, including internal controls, to ensure compliance with cash management requirements as established by 2 CFR 200.414 and 2 CFR 200.1 and TxGMS. Views of Responsible Officials: Management agrees with the finding.
2024-001 U.S. Department of Health and Human Services Passed-through the Texas Department of State Health Services FFAL #93.958 Mental Health Block Grant (Federal Award) (Contract numbers HHS000502700001, HHS001108400004, HHS001204800001, and H79SM085571-01) Health Community Collaboratives (State Award – No FFAL) Allowable Costs Cash Management Non-Material Noncompliance Significant Deficiency in Internal Control Criteria: Section 2 CFR 200.414 establishes that recipients and subrecipients that do not have a current Federal negotiated indirect cost rate (including provisional rate) may elect to charge a de minimis rate of up to 10 percent of modified total direct costs (MTDC). The recipient or subrecipient is authorized to determine the appropriate rate up to this limit. When applying the de minimis rate, costs must be consistently charged as either direct or indirect costs and may not be double charged or inconsistently charged as both. The de minimis rate does not require documentation to justify its use and may be used indefinitely. Once elected, the recipient or subrecipient must use the de minimis rate for all Federal awards until the recipient or subrecipient chooses to receive a negotiated rate. Per 2 CFR 200.1, modified total direct cost (MTDC) means all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $50,000 of each subaward (regardless of the period of performance of the subawards under the award). MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs, and the portion of each subaward in excess of $50,000. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs and with the approval of the cognizant agency for indirect costs. TxGMS follow this same guidance. Condition: The Center did not exclude charges for patient care when calculating modified total direct costs (MTDC). Cause: Due to the Center improperly calculating modified total direct costs (MTDC), an indirect rate other than the 10% de minimis indirect cost rate elected by the Center and allowed under the Uniform Guidance and TxGMS was being charged to and reimbursed by the federal and state grants. Effect: Insufficient procedures and internal controls over cash management resulted in noncompliance. Questioned Costs: Mental Health Block Grant – Total known questioned costs due to error in calculating MTDC amounted to $5,139. Projected or likely questioned costs as a result of the error are approximately $39,283. Healthy Community Collaboratives - Total known questioned costs due to error in calculating MTDC amounted to $26,426. Projected or likely questioned costs as a result of the error are approximately $88,200. Context/Sampling: Mental Health Block Grant – A nonstatistical sample of 3 out of 12 reimbursement requests for the fiscal year were selected for cash management testing. For the 3 reimbursements selected, we tested approximately $843,000 of reimbursements out of total reimbursements of approximately $5,850,000. Healthy Community Collaboratives - A nonstatistical sample of 3 out of 12 reimbursement requests for the fiscal year were selected for cash management testing. For the 3 reimbursements selected, we tested approximately $949,000 of reimbursements out of total reimbursements of approximately $2,750,000. Repeat Finding from Prior Years: No. Recommendation: We recommend that the Center establish and adhere to policies and procedures, including internal controls, to ensure compliance with cash management requirements as established by 2 CFR 200.414 and 2 CFR 200.1 and TxGMS. Views of Responsible Officials: Management agrees with the finding.
2024-001 U.S. Department of Health and Human Services Passed-through the Texas Department of State Health Services FFAL #93.958 Mental Health Block Grant (Federal Award) (Contract numbers HHS000502700001, HHS001108400004, HHS001204800001, and H79SM085571-01) Health Community Collaboratives (State Award – No FFAL) Allowable Costs Cash Management Non-Material Noncompliance Significant Deficiency in Internal Control Criteria: Section 2 CFR 200.414 establishes that recipients and subrecipients that do not have a current Federal negotiated indirect cost rate (including provisional rate) may elect to charge a de minimis rate of up to 10 percent of modified total direct costs (MTDC). The recipient or subrecipient is authorized to determine the appropriate rate up to this limit. When applying the de minimis rate, costs must be consistently charged as either direct or indirect costs and may not be double charged or inconsistently charged as both. The de minimis rate does not require documentation to justify its use and may be used indefinitely. Once elected, the recipient or subrecipient must use the de minimis rate for all Federal awards until the recipient or subrecipient chooses to receive a negotiated rate. Per 2 CFR 200.1, modified total direct cost (MTDC) means all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $50,000 of each subaward (regardless of the period of performance of the subawards under the award). MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs, and the portion of each subaward in excess of $50,000. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs and with the approval of the cognizant agency for indirect costs. TxGMS follow this same guidance. Condition: The Center did not exclude charges for patient care when calculating modified total direct costs (MTDC). Cause: Due to the Center improperly calculating modified total direct costs (MTDC), an indirect rate other than the 10% de minimis indirect cost rate elected by the Center and allowed under the Uniform Guidance and TxGMS was being charged to and reimbursed by the federal and state grants. Effect: Insufficient procedures and internal controls over cash management resulted in noncompliance. Questioned Costs: Mental Health Block Grant – Total known questioned costs due to error in calculating MTDC amounted to $5,139. Projected or likely questioned costs as a result of the error are approximately $39,283. Healthy Community Collaboratives - Total known questioned costs due to error in calculating MTDC amounted to $26,426. Projected or likely questioned costs as a result of the error are approximately $88,200. Context/Sampling: Mental Health Block Grant – A nonstatistical sample of 3 out of 12 reimbursement requests for the fiscal year were selected for cash management testing. For the 3 reimbursements selected, we tested approximately $843,000 of reimbursements out of total reimbursements of approximately $5,850,000. Healthy Community Collaboratives - A nonstatistical sample of 3 out of 12 reimbursement requests for the fiscal year were selected for cash management testing. For the 3 reimbursements selected, we tested approximately $949,000 of reimbursements out of total reimbursements of approximately $2,750,000. Repeat Finding from Prior Years: No. Recommendation: We recommend that the Center establish and adhere to policies and procedures, including internal controls, to ensure compliance with cash management requirements as established by 2 CFR 200.414 and 2 CFR 200.1 and TxGMS. Views of Responsible Officials: Management agrees with the finding.
2024-001 U.S. Department of Health and Human Services Passed-through the Texas Department of State Health Services FFAL #93.958 Mental Health Block Grant (Federal Award) (Contract numbers HHS000502700001, HHS001108400004, HHS001204800001, and H79SM085571-01) Health Community Collaboratives (State Award – No FFAL) Allowable Costs Cash Management Non-Material Noncompliance Significant Deficiency in Internal Control Criteria: Section 2 CFR 200.414 establishes that recipients and subrecipients that do not have a current Federal negotiated indirect cost rate (including provisional rate) may elect to charge a de minimis rate of up to 10 percent of modified total direct costs (MTDC). The recipient or subrecipient is authorized to determine the appropriate rate up to this limit. When applying the de minimis rate, costs must be consistently charged as either direct or indirect costs and may not be double charged or inconsistently charged as both. The de minimis rate does not require documentation to justify its use and may be used indefinitely. Once elected, the recipient or subrecipient must use the de minimis rate for all Federal awards until the recipient or subrecipient chooses to receive a negotiated rate. Per 2 CFR 200.1, modified total direct cost (MTDC) means all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $50,000 of each subaward (regardless of the period of performance of the subawards under the award). MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs, and the portion of each subaward in excess of $50,000. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs and with the approval of the cognizant agency for indirect costs. TxGMS follow this same guidance. Condition: The Center did not exclude charges for patient care when calculating modified total direct costs (MTDC). Cause: Due to the Center improperly calculating modified total direct costs (MTDC), an indirect rate other than the 10% de minimis indirect cost rate elected by the Center and allowed under the Uniform Guidance and TxGMS was being charged to and reimbursed by the federal and state grants. Effect: Insufficient procedures and internal controls over cash management resulted in noncompliance. Questioned Costs: Mental Health Block Grant – Total known questioned costs due to error in calculating MTDC amounted to $5,139. Projected or likely questioned costs as a result of the error are approximately $39,283. Healthy Community Collaboratives - Total known questioned costs due to error in calculating MTDC amounted to $26,426. Projected or likely questioned costs as a result of the error are approximately $88,200. Context/Sampling: Mental Health Block Grant – A nonstatistical sample of 3 out of 12 reimbursement requests for the fiscal year were selected for cash management testing. For the 3 reimbursements selected, we tested approximately $843,000 of reimbursements out of total reimbursements of approximately $5,850,000. Healthy Community Collaboratives - A nonstatistical sample of 3 out of 12 reimbursement requests for the fiscal year were selected for cash management testing. For the 3 reimbursements selected, we tested approximately $949,000 of reimbursements out of total reimbursements of approximately $2,750,000. Repeat Finding from Prior Years: No. Recommendation: We recommend that the Center establish and adhere to policies and procedures, including internal controls, to ensure compliance with cash management requirements as established by 2 CFR 200.414 and 2 CFR 200.1 and TxGMS. Views of Responsible Officials: Management agrees with the finding.
2024-001 U.S. Department of Health and Human Services Passed-through the Texas Department of State Health Services FFAL #93.958 Mental Health Block Grant (Federal Award) (Contract numbers HHS000502700001, HHS001108400004, HHS001204800001, and H79SM085571-01) Health Community Collaboratives (State Award – No FFAL) Allowable Costs Cash Management Non-Material Noncompliance Significant Deficiency in Internal Control Criteria: Section 2 CFR 200.414 establishes that recipients and subrecipients that do not have a current Federal negotiated indirect cost rate (including provisional rate) may elect to charge a de minimis rate of up to 10 percent of modified total direct costs (MTDC). The recipient or subrecipient is authorized to determine the appropriate rate up to this limit. When applying the de minimis rate, costs must be consistently charged as either direct or indirect costs and may not be double charged or inconsistently charged as both. The de minimis rate does not require documentation to justify its use and may be used indefinitely. Once elected, the recipient or subrecipient must use the de minimis rate for all Federal awards until the recipient or subrecipient chooses to receive a negotiated rate. Per 2 CFR 200.1, modified total direct cost (MTDC) means all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $50,000 of each subaward (regardless of the period of performance of the subawards under the award). MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs, and the portion of each subaward in excess of $50,000. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs and with the approval of the cognizant agency for indirect costs. TxGMS follow this same guidance. Condition: The Center did not exclude charges for patient care when calculating modified total direct costs (MTDC). Cause: Due to the Center improperly calculating modified total direct costs (MTDC), an indirect rate other than the 10% de minimis indirect cost rate elected by the Center and allowed under the Uniform Guidance and TxGMS was being charged to and reimbursed by the federal and state grants. Effect: Insufficient procedures and internal controls over cash management resulted in noncompliance. Questioned Costs: Mental Health Block Grant – Total known questioned costs due to error in calculating MTDC amounted to $5,139. Projected or likely questioned costs as a result of the error are approximately $39,283. Healthy Community Collaboratives - Total known questioned costs due to error in calculating MTDC amounted to $26,426. Projected or likely questioned costs as a result of the error are approximately $88,200. Context/Sampling: Mental Health Block Grant – A nonstatistical sample of 3 out of 12 reimbursement requests for the fiscal year were selected for cash management testing. For the 3 reimbursements selected, we tested approximately $843,000 of reimbursements out of total reimbursements of approximately $5,850,000. Healthy Community Collaboratives - A nonstatistical sample of 3 out of 12 reimbursement requests for the fiscal year were selected for cash management testing. For the 3 reimbursements selected, we tested approximately $949,000 of reimbursements out of total reimbursements of approximately $2,750,000. Repeat Finding from Prior Years: No. Recommendation: We recommend that the Center establish and adhere to policies and procedures, including internal controls, to ensure compliance with cash management requirements as established by 2 CFR 200.414 and 2 CFR 200.1 and TxGMS. Views of Responsible Officials: Management agrees with the finding.
CONDITION The State Treasurer's Office did not make subrecipients aware of all required grant award information for the Mineral Leasing Act. CRITERIA 2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients. Required information includes: - Subrecipients name (Must match the name associated with its unique entity identifier) - Subrecipients unique entity identifier - Federal award identification number (FAIN) - Federal award date - Subaward period of performance start and end date - Amount of Federal funds obligated in the subaward - Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation - Total amount of the Federal award committed to the subrecipient by the pass-through entity - Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA) - Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity - Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement - Identification of whether the Federal award is for research and development - Indirect cost rate for the Federal award (including if the de minimis rate is used) - All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award 2 CFR 200.303 requires non-Federal entities, in part, to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. CAUSE Not all grant agreement requirements were included in the grant award template. EFFECT Subrecipients may not have been aware of all necessary grant information and requirements. CONTEXT There were 40 awards during the audit period of 7/1/2022 - 6/30/2024. There were 8 awards tested with 8 errors noted. The following criteria were missing: - (ii) Subrecipient's unique entity identifier; - (iii) Federal Award Identification Number (FAIN); - (xiii) Identification of whether the award is R&D; and - (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged) per § 200.414. - (4) (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the pass-through entity must determine the appropriate rate in collaboration with the subrecipient, which is either: (A) The negotiated indirect cost rate between the pass-through entity and the subrecipient; which can be based on a prior negotiated rate between a different PTE and the same subrecipient. If basing the rate on a previously negotiated rate, the pass-through entity is not required to collect information justifying this rate, but may elect to do so; (B) The de minimus indirect cost rate. (ii) The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. Subrecipients can elect to use the cost allocation method to account for indirect costs in accordance with § 200.405(d). - (6) Appropriate terms and conditions concerning closeout of the subaward. Where sampling was performed, the audit used a non-statistical sampling method. IDENTIFICATION AS A REPEAT FINDING Not a repeat finding. RECOMMENDATION We recommend the State Treasurer's Office update its grant award templates to ensure that subrecipients are made award of all required grant award information. STATE TREASURER’S OFFICE RESPONSE The Office of the State Treasurer does agree with finding that our grant award template did not make subrecipients aware of all required grant award information for the Mineral Leasing Act as required. See “Management’s Response and Corrective Action” section of this report.
Criteria – 2 CFR §200.414 Indirect Costs – Entities must maintain accurate records and apply indirect costs consistently across all federal awards. They must also ensure that subrecipient indirect costs are managed in accordance with federal regulations. Condition/context – Indirect costs are not being requested, applied, billed, or reported consistently by the Organization. Indirect costs are not being applied to subrecipients consistently. We observed numerous errors in the application of indirect costs by the Organization, including: not requesting indirect costs in grant applications, negotiating non-de minimis rates with passthrough agencies after electing a de minimis rate, billing indirect costs in excess of indirect costs awarded in the grant agreement, erroneously including passthrough awards greater than $25,000 per subrecipient in the modified total direct cost base, approving indirect cost rates for subrecipients that did not match the subrecipient's elected de minimis rate, and including subrecipient indirect costs in the section of SF-425 reports reserved for reporting its own indirect costs. Questioned costs – $27,467 Cause/effect – The Organization has decentralized grant controls which are not designed to ensure compliance over indirect costs and consistency of application across all federal awards. Indirect costs in excess of allowable indirect costs were billed to federal awards. Repeat finding – No. Recommendation – The Organization should develop procedures and internal controls to ensure indirect cost rates are requested, applied, billed, and reported consistently across all federal awards using the same rate. The Organization should develop similar procedures to ensure it is awarding and reporting subrecipient indirect costs accurately. The Organization should ensure individuals responsible for these controls are adequately trained.
Criteria – 2 CFR §200.414 Indirect Costs – Entities must maintain accurate records and apply indirect costs consistently across all federal awards. They must also ensure that subrecipient indirect costs are managed in accordance with federal regulations. Condition/context – Indirect costs are not being requested, applied, billed, or reported consistently by the Organization. Indirect costs are not being applied to subrecipients consistently. We observed numerous errors in the application of indirect costs by the Organization, including: not requesting indirect costs in grant applications, negotiating non-de minimis rates with passthrough agencies after electing a de minimis rate, billing indirect costs in excess of indirect costs awarded in the grant agreement, erroneously including passthrough awards greater than $25,000 per subrecipient in the modified total direct cost base, approving indirect cost rates for subrecipients that did not match the subrecipient's elected de minimis rate, and including subrecipient indirect costs in the section of SF-425 reports reserved for reporting its own indirect costs. Questioned costs – $27,467 Cause/effect – The Organization has decentralized grant controls which are not designed to ensure compliance over indirect costs and consistency of application across all federal awards. Indirect costs in excess of allowable indirect costs were billed to federal awards. Repeat finding – No. Recommendation – The Organization should develop procedures and internal controls to ensure indirect cost rates are requested, applied, billed, and reported consistently across all federal awards using the same rate. The Organization should develop similar procedures to ensure it is awarding and reporting subrecipient indirect costs accurately. The Organization should ensure individuals responsible for these controls are adequately trained.
Criteria – 2 CFR §200.414 Indirect Costs – Entities must maintain accurate records and apply indirect costs consistently across all federal awards. They must also ensure that subrecipient indirect costs are managed in accordance with federal regulations. Condition/context – Indirect costs are not being requested, applied, billed, or reported consistently by the Organization. Indirect costs are not being applied to subrecipients consistently. We observed numerous errors in the application of indirect costs by the Organization, including: not requesting indirect costs in grant applications, negotiating non-de minimis rates with passthrough agencies after electing a de minimis rate, billing indirect costs in excess of indirect costs awarded in the grant agreement, erroneously including passthrough awards greater than $25,000 per subrecipient in the modified total direct cost base, approving indirect cost rates for subrecipients that did not match the subrecipient's elected de minimis rate, and including subrecipient indirect costs in the section of SF-425 reports reserved for reporting its own indirect costs. Questioned costs – $27,467 Cause/effect – The Organization has decentralized grant controls which are not designed to ensure compliance over indirect costs and consistency of application across all federal awards. Indirect costs in excess of allowable indirect costs were billed to federal awards. Repeat finding – No. Recommendation – The Organization should develop procedures and internal controls to ensure indirect cost rates are requested, applied, billed, and reported consistently across all federal awards using the same rate. The Organization should develop similar procedures to ensure it is awarding and reporting subrecipient indirect costs accurately. The Organization should ensure individuals responsible for these controls are adequately trained.
Criteria – 2 CFR §200.414 Indirect Costs – Entities must maintain accurate records and apply indirect costs consistently across all federal awards. They must also ensure that subrecipient indirect costs are managed in accordance with federal regulations. Condition/context – Indirect costs are not being requested, applied, billed, or reported consistently by the Organization. Indirect costs are not being applied to subrecipients consistently. We observed numerous errors in the application of indirect costs by the Organization, including: not requesting indirect costs in grant applications, negotiating non-de minimis rates with passthrough agencies after electing a de minimis rate, billing indirect costs in excess of indirect costs awarded in the grant agreement, erroneously including passthrough awards greater than $25,000 per subrecipient in the modified total direct cost base, approving indirect cost rates for subrecipients that did not match the subrecipient's elected de minimis rate, and including subrecipient indirect costs in the section of SF-425 reports reserved for reporting its own indirect costs. Questioned costs – $27,467 Cause/effect – The Organization has decentralized grant controls which are not designed to ensure compliance over indirect costs and consistency of application across all federal awards. Indirect costs in excess of allowable indirect costs were billed to federal awards. Repeat finding – No. Recommendation – The Organization should develop procedures and internal controls to ensure indirect cost rates are requested, applied, billed, and reported consistently across all federal awards using the same rate. The Organization should develop similar procedures to ensure it is awarding and reporting subrecipient indirect costs accurately. The Organization should ensure individuals responsible for these controls are adequately trained.
Criteria – 2 CFR §200.414 Indirect Costs – Entities must maintain accurate records and apply indirect costs consistently across all federal awards. They must also ensure that subrecipient indirect costs are managed in accordance with federal regulations. Condition/context – Indirect costs are not being requested, applied, billed, or reported consistently by the Organization. Indirect costs are not being applied to subrecipients consistently. We observed numerous errors in the application of indirect costs by the Organization, including: not requesting indirect costs in grant applications, negotiating non-de minimis rates with passthrough agencies after electing a de minimis rate, billing indirect costs in excess of indirect costs awarded in the grant agreement, erroneously including passthrough awards greater than $25,000 per subrecipient in the modified total direct cost base, approving indirect cost rates for subrecipients that did not match the subrecipient's elected de minimis rate, and including subrecipient indirect costs in the section of SF-425 reports reserved for reporting its own indirect costs. Questioned costs – $27,467 Cause/effect – The Organization has decentralized grant controls which are not designed to ensure compliance over indirect costs and consistency of application across all federal awards. Indirect costs in excess of allowable indirect costs were billed to federal awards. Repeat finding – No. Recommendation – The Organization should develop procedures and internal controls to ensure indirect cost rates are requested, applied, billed, and reported consistently across all federal awards using the same rate. The Organization should develop similar procedures to ensure it is awarding and reporting subrecipient indirect costs accurately. The Organization should ensure individuals responsible for these controls are adequately trained.
Significant Deficiency Other Noncompliance Program: Assistance Listing: 10.553/10.555 – Child Nutrition Cluster Assistance Listing: 84.425D – Elementary and Secondary School Emergency Relief Fund (ESSER II) Repeat Finding: No Criteria: 2 CFR 200.303 requires that a non-federal entity establish, document and maintain effective internal control over a federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statues, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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). 7 CFR 210.14(g) also requires school food authorities to follow fair and consistent methodologies to identify and allocate allowable indirect costs to the nonprofit school food service account, in accordance with 2 CFR part 200 as implemented by 2 CFR part 400. Condition: Our procedures indicate that the District’s internal control system is inadequate for ensuring that indirect costs charged to various federal grant programs are adequately documented and accurately calculated. Specifically: Child Nutrition Cluster: The District could not provide documentation of its calculation to support the $25,000 per quarter requested as reimbursement for indirect costs. Elementary and Secondary School Emergency Relief (ESSER II): The District used an indirect cost rate from a prior year to calculate indirect costs charged to the ESSER II program which resulted in an overcharge of $68,829. Our procedures indicate that the District’s internal control system is insufficient to ensure that the indirect cost charged to the program is accurately calculated and based on calculations that meet the requirements outlined in Sections 2 CFR 200.303, 2 CFR 200.414 and Appendix VII to Part 200. Context/ Perspective: This finding arises from our audit procedures on internal control, where attempted to obtain documentation of the District's calculation and subsequent approval of reimbursement for indirect costs as well as other procedures performed by us recalculating indirect costs charged to certain federal grant programs. Cause: The District lacks the necessary internal controls to ensure that requests for reimbursement of indirect costs are accurately calculated, properly documented and approved by the appropriate director. Effect: The lack of adequate internal controls over the calculation of indirect cost reimbursement may increase the risk of misappropriation or loss of public funds. It could also result in inappropriate charges to the federal award, potentially leading to disallowed costs being applied to the program. Questioned Costs: $68,829 (Elementary and Secondary School Emergency Relief II) Recommendation: The District should implement stronger internal controls to ensure that indirect cost reimbursements are accurately calculated, properly documented, and approved by the appropriate federal grant program director. Views of Responsible Officials: The Auditee’s Corrective Action Plan lists the District’s response to the findings.
Significant Deficiency Other Noncompliance Program: Assistance Listing: 10.553/10.555 – Child Nutrition Cluster Assistance Listing: 84.425D – Elementary and Secondary School Emergency Relief Fund (ESSER II) Repeat Finding: No Criteria: 2 CFR 200.303 requires that a non-federal entity establish, document and maintain effective internal control over a federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statues, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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). 7 CFR 210.14(g) also requires school food authorities to follow fair and consistent methodologies to identify and allocate allowable indirect costs to the nonprofit school food service account, in accordance with 2 CFR part 200 as implemented by 2 CFR part 400. Condition: Our procedures indicate that the District’s internal control system is inadequate for ensuring that indirect costs charged to various federal grant programs are adequately documented and accurately calculated. Specifically: Child Nutrition Cluster: The District could not provide documentation of its calculation to support the $25,000 per quarter requested as reimbursement for indirect costs. Elementary and Secondary School Emergency Relief (ESSER II): The District used an indirect cost rate from a prior year to calculate indirect costs charged to the ESSER II program which resulted in an overcharge of $68,829. Our procedures indicate that the District’s internal control system is insufficient to ensure that the indirect cost charged to the program is accurately calculated and based on calculations that meet the requirements outlined in Sections 2 CFR 200.303, 2 CFR 200.414 and Appendix VII to Part 200. Context/ Perspective: This finding arises from our audit procedures on internal control, where attempted to obtain documentation of the District's calculation and subsequent approval of reimbursement for indirect costs as well as other procedures performed by us recalculating indirect costs charged to certain federal grant programs. Cause: The District lacks the necessary internal controls to ensure that requests for reimbursement of indirect costs are accurately calculated, properly documented and approved by the appropriate director. Effect: The lack of adequate internal controls over the calculation of indirect cost reimbursement may increase the risk of misappropriation or loss of public funds. It could also result in inappropriate charges to the federal award, potentially leading to disallowed costs being applied to the program. Questioned Costs: $68,829 (Elementary and Secondary School Emergency Relief II) Recommendation: The District should implement stronger internal controls to ensure that indirect cost reimbursements are accurately calculated, properly documented, and approved by the appropriate federal grant program director. Views of Responsible Officials: The Auditee’s Corrective Action Plan lists the District’s response to the findings.
Significant Deficiency Other Noncompliance Program: Assistance Listing: 10.553/10.555 – Child Nutrition Cluster Assistance Listing: 84.425D – Elementary and Secondary School Emergency Relief Fund (ESSER II) Repeat Finding: No Criteria: 2 CFR 200.303 requires that a non-federal entity establish, document and maintain effective internal control over a federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statues, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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). 7 CFR 210.14(g) also requires school food authorities to follow fair and consistent methodologies to identify and allocate allowable indirect costs to the nonprofit school food service account, in accordance with 2 CFR part 200 as implemented by 2 CFR part 400. Condition: Our procedures indicate that the District’s internal control system is inadequate for ensuring that indirect costs charged to various federal grant programs are adequately documented and accurately calculated. Specifically: Child Nutrition Cluster: The District could not provide documentation of its calculation to support the $25,000 per quarter requested as reimbursement for indirect costs. Elementary and Secondary School Emergency Relief (ESSER II): The District used an indirect cost rate from a prior year to calculate indirect costs charged to the ESSER II program which resulted in an overcharge of $68,829. Our procedures indicate that the District’s internal control system is insufficient to ensure that the indirect cost charged to the program is accurately calculated and based on calculations that meet the requirements outlined in Sections 2 CFR 200.303, 2 CFR 200.414 and Appendix VII to Part 200. Context/ Perspective: This finding arises from our audit procedures on internal control, where attempted to obtain documentation of the District's calculation and subsequent approval of reimbursement for indirect costs as well as other procedures performed by us recalculating indirect costs charged to certain federal grant programs. Cause: The District lacks the necessary internal controls to ensure that requests for reimbursement of indirect costs are accurately calculated, properly documented and approved by the appropriate director. Effect: The lack of adequate internal controls over the calculation of indirect cost reimbursement may increase the risk of misappropriation or loss of public funds. It could also result in inappropriate charges to the federal award, potentially leading to disallowed costs being applied to the program. Questioned Costs: $68,829 (Elementary and Secondary School Emergency Relief II) Recommendation: The District should implement stronger internal controls to ensure that indirect cost reimbursements are accurately calculated, properly documented, and approved by the appropriate federal grant program director. Views of Responsible Officials: The Auditee’s Corrective Action Plan lists the District’s response to the findings.
Finding Number: 2024-009 State/Educational Agency(s): Arkansas Department of Commerce – Arkansas Economic Development Commission Pass-Through Entity: Not Applicable ALN Number(s) and Program Title(s): 21.027 – COVID 19: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Federal Awarding Agency: U.S. Department of the Treasury Federal Award Number(s): SLFRP3627 Federal Award Year(s): 2021 Compliance Requirement(s) Affected: Subrecipient Monitoring Type of Finding: Material Noncompliance and Material Weakness Repeat Finding: A similar issue was reported in prior-year finding 2023-008. Criteria: In accordance with 2 CFR § 200.332(a)(1), all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward: i. Subrecipient name (which must match the name associated with its unique entity identifier). ii. Subrecipient's unique entity identifier. iii. Federal Award Identification Number (FAIN). iv. Federal award date. v. Subaward Period of Performance start and end date. vi. Subaward budget period start and end date. vii. Amount of federal funds obligated to the subrecipient. viii. Total amount of federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation. ix. Total amount of the federal award committed to the subrecipient by the pass-through entity. x. Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA). xi. Name of federal agency, pass-through entity, and contact information for awarding official of the pass-through entity. xii. Assistance listings title and number (ALN); the pass-through entity must identify the dollar amount made available under each federal award and the ALN at the time of disbursement. xiii. Identification of whether the federal award is research and development. xiv. Indirect cost rate for the federal award (including if the de minimis rate is used in accordance with § 200.414). In addition, 2 CFR § 200.332(a)(4) requires an approved, federally recognized indirect cost rate between the subrecipient and the federal awarding agency. Condition and Context: ALA staff reviewed seven executed grant agreements, totaling $42,681,880, to determine if they met the Uniform Guidance criteria. Five of these grant agreements were selected randomly, and the remaining two were selected based upon concerns communicated to ALA by the Agency. The following deficiencies were noted in the two grant agreements selected based upon Agency concerns: • The agreements, which totaled $6,549,322, did not include all required terms, specifically items ii, iii, v, xii, xiii, and xiv from the criteria noted above. • The agreements did not include indirect cost rate agreements. Statistically Valid Sample: Not a statistically valid sample Questioned Costs: None Cause: The Agency did not ensure staff were trained and knowledgeable regarding Uniform Guidance requirements for subrecipients. Effect: Without a proper grant agreement, subrecipients may be unaware that their award is subject to federal compliance requirements, and the Agency risks noncompliance with subrecipient monitoring requirements. Recommendation: ALA staff recommend the Agency provide training to appropriate staff to ensure adherence to Uniform Guidance regarding subrecipient monitoring. Views of Responsible Officials and Planned Corrective Action: In 2023, ASBO sent out Amendment #1 for all SLFRF subgrants. This amendment was a one-page sheet providing information for all the requirements listed in 2 CFR § 200.332(a)(1). The subrecipient listed in this finding, Extreme Broadband, did not acknowledge or return their amendment. We will begin to request acknowledgement from this provider on a continuous quarterly basis. Anticipated Completion Date: March 4, 2025 Contact Person: Glen Howie, Jr. Director, Ark State Broadband Office Department of Commerce 1 Commerce Way Little Rock, AR 72202 (501) 682-1123 Glen.Howie@Arkansas.gov
Finding Number: 2024-010 State/Educational Agency(s): Arkansas Department of Agriculture – Natural Resources Division Pass-Through Entity: Not Applicable ALN Number(s) and Program Title(s): 21.027 – COVID 19: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Federal Awarding Agency: U.S. Department of the Treasury Federal Award Number(s): SLFRP3627 Federal Award Year(s): 2021 Compliance Requirement(s) Affected: Subrecipient Monitoring Type of Finding: Material Noncompliance and Material Weakness Repeat Finding: Not applicable Criteria: In accordance with 2 CFR § 200.332(a)(1), all pass-through entities must: ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward: i. Subrecipient name (which must match the name associated with its unique entity identifier). ii. Subrecipient's unique entity identifier. iii. Federal Award Identification Number (FAIN). iv. Federal award date. v. Subaward Period of Performance start and end date. vi. Subaward budget period start and end date. vii. Amount of federal funds obligated in the subaward. viii. Total amount of federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation. ix. Total amount of the federal award committed to the subrecipient by the pass-through entity. x. Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA). xi. Name of federal agency, pass-through entity, and contact information for awarding official of the pass-through entity. xii. Assistance listings title and number (ALN); the pass-through entity must identify the dollar amount made available under each federal award and the ALN at the time of disbursement. xiii. Identification of whether the federal award is research and development. xiv. Indirect cost rate for the federal award (including if the de minimis rate is used in accordance with § 200.414). In addition, 2 CFR § 200.332(a)(4) requires an approved, federally recognized indirect cost rate between the subrecipient and the federal awarding agency. Condition and Context: ALA staff reviewed 13 executed grant agreements, totaling $29,342,709, to determine if they met the Uniform Guidance criteria. The following deficiencies were noted: • The 13 grant agreements did not include all required terms, specifically items ii, iii, v, vi, xi, xii, xiii, and xiv from the criteria noted above. • An indirect cost rate agreement could not be provided. Statistically Valid Sample: Not a statistically valid sample Questioned Costs: None Cause: The Agency did not ensure staff were trained and knowledgeable regarding Uniform Guidance requirements for subrecipients. Effect: Without a proper grant agreement, subrecipients may be unaware that their award is subject to federal compliance requirements, and the Agency risks noncompliance with subrecipient monitoring requirements. Recommendation: ALA staff recommend the Agency provide training to appropriate staff to ensure adherence to Uniform Guidance regarding subrecipient monitoring. Views of Responsible Officials and Planned Corrective Action: The Department will execute an amendment to the grant agreements for all ARPA funding not disbursed as of 7/1/2024 to include the missing data as detailed in the finding. Staff will be trained on Uniform Guidance requirements. Anticipated Completion Date: June 30, 2025 Contact Person: Debby Dickson Water Development Division Manager Arkansas Department of Agriculture-Natural Resources Division 1 Natural Resources Drive Little Rock, AR 72205 (501) 225-1598 Debra.Dickson@agriculture.arkansas.gov
2024-002 Indirect Costs Federal Agency: Department of Labor Federal Programs: 17.258/17.259/17.278 Workforce Innovation Opportunity Act (WIOA) Cluster (Passed through MassHire Department of Career Services (MDCS)) Condition: The Organization over billed grant awards under the WIOA Cluster $37,790 for indirect costs. Criteria: 2 CFR 200.414(f) of the Uniform Guidance allows entities that do not have a current negotiated indirect cost rate to charge federal awards a de minimus rate of 10% of modified total direct costs. The Uniform Guidance defines modified total direct costs as all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $25,000 of each subaward. Cause: The Organization did not properly calculate its modified total direct costs for each federal award under the WIOA cluster resulting in the calculated indirect costs being overstated. Effect: The Organization has over billed grant awards under the WIOA cluster. Context: Modified total direct costs under the WIOA Cluster grant awards were $781,730 for the year ended June 30, 2024. The WIOA Cluster grants were billed for $115,963 in indirect costs for the year ended June 30, 2024. Questioned Costs: $37,790 Recommendation: We recommend that management return the over billed costs to the grantor and review its policies and procedures to ensure indirect costs are properly calculated and billed under the Uniform Guidance. Management Response: Management agrees with the finding. See management’s attached corrective action plan.
2024-002 Indirect Costs Federal Agency: Department of Labor Federal Programs: 17.258/17.259/17.278 Workforce Innovation Opportunity Act (WIOA) Cluster (Passed through MassHire Department of Career Services (MDCS)) Condition: The Organization over billed grant awards under the WIOA Cluster $37,790 for indirect costs. Criteria: 2 CFR 200.414(f) of the Uniform Guidance allows entities that do not have a current negotiated indirect cost rate to charge federal awards a de minimus rate of 10% of modified total direct costs. The Uniform Guidance defines modified total direct costs as all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $25,000 of each subaward. Cause: The Organization did not properly calculate its modified total direct costs for each federal award under the WIOA cluster resulting in the calculated indirect costs being overstated. Effect: The Organization has over billed grant awards under the WIOA cluster. Context: Modified total direct costs under the WIOA Cluster grant awards were $781,730 for the year ended June 30, 2024. The WIOA Cluster grants were billed for $115,963 in indirect costs for the year ended June 30, 2024. Questioned Costs: $37,790 Recommendation: We recommend that management return the over billed costs to the grantor and review its policies and procedures to ensure indirect costs are properly calculated and billed under the Uniform Guidance. Management Response: Management agrees with the finding. See management’s attached corrective action plan.
2024-002 Indirect Costs Federal Agency: Department of Labor Federal Programs: 17.258/17.259/17.278 Workforce Innovation Opportunity Act (WIOA) Cluster (Passed through MassHire Department of Career Services (MDCS)) Condition: The Organization over billed grant awards under the WIOA Cluster $37,790 for indirect costs. Criteria: 2 CFR 200.414(f) of the Uniform Guidance allows entities that do not have a current negotiated indirect cost rate to charge federal awards a de minimus rate of 10% of modified total direct costs. The Uniform Guidance defines modified total direct costs as all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $25,000 of each subaward. Cause: The Organization did not properly calculate its modified total direct costs for each federal award under the WIOA cluster resulting in the calculated indirect costs being overstated. Effect: The Organization has over billed grant awards under the WIOA cluster. Context: Modified total direct costs under the WIOA Cluster grant awards were $781,730 for the year ended June 30, 2024. The WIOA Cluster grants were billed for $115,963 in indirect costs for the year ended June 30, 2024. Questioned Costs: $37,790 Recommendation: We recommend that management return the over billed costs to the grantor and review its policies and procedures to ensure indirect costs are properly calculated and billed under the Uniform Guidance. Management Response: Management agrees with the finding. See management’s attached corrective action plan.
2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.332, which established requirements over subawards for pass-through entities and states, in part: All pass-through entities must: a) Verify that the subrecipient is not excluded or disqualified in accordance with § 180.300. Verification methods are provided in § 180.300, which include confirming in SAM.gov that a potential subrecipient is not suspended, debarred, or otherwise excluded from receiving Federal funds. b) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: 1. Federal award identification. i. Subrecipient name (which must match the name associated with its unique entity identifier); ii. Subrecipient's unique entity identifier; iii. Federal Award Identification Number (FAIN); iv. Federal Award Date (see the definition of Federal award date in §200.1 of this part) of award to the recipient by the Federal agency; v. Subaward Period of Performance Start and End Date; vi. Subaward Budget Period Start and End Date; vii. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; viii. Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; ix. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; x. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); xi. Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xii. Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; xiii. Identification of whether the award is R&D; and xiv. Indirect cost rate for the Federal award (including if the de minimis rate is charged) per §200.414. c) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraph (f) of this section; d) If appropriate, consider implementing specific conditions in a subaward as described in § 200.208 and notify the Federal agency of the specific conditions. e) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved; f) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (c) of this section), the CFR lists monitoring tools that may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals. We noted the District did not perform a subrecipient checklist prior to allocating funds. Additionally, the District did not complete monitoring procedures for subrecipients. Further, we noted the District signed a service agreement with the subrecipient; however, the agreement did not specifically identify the subrecipient as a subrecipient or include all award information as required above. Per inquiry of the Treasurer, the District does not review audit reports of the subrecipient for any noted deficiencies. The District should implement procedures to verify that all required reviews and any additional required follow ups are completed and accurately documented. Further, the District should ensure all required information is included in the subrecipient agreement. We recommend that the District request copies of annual audit reports of the subrecipient to review the report for any potential deficiencies.
2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.332, which established requirements over subawards for pass-through entities and states, in part: All pass-through entities must: a) Verify that the subrecipient is not excluded or disqualified in accordance with § 180.300. Verification methods are provided in § 180.300, which include confirming in SAM.gov that a potential subrecipient is not suspended, debarred, or otherwise excluded from receiving Federal funds. b) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: 1. Federal award identification. i. Subrecipient name (which must match the name associated with its unique entity identifier); ii. Subrecipient's unique entity identifier; iii. Federal Award Identification Number (FAIN); iv. Federal Award Date (see the definition of Federal award date in §200.1 of this part) of award to the recipient by the Federal agency; v. Subaward Period of Performance Start and End Date; vi. Subaward Budget Period Start and End Date; vii. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; viii. Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; ix. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; x. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); xi. Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xii. Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; xiii. Identification of whether the award is R&D; and xiv. Indirect cost rate for the Federal award (including if the de minimis rate is charged) per §200.414. c) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraph (f) of this section; d) If appropriate, consider implementing specific conditions in a subaward as described in § 200.208 and notify the Federal agency of the specific conditions. e) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved; f) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (c) of this section), the CFR lists monitoring tools that may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals. We noted the District did not perform a subrecipient checklist prior to allocating funds. Additionally, the District did not complete monitoring procedures for subrecipients. Further, we noted the District signed a service agreement with the subrecipient; however, the agreement did not specifically identify the subrecipient as a subrecipient or include all award information as required above. Per inquiry of the Treasurer, the District does not review audit reports of the subrecipient for any noted deficiencies. The District should implement procedures to verify that all required reviews and any additional required follow ups are completed and accurately documented. Further, the District should ensure all required information is included in the subrecipient agreement. We recommend that the District request copies of annual audit reports of the subrecipient to review the report for any potential deficiencies.
Reference Number: 2024-006 – Subrecipient Monitoring Federal Program Title: WIOA Cluster Federal Assistance Listing Number: 17.258 BWC Federal Agency: Department of Labor (DOL) Pass-Through Entity: State of California Employment Development Department Federal Award Number and Year: AA211079 Fiscal Year 2023-2024 Category of Finding: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control over Compliance, Instance of Noncompliance Criteria In accordance with Title 2 U.S. Code of Federal Regulations (CFR) § 200.332, all pass-through entities (PTE) must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal award identification: i. Subrecipient name (which must match the name associated with its unique entity identifier); ii. Subrecipient's unique entity identifier; iii. Federal Award Identification Number (FAIN); iv. Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; v. Subaward Period of Performance Start and End Date; vi. Subaward Budget Period Start and End Date; vii. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; viii. Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; ix. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; x. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); xi. Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xii. Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; xiii. Identification of whether the award is R&D; and xiv. Indirect cost rate for the Federal award (including if the de minimis rate is charged) per § 200.414. (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section. (c) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. (d) Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. Condition During our audit of compliance with subrecipient monitoring, we noted that for one (1) subrecipient agreement, the agreement did not include one or more of the required elements defined in 2 CFR § 200.332 (a)(1) in the subrecipient’s agreement. For the same one (1) subrecipient, the Organization did not perform the risk assessment procedures defined in 2 CFR § 200.332 (b) or verify that the subrecipient should be audited as defined in 2 CFR § 200.332 (d). Cause Due to significant turnover in key personnel in the Organization’s finance department and management in past years, the Organization has no documented policies and procedures for subrecipient monitoring. Effect Not providing sufficient documentation to auditors to demonstrate compliance with federal compliance results in an audit scope limitation. Failure to provide all the required subaward information may result in subrecipients incorrectly reporting on federal pass-through awards in their Single Audit reports. Failure to document subrecipient risk assessment and verifying the subrecipient audit requirement result in noncompliance with the subrecipient monitoring requirements 2 CFR § 200.332. Questioned Costs Questioned costs were not determinable. Context For one (1) subrecipient selected for testing, with total expenditures of $325,977, from a population of one (1) subrecipient, the Company did not communicate all of the required subaward data elements, did not perform subrecipient risk assessment, and did not verify if subrecipient received audit. The sample was not a statistically valid sample. Recommendation We recommend that the Organization perform the following: (1) Develop procedures for future subrecipient agreements to ensure agreements will include all the required elements of 2 CFR § 200.332 (a)(1). (2) For existing subrecipients that were not provided the required elements, provide a letter or amended agreement to include all the required elements of 2 CFR § 200.332 (a)(1). (3) Maintain sufficient records of subrecipient risk assessment and monitoring subrecipients in accordance with subrecipient monitoring requirements noted in 2 CFR § 200.332 (b) – (d). Views of Responsible Officials and Planned Corrective Action Person responsible: Leona Smith Di Faustino, Interim Executive Director Corrective Action Plan: The Organization will update its subrecipient monitoring policies to ensure all required elements as defined in 2 CFR § 200.332 (a)(1) are included in subrecipient agreements, Additionally, a checklist will be established to perform a risk assessment process to evaluate subrecipient risk prior to contract execution and annually thereafter and to verify each subrecipient’s that meets the audit threshold and if required has a current Single Audit on file or is otherwise in compliance. Anticipated Implementation Date: July 1, 2025
Finding Reference Number: 2024-008 NH Fish and Game Department Fish and Wildlife Cluster (Assistance Listing #15.605, #15.611, #15.626) Federal Award Numbers: F22AF00995-00, F22AF00929-00, F23AF03086-00, F22AF00514-01, F22AF02616-02, F21AF04100-02, F21AF03886-03 Federal Award Year: 2021, 2022, 2023 U.S. Department of Interior Compliance Requirement: Matching Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: N/A Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Criteria In-kind match requirement is to test records to corroborate the values placed on in-kind contributions (including third party in-kind contributions) are in accordance with 2 CFR 200.306, 200.434, and 200.414, and the terms and conditions of the award. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide 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. Condition To meet the federal match required under the program, the New Hampshire Fish and Game Department (the Department) utilizes in-kind match that is earned from volunteer hours and costs contributed by its third party subrecipient. During our testwork over in-kind match, we identified the following: A. For 7 of 9 subrecipient invoices selected for testwork used to support the Department’s in-kind match, we were unable to obtain documentation to support the amount of the in-kind match earned. For each of the 7 sample selections, the value of the in-kind contribution was handwritten on the subrecipient's invoice for unrelated services. There was no documentation obtained to support the accuracy of this handwritten amount. Upon inquiry, the Department confirmed that no further verification was performed to ensure the subrecipient's in-kind match was accurate and based upon costs in support of the grant associated with the in-kind match. B. For 1 of 4 volunteer in-kind match contribution calculations, the Department incorrectly allocated volunteer hours using the prior fiscal year rates, resulting in an excess of in-kind match being recorded as earned. In addition, we were unable to verify the existence of 1 of the volunteer timesheets used in this calculation for this sample selection. Cause The cause of the condition found is primarily due to insufficient internal controls to ensure that the value of the match contributed by its subrecipient is complete and accurate. Due to the long-standing and collaborative relationship between the Department and the subrecipient, the Department has not developed or implemented formalized policies and procedures related to validating the existence of in-kind match earned. Further, related to the volunteer hours, the cause of the condition is due to human error. With over 250 timesheets to process, the volume of data and calculations are susceptible to error. Effect The effect of the condition found is that the Department did not have appropriate documentation to support the in-kind match earned and applied against its federal award in support of federal funds that were drawn. This could lead to unallowable costs being charged to the grant if the sufficient match was not made. Questioned Costs: $201,250 Recommendation We recommend that the Department implement written policies and procedures surrounding the tracking of in-kind match. Internal controls should be implemented to ensure the accuracy of the in-kind match earned, including ensuring that there is supporting documentation to substantiate the amount earned. The existing policies and procedures should also be enhanced related to volunteer time to monitor to ensure that all required timesheets are completed before using the volunteer time in support of its matching requirement and that the appropriate rate is used when determining the value of the volunteer in-kind match. View of Responsible Officials: Management concurs with this finding except for the questioned cost amount. Rejoinder: As documented within the condition found, we were unable to obtain sufficient documentation to support in-kind matching costs. As a result of our audit procedures, we identified questioned costs of $201,250.
Finding Reference Number: 2024-008 NH Fish and Game Department Fish and Wildlife Cluster (Assistance Listing #15.605, #15.611, #15.626) Federal Award Numbers: F22AF00995-00, F22AF00929-00, F23AF03086-00, F22AF00514-01, F22AF02616-02, F21AF04100-02, F21AF03886-03 Federal Award Year: 2021, 2022, 2023 U.S. Department of Interior Compliance Requirement: Matching Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: N/A Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Criteria In-kind match requirement is to test records to corroborate the values placed on in-kind contributions (including third party in-kind contributions) are in accordance with 2 CFR 200.306, 200.434, and 200.414, and the terms and conditions of the award. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide 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. Condition To meet the federal match required under the program, the New Hampshire Fish and Game Department (the Department) utilizes in-kind match that is earned from volunteer hours and costs contributed by its third party subrecipient. During our testwork over in-kind match, we identified the following: A. For 7 of 9 subrecipient invoices selected for testwork used to support the Department’s in-kind match, we were unable to obtain documentation to support the amount of the in-kind match earned. For each of the 7 sample selections, the value of the in-kind contribution was handwritten on the subrecipient's invoice for unrelated services. There was no documentation obtained to support the accuracy of this handwritten amount. Upon inquiry, the Department confirmed that no further verification was performed to ensure the subrecipient's in-kind match was accurate and based upon costs in support of the grant associated with the in-kind match. B. For 1 of 4 volunteer in-kind match contribution calculations, the Department incorrectly allocated volunteer hours using the prior fiscal year rates, resulting in an excess of in-kind match being recorded as earned. In addition, we were unable to verify the existence of 1 of the volunteer timesheets used in this calculation for this sample selection. Cause The cause of the condition found is primarily due to insufficient internal controls to ensure that the value of the match contributed by its subrecipient is complete and accurate. Due to the long-standing and collaborative relationship between the Department and the subrecipient, the Department has not developed or implemented formalized policies and procedures related to validating the existence of in-kind match earned. Further, related to the volunteer hours, the cause of the condition is due to human error. With over 250 timesheets to process, the volume of data and calculations are susceptible to error. Effect The effect of the condition found is that the Department did not have appropriate documentation to support the in-kind match earned and applied against its federal award in support of federal funds that were drawn. This could lead to unallowable costs being charged to the grant if the sufficient match was not made. Questioned Costs: $201,250 Recommendation We recommend that the Department implement written policies and procedures surrounding the tracking of in-kind match. Internal controls should be implemented to ensure the accuracy of the in-kind match earned, including ensuring that there is supporting documentation to substantiate the amount earned. The existing policies and procedures should also be enhanced related to volunteer time to monitor to ensure that all required timesheets are completed before using the volunteer time in support of its matching requirement and that the appropriate rate is used when determining the value of the volunteer in-kind match. View of Responsible Officials: Management concurs with this finding except for the questioned cost amount. Rejoinder: As documented within the condition found, we were unable to obtain sufficient documentation to support in-kind matching costs. As a result of our audit procedures, we identified questioned costs of $201,250.
Finding Reference Number: 2024-008 NH Fish and Game Department Fish and Wildlife Cluster (Assistance Listing #15.605, #15.611, #15.626) Federal Award Numbers: F22AF00995-00, F22AF00929-00, F23AF03086-00, F22AF00514-01, F22AF02616-02, F21AF04100-02, F21AF03886-03 Federal Award Year: 2021, 2022, 2023 U.S. Department of Interior Compliance Requirement: Matching Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: N/A Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Criteria In-kind match requirement is to test records to corroborate the values placed on in-kind contributions (including third party in-kind contributions) are in accordance with 2 CFR 200.306, 200.434, and 200.414, and the terms and conditions of the award. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide 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. Condition To meet the federal match required under the program, the New Hampshire Fish and Game Department (the Department) utilizes in-kind match that is earned from volunteer hours and costs contributed by its third party subrecipient. During our testwork over in-kind match, we identified the following: A. For 7 of 9 subrecipient invoices selected for testwork used to support the Department’s in-kind match, we were unable to obtain documentation to support the amount of the in-kind match earned. For each of the 7 sample selections, the value of the in-kind contribution was handwritten on the subrecipient's invoice for unrelated services. There was no documentation obtained to support the accuracy of this handwritten amount. Upon inquiry, the Department confirmed that no further verification was performed to ensure the subrecipient's in-kind match was accurate and based upon costs in support of the grant associated with the in-kind match. B. For 1 of 4 volunteer in-kind match contribution calculations, the Department incorrectly allocated volunteer hours using the prior fiscal year rates, resulting in an excess of in-kind match being recorded as earned. In addition, we were unable to verify the existence of 1 of the volunteer timesheets used in this calculation for this sample selection. Cause The cause of the condition found is primarily due to insufficient internal controls to ensure that the value of the match contributed by its subrecipient is complete and accurate. Due to the long-standing and collaborative relationship between the Department and the subrecipient, the Department has not developed or implemented formalized policies and procedures related to validating the existence of in-kind match earned. Further, related to the volunteer hours, the cause of the condition is due to human error. With over 250 timesheets to process, the volume of data and calculations are susceptible to error. Effect The effect of the condition found is that the Department did not have appropriate documentation to support the in-kind match earned and applied against its federal award in support of federal funds that were drawn. This could lead to unallowable costs being charged to the grant if the sufficient match was not made. Questioned Costs: $201,250 Recommendation We recommend that the Department implement written policies and procedures surrounding the tracking of in-kind match. Internal controls should be implemented to ensure the accuracy of the in-kind match earned, including ensuring that there is supporting documentation to substantiate the amount earned. The existing policies and procedures should also be enhanced related to volunteer time to monitor to ensure that all required timesheets are completed before using the volunteer time in support of its matching requirement and that the appropriate rate is used when determining the value of the volunteer in-kind match. View of Responsible Officials: Management concurs with this finding except for the questioned cost amount. Rejoinder: As documented within the condition found, we were unable to obtain sufficient documentation to support in-kind matching costs. As a result of our audit procedures, we identified questioned costs of $201,250.
Finding Reference Number: 2024-021 NH Department of Energy Low Income Home Energy Assistance (Assistance Listing #93.568) Federal Award Numbers: 2301NHLIEA, 2401NHLIEA Federal Award Year: 2023, 2024 U.S. Department of Health and Human Services Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2023-015 Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Criteria A pass-through entity must: • Clearly identify to the subrecipient required award information and applicable requirements described in 2 CFR section 200.332(a); • Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required through the terms and conditions of the award, subaward monitoring must include following up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means; and Issuing a management decision for audit findings pertaining to federal award provided to the subrecipient from the subrecipient as required by 2 CFR section 200.521. Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the 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. Condition As part of the Low-Income Home Energy Assistance program (LIHEAP), the New Hampshire Department of Energy (the Department) enters into grant agreements with local entities to provide services related to the eligibility determination process for the LIHEAP program (including the calculation of participant benefits) and payment of benefits to fuel providers. During the year ended June 30, 2024, $38,545,693 was passed through to subrecipients. As part of our testwork over the subrecipient monitoring process, we identified the following: A. The Department communicates award information to subrecipients through the approved grant agreement. Per review of the grant agreement, for each of the 4 subrecipients selected for testwork, the Department did not communicate all the required award information as outlined in 2 CFR section 200.332. Specifically, the following elements were not communicated: a. Indirect cost rate for federal awards (including if the deminimus rate is charged per 2 CFR section 200.414) b. Identification of whether the award is R&D B. The data that is used to compile the Annual Report on Households Assisted by LIHEAP is obtained from case data that is reported to the New Hampshire Department of Energy (the Department) from its subrecipients as the Department has entered into grant agreements with third parties who are responsible for the eligibility determination and benefit payment process. The Annual Report on Households Assisted by LIHEAP contains data that is specific to benefits paid to eligible participants. As part of our subrecipient monitoring testwork, we were unable to verify that the Department had performed any monitoring procedures over the data provided by each subrecipient to ensure that the data reported within the annual report was complete and accurate. Cause The cause of the condition found was primarily due to insufficient documented subrecipient policies and procedures to ensure that award information is appropriately communicated and that there is appropriate monitoring procedures performed over the completeness and accuracy of the data submitted by the subrecipient utilized to compile federal reports. Effect The effect of the condition found is that the Department did not comply with section 2 CFR 200.332 (a) and 2 CFR 200.332(d) through (f). Questioned Costs: None. Recommendation We recommend that the Department formalize, policies and procedures and implement the necessary internal controls to ensure that all required award identification information is communicated to subrecipients and over the monitoring of data submitted by subrecipients to be used in the Annual Report on Households Assisted by LIHEAP to ensure that the report is complete and accurate. View of Responsible Officials: Management concurs with the finding above.
2024-009 – Indirect Costs Federal Agency: Various Federal Program Title: Research and Development Cluster Federal Assistance Listing Number: 10.216 Federal Award Identification Number and Year: Various Award Period: 7/1/2023 – 6/30/2024 Type of Finding: Other Matters and Significant Deficiency in Internal Control Over Compliance Criteria or Specific Requirement: In accordance with 2 CFR section 200.414(c), negotiated indirect cost rates must be accepted by all Federal agencies. A Federal agency may use a rate different from the negotiated rate for either a class of Federal awards or a single Federal award only when required by Federal statute or regulation, or when approved by the awarding Federal agency in accordance with paragraph (c)(3) of this section. Condition: An incorrect indirect cost rate was used when calculating indirect costs. Questioned Costs: $38,449 Context: During our testing of indirect costs, three out of a sample of 40 used a rate of 46% instead of the rate stated in the grant of 30%. Cause: Oversight by the individual responsible for completing the indirect cost calculations. Effect: Overstatement of indirect costs. Repeat Finding: No. Recommendation: We recommend the University establish a policy to review the specific indirect cost rates in the grants with the calculation being performed to ensure the correct rate is being used. Views of Responsible Officials: There is no disagreement with the audit finding and the University is in the process of implementing corrective procedures.
2024-009 – Indirect Costs Federal Agency: Various Federal Program Title: Research and Development Cluster Federal Assistance Listing Number: 10.216 Federal Award Identification Number and Year: Various Award Period: 7/1/2023 – 6/30/2024 Type of Finding: Other Matters and Significant Deficiency in Internal Control Over Compliance Criteria or Specific Requirement: In accordance with 2 CFR section 200.414(c), negotiated indirect cost rates must be accepted by all Federal agencies. A Federal agency may use a rate different from the negotiated rate for either a class of Federal awards or a single Federal award only when required by Federal statute or regulation, or when approved by the awarding Federal agency in accordance with paragraph (c)(3) of this section. Condition: An incorrect indirect cost rate was used when calculating indirect costs. Questioned Costs: $38,449 Context: During our testing of indirect costs, three out of a sample of 40 used a rate of 46% instead of the rate stated in the grant of 30%. Cause: Oversight by the individual responsible for completing the indirect cost calculations. Effect: Overstatement of indirect costs. Repeat Finding: No. Recommendation: We recommend the University establish a policy to review the specific indirect cost rates in the grants with the calculation being performed to ensure the correct rate is being used. Views of Responsible Officials: There is no disagreement with the audit finding and the University is in the process of implementing corrective procedures.
2024-009 – Indirect Costs Federal Agency: Various Federal Program Title: Research and Development Cluster Federal Assistance Listing Number: 10.216 Federal Award Identification Number and Year: Various Award Period: 7/1/2023 – 6/30/2024 Type of Finding: Other Matters and Significant Deficiency in Internal Control Over Compliance Criteria or Specific Requirement: In accordance with 2 CFR section 200.414(c), negotiated indirect cost rates must be accepted by all Federal agencies. A Federal agency may use a rate different from the negotiated rate for either a class of Federal awards or a single Federal award only when required by Federal statute or regulation, or when approved by the awarding Federal agency in accordance with paragraph (c)(3) of this section. Condition: An incorrect indirect cost rate was used when calculating indirect costs. Questioned Costs: $38,449 Context: During our testing of indirect costs, three out of a sample of 40 used a rate of 46% instead of the rate stated in the grant of 30%. Cause: Oversight by the individual responsible for completing the indirect cost calculations. Effect: Overstatement of indirect costs. Repeat Finding: No. Recommendation: We recommend the University establish a policy to review the specific indirect cost rates in the grants with the calculation being performed to ensure the correct rate is being used. Views of Responsible Officials: There is no disagreement with the audit finding and the University is in the process of implementing corrective procedures.
2024-009 – Indirect Costs Federal Agency: Various Federal Program Title: Research and Development Cluster Federal Assistance Listing Number: 10.216 Federal Award Identification Number and Year: Various Award Period: 7/1/2023 – 6/30/2024 Type of Finding: Other Matters and Significant Deficiency in Internal Control Over Compliance Criteria or Specific Requirement: In accordance with 2 CFR section 200.414(c), negotiated indirect cost rates must be accepted by all Federal agencies. A Federal agency may use a rate different from the negotiated rate for either a class of Federal awards or a single Federal award only when required by Federal statute or regulation, or when approved by the awarding Federal agency in accordance with paragraph (c)(3) of this section. Condition: An incorrect indirect cost rate was used when calculating indirect costs. Questioned Costs: $38,449 Context: During our testing of indirect costs, three out of a sample of 40 used a rate of 46% instead of the rate stated in the grant of 30%. Cause: Oversight by the individual responsible for completing the indirect cost calculations. Effect: Overstatement of indirect costs. Repeat Finding: No. Recommendation: We recommend the University establish a policy to review the specific indirect cost rates in the grants with the calculation being performed to ensure the correct rate is being used. Views of Responsible Officials: There is no disagreement with the audit finding and the University is in the process of implementing corrective procedures.
2024-009 – Indirect Costs Federal Agency: Various Federal Program Title: Research and Development Cluster Federal Assistance Listing Number: 10.216 Federal Award Identification Number and Year: Various Award Period: 7/1/2023 – 6/30/2024 Type of Finding: Other Matters and Significant Deficiency in Internal Control Over Compliance Criteria or Specific Requirement: In accordance with 2 CFR section 200.414(c), negotiated indirect cost rates must be accepted by all Federal agencies. A Federal agency may use a rate different from the negotiated rate for either a class of Federal awards or a single Federal award only when required by Federal statute or regulation, or when approved by the awarding Federal agency in accordance with paragraph (c)(3) of this section. Condition: An incorrect indirect cost rate was used when calculating indirect costs. Questioned Costs: $38,449 Context: During our testing of indirect costs, three out of a sample of 40 used a rate of 46% instead of the rate stated in the grant of 30%. Cause: Oversight by the individual responsible for completing the indirect cost calculations. Effect: Overstatement of indirect costs. Repeat Finding: No. Recommendation: We recommend the University establish a policy to review the specific indirect cost rates in the grants with the calculation being performed to ensure the correct rate is being used. Views of Responsible Officials: There is no disagreement with the audit finding and the University is in the process of implementing corrective procedures.
2024-009 – Indirect Costs Federal Agency: Various Federal Program Title: Research and Development Cluster Federal Assistance Listing Number: 10.216 Federal Award Identification Number and Year: Various Award Period: 7/1/2023 – 6/30/2024 Type of Finding: Other Matters and Significant Deficiency in Internal Control Over Compliance Criteria or Specific Requirement: In accordance with 2 CFR section 200.414(c), negotiated indirect cost rates must be accepted by all Federal agencies. A Federal agency may use a rate different from the negotiated rate for either a class of Federal awards or a single Federal award only when required by Federal statute or regulation, or when approved by the awarding Federal agency in accordance with paragraph (c)(3) of this section. Condition: An incorrect indirect cost rate was used when calculating indirect costs. Questioned Costs: $38,449 Context: During our testing of indirect costs, three out of a sample of 40 used a rate of 46% instead of the rate stated in the grant of 30%. Cause: Oversight by the individual responsible for completing the indirect cost calculations. Effect: Overstatement of indirect costs. Repeat Finding: No. Recommendation: We recommend the University establish a policy to review the specific indirect cost rates in the grants with the calculation being performed to ensure the correct rate is being used. Views of Responsible Officials: There is no disagreement with the audit finding and the University is in the process of implementing corrective procedures.
2024-009 – Indirect Costs Federal Agency: Various Federal Program Title: Research and Development Cluster Federal Assistance Listing Number: 10.216 Federal Award Identification Number and Year: Various Award Period: 7/1/2023 – 6/30/2024 Type of Finding: Other Matters and Significant Deficiency in Internal Control Over Compliance Criteria or Specific Requirement: In accordance with 2 CFR section 200.414(c), negotiated indirect cost rates must be accepted by all Federal agencies. A Federal agency may use a rate different from the negotiated rate for either a class of Federal awards or a single Federal award only when required by Federal statute or regulation, or when approved by the awarding Federal agency in accordance with paragraph (c)(3) of this section. Condition: An incorrect indirect cost rate was used when calculating indirect costs. Questioned Costs: $38,449 Context: During our testing of indirect costs, three out of a sample of 40 used a rate of 46% instead of the rate stated in the grant of 30%. Cause: Oversight by the individual responsible for completing the indirect cost calculations. Effect: Overstatement of indirect costs. Repeat Finding: No. Recommendation: We recommend the University establish a policy to review the specific indirect cost rates in the grants with the calculation being performed to ensure the correct rate is being used. Views of Responsible Officials: There is no disagreement with the audit finding and the University is in the process of implementing corrective procedures.
Awards to Subrecipients Criteria – The Uniform Guidance, Part 200.332 states, “All pass-through entities must: ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward.” Required information includes identification of whether the award is research and development and the indirect cost rate for the Federal award (including if the de minimis rate is charged) per § 200.414. Condition – For five out of six subawards, the Department did not include identification of whether the award is research and development or indirect cost rate for the Federal award (including if the de minimis rate is charged) per § 200.414. These contracts also did not include the subrecipient’s Unique Entity Identifiers, nor the Federal Award Date. Cause – At the time the tested agreements were established, the Department had not established policies and procedures to ensure all required information is included in the subaward to the subrecipients. Effect – The information required in the subaward to subrecipients would result in grantee’s not being aware of their current indirect cost rate allowance, or if the award was for R&D purposes. Recommendation – The Department should establish policies and procedures to ensure all required information is included in the subaward to subrecipients as required by Uniform Guidance, Part 200.332. Response and Corrective Action Planned – Effective late fiscal year 2024; new sub-awards and pass thru grant agreements utilize a cover sheet to ensure all required elements listed in 2 CFR 200.332 are clearly included in the subaward agreements. Conclusion – Response accepted.
Awards to Subrecipients Criteria – The Uniform Guidance, Part 200.332 states, “All pass-through entities must: ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward.” Required information includes identification of whether the award is research and development and the indirect cost rate for the Federal award (including if the de minimis rate is charged) per § 200.414. Condition – For five out of six subawards, the Department did not include identification of whether the award is research and development or indirect cost rate for the Federal award (including if the de minimis rate is charged) per § 200.414. These contracts also did not include the subrecipient’s Unique Entity Identifiers, nor the Federal Award Date. Cause – At the time the tested agreements were established, the Department had not established policies and procedures to ensure all required information is included in the subaward to the subrecipients. Effect – The information required in the subaward to subrecipients would result in grantee’s not being aware of their current indirect cost rate allowance, or if the award was for R&D purposes. Recommendation – The Department should establish policies and procedures to ensure all required information is included in the subaward to subrecipients as required by Uniform Guidance, Part 200.332. Response and Corrective Action Planned – Effective late fiscal year 2024; new sub-awards and pass thru grant agreements utilize a cover sheet to ensure all required elements listed in 2 CFR 200.332 are clearly included in the subaward agreements. Conclusion – Response accepted.
Awards to Subrecipients Criteria – The Uniform Guidance, Part 200.332 states, “All pass-through entities must: ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward.” Required information includes identification of whether the award is research and development and the indirect cost rate for the Federal award (including if the de minimis rate is charged) per § 200.414. Condition – For five out of six subawards, the Department did not include identification of whether the award is research and development or indirect cost rate for the Federal award (including if the de minimis rate is charged) per § 200.414. These contracts also did not include the subrecipient’s Unique Entity Identifiers, nor the Federal Award Date. Cause – At the time the tested agreements were established, the Department had not established policies and procedures to ensure all required information is included in the subaward to the subrecipients. Effect – The information required in the subaward to subrecipients would result in grantee’s not being aware of their current indirect cost rate allowance, or if the award was for R&D purposes. Recommendation – The Department should establish policies and procedures to ensure all required information is included in the subaward to subrecipients as required by Uniform Guidance, Part 200.332. Response and Corrective Action Planned – Effective late fiscal year 2024; new sub-awards and pass thru grant agreements utilize a cover sheet to ensure all required elements listed in 2 CFR 200.332 are clearly included in the subaward agreements. Conclusion – Response accepted.
Awards to Subrecipients Criteria – The Governor allocated Coronavirus State and Local Recovery Funds to the Department for Child Care Business Incentive to encourage and enable businesses and employer consortiums to build on-site childcare centers or partner with local and regional childcare services to renovate and expand. Health Careers Registered Apprenticeship 2.0 Grant was created to establish new or expand existing, high school-based and/or adult registered apprenticeship programs for health careers in nursing, emergency medical services, direct support care and behavioral health career pathways. The Healthy Childhood Environments: Child Care Challenge project was to create new childcare slots across the State and help communities improve their childcare options and bolster opportunities for Iowans to reenter the workforce. All the projects are designed to address childcare shortages and alleviate local childcare need. The Uniform Guidance, Part 200.332 states, “All pass-through entities must: ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward.” Required information includes, in part, subrecipient's unique entity identifier, federal award identification number (FAIN), subaward budget period start and end date, identification of whether the award is research and development and the indirect cost rate for the federal award (including if the de minimis rate is charged) per Part 200.414. Condition – For the subawards provided, the Department did not include the identification of whether the award is research and development and the indirect cost rate for the Federal award (including if the de minimis rate is charged) per § 200.414. Cause – The Department has not established policies and procedures to ensure all required information is included in the subaward to the subrecipients. Effect – The information required in the subaward to subrecipients was not included due to the lack of policies and procedures. Recommendation – The Department should establish policies and procedures to ensure all required information is included in the subaward to subrecipients as required by Uniform Guidance, Part 200.332. Response and Corrective Action Planned – Effective August 2023; new sub-awards and pass thru grant agreements have elements specified in the respective agreement as required by Uniform Guidance, Part 200.332. In addition, Iowa Workforce Development is in the process of reaching out to grantees whose awards did not clearly state that the specified award is research and development, and that there will be no indirect costs assumed for reimbursement, as this was assumed given the nature of the projects as well as discussions that were had during the awarding process. Conclusion – Response accepted.
Finding 2024-004: Unallowable Costs / Cash Management (Material Weakness) Information on the Federal Programs: Assistance Listing Number 98.001 Criteria: According to Uniform Guidance (2 CFR 200.305(b)), Federal funds must be managed in a way that minimizes the time elapsing between the transfer of funds and the Organization’s disbursement of those funds for program purposes. Additionally, internal controls over cash management should ensure that all drawdowns are approved by designated personnel to prevent improper or premature use of Federal funds. Furthermore, per 2 CFR 200.414(c), indirect costs may only be charged to a Federal program if an approved indirect cost rate or a direct cost allocation methodology is in place and if the Federal award allows for indirect cost recovery. Condition: During our review of Federal grant drawdowns, it was noted that several drawdowns were processed without obtaining the required internal approvals as outlined in Astraea's cash management policies and procedures. We also noted that several draws included indirect costs, despite the Federal award agreement explicitly prohibiting indirect cost recovery. While these costs were later removed and ultimately not charged to the Federal program, their inclusion initially led to an overdraw of funds exceeding the program’s actual needs. Furthermore, Astraea is carrying a large refundable advance balance. Cause: Astraea’s cash management procedures were not consistently followed, leading to missed approvals for certain drawdowns and delays in fund disbursement. Additionally, the lack of approval led to errors in charging indirect costs to the program.Effect: Drawdowns without proper internal approval increase the risk of non-compliance with Federal cash management requirements and could result in unauthorized or inaccurate fund usage. Additionally, charging unallowable indirect costs to the program resulted in noncompliance with Federal regulations. Furthermore, the delay in disbursing Federal funds increases the risk of noncompliance with cash management requirements, potentially resulting in interest liability. Questioned Costs: None noted. Identification as a Repeat Finding, if Applicable: Finding 2023-005 Recommendation: Astraea should reinforce cash management controls by ensuring all Federal drawdowns obtain the appropriate internal approvals before processing. This can be achieved by implementing a checklist or automated workflow to verify compliance with approval requirements. Astraea should also strengthen internal controls over cost allocation to prevent unallowable indirect charges. Additionally, we recommend Astraea implement procedures to ensure that Federal funds are disbursed promptly in accordance with 2 CFR 200.305 to avoid undue delays.
Finding No.: 2024-002 – Allowability – Significant deficiency Federal Agency: Various Program Name: Research and Development Cluster ALN Number: Various Federal Award Year: July 1, 2023 – June 30, 2024 Criteria: In accordance with 2 CFR 200.303(a), 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 the 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 Committeeof Sponsoring Organizations of the Treadway Commission (COSO).Conditions Found: I. Indirect Cost Expenditures (IDC): To ensure compliance with federally funded grants, particularly concerning indirect cost rates, the institution must adhere to specific criteria. Firstly, compliance with the Uniform Guidance (2 CFR Part 200) is essential. This regulation establishes uniform administrative requirements, cost principles, and audit requirements for federal awards to non-federal entities. The institution must follow these guidelines, which include the proper application and calculation of indirect cost rates. Additionally, adherence to approved indirect cost rates as specified in 2 CFR 200.414 is required. The institution must apply the federally approved indirect cost rates when charging costs to federal awards, ensuring that any deviations, such as using a de minimis rate, are appropriately justified and documented.During our audit we found 3 out of 15 samples selected for our compliance testwork, the College used an incorrect IDC rate. This represents an overcharge, as the IDC rate is intended to cover general administrative expenses that cannot be directly attributed to a specific project. In utilizing a higher rate, the College effectively inflated the administrative costs charged to the federal grants. II. Fringe Rates: When applying fringe rates to federally funded R&D grants, institutions must comply with specific laws, regulations, and requirements to ensure adherence to federal guidelines. The primary regulatory framework is outlined in the OMB Uniform Guidance (2CFR Part 200), which provides the Uniform Administrative Requirements, Cost Principles,and Audit Requirements for Federal Awards. This regulation specifies that fringe benefits,which include employee-related expenses such as health insurance and retirement contributions, are allowable costs only if they are necessary, reasonable, and allocable to the federal award. Additionally, the Federal Acquisition Regulation (FAR) Part 31 outlines the cost principles and procedures for determining the allowability of costs under government contracts, reinforcing the need for costs to be necessary, reasonable, and allocable. Institutions must apply fringe benefit rates that align with the approved rates set by the overseeing federal agency. Overcharging or applying incorrect rates can result in noncompliance with federal regulations. Adequate internal controls are necessary to ensure the correct application of fringe rates, which includes regular monitoring and verification. In cases of noncompliance, corrective actions must be taken to address and rectify discrepancies. Proper documentation and recordkeeping are also essential to support the application of fringe rates and demonstrate compliance with federal guidelines. During our audit we found 5 out of 20 samples selected for our compliance testwork, the College charged an incorrect fringe rate. After inquiry of management, we noted during thefirst quarter of the period under audit, the College charged a fringe benefit rate of 19.9%,instead of the actual rate of 18.65%. KPMG noted for our 15 of 20 samples which were incurred during quarters two, three, and four, the appropriate fringe rate was utilized. Cause: I. Indirect Cost Expenditures (IDC): The cause of the condition is that the College’s internal controls over the review of the rates applied to calculate the IDC charges were not operating effectively to the awards throughout the year. The College manually calculates what the IDC costs are based upon outdated rates and was booked into their financial reporting system without a supplemental review or reconciliation. II. Fringe Rates: The cause of the condition found is the institution not maintaining appropriately functioning controls to review the rates applied to the fringe benefit charges applied to theawards throughout the year. The College manually reviews the fringe benefits charges afterthe expenditure process and therefore is not designed to catch noncompliance prior to the charges to grant. The College identified they were using the incorrect fringe rates during the first quarter, however, did not go back and correct the error as they deemed it to be immaterial. Possible Asserted Effect: I. Indirect Cost Expenditures (IDC): The inflated rate has led to an unwarranted increase in administrative costs charged to federal grants, potentially resulting in the overcharge. II. Fringe Rates: The possible effect of the condition found is that the Institution is overcharging future federal grants for an excess of fringe more than what is deemed as allowable. Questioned Costs The known questioned costs are $3,835 (IDC known questioned costs are $1,703 and fringe known questioned costs are $2,132) and the likely questioned costs are $4,767. Statistical Sampling: Neither samples were intended to be, and were not, a statistically valid sample. Repeat Finding: The conditions found do not constitute a repeat finding from the prior year. Recommendation: I. Indirect Cost Expenditures (IDC): We recommend that management review its internal controls and establish a routine audit and monitoring process to regularly review the application of indirect cost rates and ensure compliance with federal regulations.
Finding No.: 2024-002 – Allowability – Significant deficiency Federal Agency: Various Program Name: Research and Development Cluster ALN Number: Various Federal Award Year: July 1, 2023 – June 30, 2024 Criteria: In accordance with 2 CFR 200.303(a), 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 the 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 Committeeof Sponsoring Organizations of the Treadway Commission (COSO).Conditions Found: I. Indirect Cost Expenditures (IDC): To ensure compliance with federally funded grants, particularly concerning indirect cost rates, the institution must adhere to specific criteria. Firstly, compliance with the Uniform Guidance (2 CFR Part 200) is essential. This regulation establishes uniform administrative requirements, cost principles, and audit requirements for federal awards to non-federal entities. The institution must follow these guidelines, which include the proper application and calculation of indirect cost rates. Additionally, adherence to approved indirect cost rates as specified in 2 CFR 200.414 is required. The institution must apply the federally approved indirect cost rates when charging costs to federal awards, ensuring that any deviations, such as using a de minimis rate, are appropriately justified and documented.During our audit we found 3 out of 15 samples selected for our compliance testwork, the College used an incorrect IDC rate. This represents an overcharge, as the IDC rate is intended to cover general administrative expenses that cannot be directly attributed to a specific project. In utilizing a higher rate, the College effectively inflated the administrative costs charged to the federal grants. II. Fringe Rates: When applying fringe rates to federally funded R&D grants, institutions must comply with specific laws, regulations, and requirements to ensure adherence to federal guidelines. The primary regulatory framework is outlined in the OMB Uniform Guidance (2CFR Part 200), which provides the Uniform Administrative Requirements, Cost Principles,and Audit Requirements for Federal Awards. This regulation specifies that fringe benefits,which include employee-related expenses such as health insurance and retirement contributions, are allowable costs only if they are necessary, reasonable, and allocable to the federal award. Additionally, the Federal Acquisition Regulation (FAR) Part 31 outlines the cost principles and procedures for determining the allowability of costs under government contracts, reinforcing the need for costs to be necessary, reasonable, and allocable. Institutions must apply fringe benefit rates that align with the approved rates set by the overseeing federal agency. Overcharging or applying incorrect rates can result in noncompliance with federal regulations. Adequate internal controls are necessary to ensure the correct application of fringe rates, which includes regular monitoring and verification. In cases of noncompliance, corrective actions must be taken to address and rectify discrepancies. Proper documentation and recordkeeping are also essential to support the application of fringe rates and demonstrate compliance with federal guidelines. During our audit we found 5 out of 20 samples selected for our compliance testwork, the College charged an incorrect fringe rate. After inquiry of management, we noted during thefirst quarter of the period under audit, the College charged a fringe benefit rate of 19.9%,instead of the actual rate of 18.65%. KPMG noted for our 15 of 20 samples which were incurred during quarters two, three, and four, the appropriate fringe rate was utilized. Cause: I. Indirect Cost Expenditures (IDC): The cause of the condition is that the College’s internal controls over the review of the rates applied to calculate the IDC charges were not operating effectively to the awards throughout the year. The College manually calculates what the IDC costs are based upon outdated rates and was booked into their financial reporting system without a supplemental review or reconciliation. II. Fringe Rates: The cause of the condition found is the institution not maintaining appropriately functioning controls to review the rates applied to the fringe benefit charges applied to theawards throughout the year. The College manually reviews the fringe benefits charges afterthe expenditure process and therefore is not designed to catch noncompliance prior to the charges to grant. The College identified they were using the incorrect fringe rates during the first quarter, however, did not go back and correct the error as they deemed it to be immaterial. Possible Asserted Effect: I. Indirect Cost Expenditures (IDC): The inflated rate has led to an unwarranted increase in administrative costs charged to federal grants, potentially resulting in the overcharge. II. Fringe Rates: The possible effect of the condition found is that the Institution is overcharging future federal grants for an excess of fringe more than what is deemed as allowable. Questioned Costs The known questioned costs are $3,835 (IDC known questioned costs are $1,703 and fringe known questioned costs are $2,132) and the likely questioned costs are $4,767. Statistical Sampling: Neither samples were intended to be, and were not, a statistically valid sample. Repeat Finding: The conditions found do not constitute a repeat finding from the prior year. Recommendation: I. Indirect Cost Expenditures (IDC): We recommend that management review its internal controls and establish a routine audit and monitoring process to regularly review the application of indirect cost rates and ensure compliance with federal regulations.
Finding No.: 2024-002 – Allowability – Significant deficiency Federal Agency: Various Program Name: Research and Development Cluster ALN Number: Various Federal Award Year: July 1, 2023 – June 30, 2024 Criteria: In accordance with 2 CFR 200.303(a), 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 the 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 Committeeof Sponsoring Organizations of the Treadway Commission (COSO).Conditions Found: I. Indirect Cost Expenditures (IDC): To ensure compliance with federally funded grants, particularly concerning indirect cost rates, the institution must adhere to specific criteria. Firstly, compliance with the Uniform Guidance (2 CFR Part 200) is essential. This regulation establishes uniform administrative requirements, cost principles, and audit requirements for federal awards to non-federal entities. The institution must follow these guidelines, which include the proper application and calculation of indirect cost rates. Additionally, adherence to approved indirect cost rates as specified in 2 CFR 200.414 is required. The institution must apply the federally approved indirect cost rates when charging costs to federal awards, ensuring that any deviations, such as using a de minimis rate, are appropriately justified and documented.During our audit we found 3 out of 15 samples selected for our compliance testwork, the College used an incorrect IDC rate. This represents an overcharge, as the IDC rate is intended to cover general administrative expenses that cannot be directly attributed to a specific project. In utilizing a higher rate, the College effectively inflated the administrative costs charged to the federal grants. II. Fringe Rates: When applying fringe rates to federally funded R&D grants, institutions must comply with specific laws, regulations, and requirements to ensure adherence to federal guidelines. The primary regulatory framework is outlined in the OMB Uniform Guidance (2CFR Part 200), which provides the Uniform Administrative Requirements, Cost Principles,and Audit Requirements for Federal Awards. This regulation specifies that fringe benefits,which include employee-related expenses such as health insurance and retirement contributions, are allowable costs only if they are necessary, reasonable, and allocable to the federal award. Additionally, the Federal Acquisition Regulation (FAR) Part 31 outlines the cost principles and procedures for determining the allowability of costs under government contracts, reinforcing the need for costs to be necessary, reasonable, and allocable. Institutions must apply fringe benefit rates that align with the approved rates set by the overseeing federal agency. Overcharging or applying incorrect rates can result in noncompliance with federal regulations. Adequate internal controls are necessary to ensure the correct application of fringe rates, which includes regular monitoring and verification. In cases of noncompliance, corrective actions must be taken to address and rectify discrepancies. Proper documentation and recordkeeping are also essential to support the application of fringe rates and demonstrate compliance with federal guidelines. During our audit we found 5 out of 20 samples selected for our compliance testwork, the College charged an incorrect fringe rate. After inquiry of management, we noted during thefirst quarter of the period under audit, the College charged a fringe benefit rate of 19.9%,instead of the actual rate of 18.65%. KPMG noted for our 15 of 20 samples which were incurred during quarters two, three, and four, the appropriate fringe rate was utilized. Cause: I. Indirect Cost Expenditures (IDC): The cause of the condition is that the College’s internal controls over the review of the rates applied to calculate the IDC charges were not operating effectively to the awards throughout the year. The College manually calculates what the IDC costs are based upon outdated rates and was booked into their financial reporting system without a supplemental review or reconciliation. II. Fringe Rates: The cause of the condition found is the institution not maintaining appropriately functioning controls to review the rates applied to the fringe benefit charges applied to theawards throughout the year. The College manually reviews the fringe benefits charges afterthe expenditure process and therefore is not designed to catch noncompliance prior to the charges to grant. The College identified they were using the incorrect fringe rates during the first quarter, however, did not go back and correct the error as they deemed it to be immaterial. Possible Asserted Effect: I. Indirect Cost Expenditures (IDC): The inflated rate has led to an unwarranted increase in administrative costs charged to federal grants, potentially resulting in the overcharge. II. Fringe Rates: The possible effect of the condition found is that the Institution is overcharging future federal grants for an excess of fringe more than what is deemed as allowable. Questioned Costs The known questioned costs are $3,835 (IDC known questioned costs are $1,703 and fringe known questioned costs are $2,132) and the likely questioned costs are $4,767. Statistical Sampling: Neither samples were intended to be, and were not, a statistically valid sample. Repeat Finding: The conditions found do not constitute a repeat finding from the prior year. Recommendation: I. Indirect Cost Expenditures (IDC): We recommend that management review its internal controls and establish a routine audit and monitoring process to regularly review the application of indirect cost rates and ensure compliance with federal regulations.
Finding No.: 2024-002 – Allowability – Significant deficiency Federal Agency: Various Program Name: Research and Development Cluster ALN Number: Various Federal Award Year: July 1, 2023 – June 30, 2024 Criteria: In accordance with 2 CFR 200.303(a), 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 the 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 Committeeof Sponsoring Organizations of the Treadway Commission (COSO).Conditions Found: I. Indirect Cost Expenditures (IDC): To ensure compliance with federally funded grants, particularly concerning indirect cost rates, the institution must adhere to specific criteria. Firstly, compliance with the Uniform Guidance (2 CFR Part 200) is essential. This regulation establishes uniform administrative requirements, cost principles, and audit requirements for federal awards to non-federal entities. The institution must follow these guidelines, which include the proper application and calculation of indirect cost rates. Additionally, adherence to approved indirect cost rates as specified in 2 CFR 200.414 is required. The institution must apply the federally approved indirect cost rates when charging costs to federal awards, ensuring that any deviations, such as using a de minimis rate, are appropriately justified and documented.During our audit we found 3 out of 15 samples selected for our compliance testwork, the College used an incorrect IDC rate. This represents an overcharge, as the IDC rate is intended to cover general administrative expenses that cannot be directly attributed to a specific project. In utilizing a higher rate, the College effectively inflated the administrative costs charged to the federal grants. II. Fringe Rates: When applying fringe rates to federally funded R&D grants, institutions must comply with specific laws, regulations, and requirements to ensure adherence to federal guidelines. The primary regulatory framework is outlined in the OMB Uniform Guidance (2CFR Part 200), which provides the Uniform Administrative Requirements, Cost Principles,and Audit Requirements for Federal Awards. This regulation specifies that fringe benefits,which include employee-related expenses such as health insurance and retirement contributions, are allowable costs only if they are necessary, reasonable, and allocable to the federal award. Additionally, the Federal Acquisition Regulation (FAR) Part 31 outlines the cost principles and procedures for determining the allowability of costs under government contracts, reinforcing the need for costs to be necessary, reasonable, and allocable. Institutions must apply fringe benefit rates that align with the approved rates set by the overseeing federal agency. Overcharging or applying incorrect rates can result in noncompliance with federal regulations. Adequate internal controls are necessary to ensure the correct application of fringe rates, which includes regular monitoring and verification. In cases of noncompliance, corrective actions must be taken to address and rectify discrepancies. Proper documentation and recordkeeping are also essential to support the application of fringe rates and demonstrate compliance with federal guidelines. During our audit we found 5 out of 20 samples selected for our compliance testwork, the College charged an incorrect fringe rate. After inquiry of management, we noted during thefirst quarter of the period under audit, the College charged a fringe benefit rate of 19.9%,instead of the actual rate of 18.65%. KPMG noted for our 15 of 20 samples which were incurred during quarters two, three, and four, the appropriate fringe rate was utilized. Cause: I. Indirect Cost Expenditures (IDC): The cause of the condition is that the College’s internal controls over the review of the rates applied to calculate the IDC charges were not operating effectively to the awards throughout the year. The College manually calculates what the IDC costs are based upon outdated rates and was booked into their financial reporting system without a supplemental review or reconciliation. II. Fringe Rates: The cause of the condition found is the institution not maintaining appropriately functioning controls to review the rates applied to the fringe benefit charges applied to theawards throughout the year. The College manually reviews the fringe benefits charges afterthe expenditure process and therefore is not designed to catch noncompliance prior to the charges to grant. The College identified they were using the incorrect fringe rates during the first quarter, however, did not go back and correct the error as they deemed it to be immaterial. Possible Asserted Effect: I. Indirect Cost Expenditures (IDC): The inflated rate has led to an unwarranted increase in administrative costs charged to federal grants, potentially resulting in the overcharge. II. Fringe Rates: The possible effect of the condition found is that the Institution is overcharging future federal grants for an excess of fringe more than what is deemed as allowable. Questioned Costs The known questioned costs are $3,835 (IDC known questioned costs are $1,703 and fringe known questioned costs are $2,132) and the likely questioned costs are $4,767. Statistical Sampling: Neither samples were intended to be, and were not, a statistically valid sample. Repeat Finding: The conditions found do not constitute a repeat finding from the prior year. Recommendation: I. Indirect Cost Expenditures (IDC): We recommend that management review its internal controls and establish a routine audit and monitoring process to regularly review the application of indirect cost rates and ensure compliance with federal regulations.
Finding No.: 2024-002 – Allowability – Significant deficiency Federal Agency: Various Program Name: Research and Development Cluster ALN Number: Various Federal Award Year: July 1, 2023 – June 30, 2024 Criteria: In accordance with 2 CFR 200.303(a), 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 the 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 Committeeof Sponsoring Organizations of the Treadway Commission (COSO).Conditions Found: I. Indirect Cost Expenditures (IDC): To ensure compliance with federally funded grants, particularly concerning indirect cost rates, the institution must adhere to specific criteria. Firstly, compliance with the Uniform Guidance (2 CFR Part 200) is essential. This regulation establishes uniform administrative requirements, cost principles, and audit requirements for federal awards to non-federal entities. The institution must follow these guidelines, which include the proper application and calculation of indirect cost rates. Additionally, adherence to approved indirect cost rates as specified in 2 CFR 200.414 is required. The institution must apply the federally approved indirect cost rates when charging costs to federal awards, ensuring that any deviations, such as using a de minimis rate, are appropriately justified and documented.During our audit we found 3 out of 15 samples selected for our compliance testwork, the College used an incorrect IDC rate. This represents an overcharge, as the IDC rate is intended to cover general administrative expenses that cannot be directly attributed to a specific project. In utilizing a higher rate, the College effectively inflated the administrative costs charged to the federal grants. II. Fringe Rates: When applying fringe rates to federally funded R&D grants, institutions must comply with specific laws, regulations, and requirements to ensure adherence to federal guidelines. The primary regulatory framework is outlined in the OMB Uniform Guidance (2CFR Part 200), which provides the Uniform Administrative Requirements, Cost Principles,and Audit Requirements for Federal Awards. This regulation specifies that fringe benefits,which include employee-related expenses such as health insurance and retirement contributions, are allowable costs only if they are necessary, reasonable, and allocable to the federal award. Additionally, the Federal Acquisition Regulation (FAR) Part 31 outlines the cost principles and procedures for determining the allowability of costs under government contracts, reinforcing the need for costs to be necessary, reasonable, and allocable. Institutions must apply fringe benefit rates that align with the approved rates set by the overseeing federal agency. Overcharging or applying incorrect rates can result in noncompliance with federal regulations. Adequate internal controls are necessary to ensure the correct application of fringe rates, which includes regular monitoring and verification. In cases of noncompliance, corrective actions must be taken to address and rectify discrepancies. Proper documentation and recordkeeping are also essential to support the application of fringe rates and demonstrate compliance with federal guidelines. During our audit we found 5 out of 20 samples selected for our compliance testwork, the College charged an incorrect fringe rate. After inquiry of management, we noted during thefirst quarter of the period under audit, the College charged a fringe benefit rate of 19.9%,instead of the actual rate of 18.65%. KPMG noted for our 15 of 20 samples which were incurred during quarters two, three, and four, the appropriate fringe rate was utilized. Cause: I. Indirect Cost Expenditures (IDC): The cause of the condition is that the College’s internal controls over the review of the rates applied to calculate the IDC charges were not operating effectively to the awards throughout the year. The College manually calculates what the IDC costs are based upon outdated rates and was booked into their financial reporting system without a supplemental review or reconciliation. II. Fringe Rates: The cause of the condition found is the institution not maintaining appropriately functioning controls to review the rates applied to the fringe benefit charges applied to theawards throughout the year. The College manually reviews the fringe benefits charges afterthe expenditure process and therefore is not designed to catch noncompliance prior to the charges to grant. The College identified they were using the incorrect fringe rates during the first quarter, however, did not go back and correct the error as they deemed it to be immaterial. Possible Asserted Effect: I. Indirect Cost Expenditures (IDC): The inflated rate has led to an unwarranted increase in administrative costs charged to federal grants, potentially resulting in the overcharge. II. Fringe Rates: The possible effect of the condition found is that the Institution is overcharging future federal grants for an excess of fringe more than what is deemed as allowable. Questioned Costs The known questioned costs are $3,835 (IDC known questioned costs are $1,703 and fringe known questioned costs are $2,132) and the likely questioned costs are $4,767. Statistical Sampling: Neither samples were intended to be, and were not, a statistically valid sample. Repeat Finding: The conditions found do not constitute a repeat finding from the prior year. Recommendation: I. Indirect Cost Expenditures (IDC): We recommend that management review its internal controls and establish a routine audit and monitoring process to regularly review the application of indirect cost rates and ensure compliance with federal regulations.
Finding No.: 2024-002 – Allowability – Significant deficiency Federal Agency: Various Program Name: Research and Development Cluster ALN Number: Various Federal Award Year: July 1, 2023 – June 30, 2024 Criteria: In accordance with 2 CFR 200.303(a), 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 the 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 Committeeof Sponsoring Organizations of the Treadway Commission (COSO).Conditions Found: I. Indirect Cost Expenditures (IDC): To ensure compliance with federally funded grants, particularly concerning indirect cost rates, the institution must adhere to specific criteria. Firstly, compliance with the Uniform Guidance (2 CFR Part 200) is essential. This regulation establishes uniform administrative requirements, cost principles, and audit requirements for federal awards to non-federal entities. The institution must follow these guidelines, which include the proper application and calculation of indirect cost rates. Additionally, adherence to approved indirect cost rates as specified in 2 CFR 200.414 is required. The institution must apply the federally approved indirect cost rates when charging costs to federal awards, ensuring that any deviations, such as using a de minimis rate, are appropriately justified and documented.During our audit we found 3 out of 15 samples selected for our compliance testwork, the College used an incorrect IDC rate. This represents an overcharge, as the IDC rate is intended to cover general administrative expenses that cannot be directly attributed to a specific project. In utilizing a higher rate, the College effectively inflated the administrative costs charged to the federal grants. II. Fringe Rates: When applying fringe rates to federally funded R&D grants, institutions must comply with specific laws, regulations, and requirements to ensure adherence to federal guidelines. The primary regulatory framework is outlined in the OMB Uniform Guidance (2CFR Part 200), which provides the Uniform Administrative Requirements, Cost Principles,and Audit Requirements for Federal Awards. This regulation specifies that fringe benefits,which include employee-related expenses such as health insurance and retirement contributions, are allowable costs only if they are necessary, reasonable, and allocable to the federal award. Additionally, the Federal Acquisition Regulation (FAR) Part 31 outlines the cost principles and procedures for determining the allowability of costs under government contracts, reinforcing the need for costs to be necessary, reasonable, and allocable. Institutions must apply fringe benefit rates that align with the approved rates set by the overseeing federal agency. Overcharging or applying incorrect rates can result in noncompliance with federal regulations. Adequate internal controls are necessary to ensure the correct application of fringe rates, which includes regular monitoring and verification. In cases of noncompliance, corrective actions must be taken to address and rectify discrepancies. Proper documentation and recordkeeping are also essential to support the application of fringe rates and demonstrate compliance with federal guidelines. During our audit we found 5 out of 20 samples selected for our compliance testwork, the College charged an incorrect fringe rate. After inquiry of management, we noted during thefirst quarter of the period under audit, the College charged a fringe benefit rate of 19.9%,instead of the actual rate of 18.65%. KPMG noted for our 15 of 20 samples which were incurred during quarters two, three, and four, the appropriate fringe rate was utilized. Cause: I. Indirect Cost Expenditures (IDC): The cause of the condition is that the College’s internal controls over the review of the rates applied to calculate the IDC charges were not operating effectively to the awards throughout the year. The College manually calculates what the IDC costs are based upon outdated rates and was booked into their financial reporting system without a supplemental review or reconciliation. II. Fringe Rates: The cause of the condition found is the institution not maintaining appropriately functioning controls to review the rates applied to the fringe benefit charges applied to theawards throughout the year. The College manually reviews the fringe benefits charges afterthe expenditure process and therefore is not designed to catch noncompliance prior to the charges to grant. The College identified they were using the incorrect fringe rates during the first quarter, however, did not go back and correct the error as they deemed it to be immaterial. Possible Asserted Effect: I. Indirect Cost Expenditures (IDC): The inflated rate has led to an unwarranted increase in administrative costs charged to federal grants, potentially resulting in the overcharge. II. Fringe Rates: The possible effect of the condition found is that the Institution is overcharging future federal grants for an excess of fringe more than what is deemed as allowable. Questioned Costs The known questioned costs are $3,835 (IDC known questioned costs are $1,703 and fringe known questioned costs are $2,132) and the likely questioned costs are $4,767. Statistical Sampling: Neither samples were intended to be, and were not, a statistically valid sample. Repeat Finding: The conditions found do not constitute a repeat finding from the prior year. Recommendation: I. Indirect Cost Expenditures (IDC): We recommend that management review its internal controls and establish a routine audit and monitoring process to regularly review the application of indirect cost rates and ensure compliance with federal regulations.
Finding No.: 2024-002 – Allowability – Significant deficiency Federal Agency: Various Program Name: Research and Development Cluster ALN Number: Various Federal Award Year: July 1, 2023 – June 30, 2024 Criteria: In accordance with 2 CFR 200.303(a), 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 the 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 Committeeof Sponsoring Organizations of the Treadway Commission (COSO).Conditions Found: I. Indirect Cost Expenditures (IDC): To ensure compliance with federally funded grants, particularly concerning indirect cost rates, the institution must adhere to specific criteria. Firstly, compliance with the Uniform Guidance (2 CFR Part 200) is essential. This regulation establishes uniform administrative requirements, cost principles, and audit requirements for federal awards to non-federal entities. The institution must follow these guidelines, which include the proper application and calculation of indirect cost rates. Additionally, adherence to approved indirect cost rates as specified in 2 CFR 200.414 is required. The institution must apply the federally approved indirect cost rates when charging costs to federal awards, ensuring that any deviations, such as using a de minimis rate, are appropriately justified and documented.During our audit we found 3 out of 15 samples selected for our compliance testwork, the College used an incorrect IDC rate. This represents an overcharge, as the IDC rate is intended to cover general administrative expenses that cannot be directly attributed to a specific project. In utilizing a higher rate, the College effectively inflated the administrative costs charged to the federal grants. II. Fringe Rates: When applying fringe rates to federally funded R&D grants, institutions must comply with specific laws, regulations, and requirements to ensure adherence to federal guidelines. The primary regulatory framework is outlined in the OMB Uniform Guidance (2CFR Part 200), which provides the Uniform Administrative Requirements, Cost Principles,and Audit Requirements for Federal Awards. This regulation specifies that fringe benefits,which include employee-related expenses such as health insurance and retirement contributions, are allowable costs only if they are necessary, reasonable, and allocable to the federal award. Additionally, the Federal Acquisition Regulation (FAR) Part 31 outlines the cost principles and procedures for determining the allowability of costs under government contracts, reinforcing the need for costs to be necessary, reasonable, and allocable. Institutions must apply fringe benefit rates that align with the approved rates set by the overseeing federal agency. Overcharging or applying incorrect rates can result in noncompliance with federal regulations. Adequate internal controls are necessary to ensure the correct application of fringe rates, which includes regular monitoring and verification. In cases of noncompliance, corrective actions must be taken to address and rectify discrepancies. Proper documentation and recordkeeping are also essential to support the application of fringe rates and demonstrate compliance with federal guidelines. During our audit we found 5 out of 20 samples selected for our compliance testwork, the College charged an incorrect fringe rate. After inquiry of management, we noted during thefirst quarter of the period under audit, the College charged a fringe benefit rate of 19.9%,instead of the actual rate of 18.65%. KPMG noted for our 15 of 20 samples which were incurred during quarters two, three, and four, the appropriate fringe rate was utilized. Cause: I. Indirect Cost Expenditures (IDC): The cause of the condition is that the College’s internal controls over the review of the rates applied to calculate the IDC charges were not operating effectively to the awards throughout the year. The College manually calculates what the IDC costs are based upon outdated rates and was booked into their financial reporting system without a supplemental review or reconciliation. II. Fringe Rates: The cause of the condition found is the institution not maintaining appropriately functioning controls to review the rates applied to the fringe benefit charges applied to theawards throughout the year. The College manually reviews the fringe benefits charges afterthe expenditure process and therefore is not designed to catch noncompliance prior to the charges to grant. The College identified they were using the incorrect fringe rates during the first quarter, however, did not go back and correct the error as they deemed it to be immaterial. Possible Asserted Effect: I. Indirect Cost Expenditures (IDC): The inflated rate has led to an unwarranted increase in administrative costs charged to federal grants, potentially resulting in the overcharge. II. Fringe Rates: The possible effect of the condition found is that the Institution is overcharging future federal grants for an excess of fringe more than what is deemed as allowable. Questioned Costs The known questioned costs are $3,835 (IDC known questioned costs are $1,703 and fringe known questioned costs are $2,132) and the likely questioned costs are $4,767. Statistical Sampling: Neither samples were intended to be, and were not, a statistically valid sample. Repeat Finding: The conditions found do not constitute a repeat finding from the prior year. Recommendation: I. Indirect Cost Expenditures (IDC): We recommend that management review its internal controls and establish a routine audit and monitoring process to regularly review the application of indirect cost rates and ensure compliance with federal regulations.
Finding No.: 2024-002 – Allowability – Significant deficiency Federal Agency: Various Program Name: Research and Development Cluster ALN Number: Various Federal Award Year: July 1, 2023 – June 30, 2024 Criteria: In accordance with 2 CFR 200.303(a), 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 the 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 Committeeof Sponsoring Organizations of the Treadway Commission (COSO).Conditions Found: I. Indirect Cost Expenditures (IDC): To ensure compliance with federally funded grants, particularly concerning indirect cost rates, the institution must adhere to specific criteria. Firstly, compliance with the Uniform Guidance (2 CFR Part 200) is essential. This regulation establishes uniform administrative requirements, cost principles, and audit requirements for federal awards to non-federal entities. The institution must follow these guidelines, which include the proper application and calculation of indirect cost rates. Additionally, adherence to approved indirect cost rates as specified in 2 CFR 200.414 is required. The institution must apply the federally approved indirect cost rates when charging costs to federal awards, ensuring that any deviations, such as using a de minimis rate, are appropriately justified and documented.During our audit we found 3 out of 15 samples selected for our compliance testwork, the College used an incorrect IDC rate. This represents an overcharge, as the IDC rate is intended to cover general administrative expenses that cannot be directly attributed to a specific project. In utilizing a higher rate, the College effectively inflated the administrative costs charged to the federal grants. II. Fringe Rates: When applying fringe rates to federally funded R&D grants, institutions must comply with specific laws, regulations, and requirements to ensure adherence to federal guidelines. The primary regulatory framework is outlined in the OMB Uniform Guidance (2CFR Part 200), which provides the Uniform Administrative Requirements, Cost Principles,and Audit Requirements for Federal Awards. This regulation specifies that fringe benefits,which include employee-related expenses such as health insurance and retirement contributions, are allowable costs only if they are necessary, reasonable, and allocable to the federal award. Additionally, the Federal Acquisition Regulation (FAR) Part 31 outlines the cost principles and procedures for determining the allowability of costs under government contracts, reinforcing the need for costs to be necessary, reasonable, and allocable. Institutions must apply fringe benefit rates that align with the approved rates set by the overseeing federal agency. Overcharging or applying incorrect rates can result in noncompliance with federal regulations. Adequate internal controls are necessary to ensure the correct application of fringe rates, which includes regular monitoring and verification. In cases of noncompliance, corrective actions must be taken to address and rectify discrepancies. Proper documentation and recordkeeping are also essential to support the application of fringe rates and demonstrate compliance with federal guidelines. During our audit we found 5 out of 20 samples selected for our compliance testwork, the College charged an incorrect fringe rate. After inquiry of management, we noted during thefirst quarter of the period under audit, the College charged a fringe benefit rate of 19.9%,instead of the actual rate of 18.65%. KPMG noted for our 15 of 20 samples which were incurred during quarters two, three, and four, the appropriate fringe rate was utilized. Cause: I. Indirect Cost Expenditures (IDC): The cause of the condition is that the College’s internal controls over the review of the rates applied to calculate the IDC charges were not operating effectively to the awards throughout the year. The College manually calculates what the IDC costs are based upon outdated rates and was booked into their financial reporting system without a supplemental review or reconciliation. II. Fringe Rates: The cause of the condition found is the institution not maintaining appropriately functioning controls to review the rates applied to the fringe benefit charges applied to theawards throughout the year. The College manually reviews the fringe benefits charges afterthe expenditure process and therefore is not designed to catch noncompliance prior to the charges to grant. The College identified they were using the incorrect fringe rates during the first quarter, however, did not go back and correct the error as they deemed it to be immaterial. Possible Asserted Effect: I. Indirect Cost Expenditures (IDC): The inflated rate has led to an unwarranted increase in administrative costs charged to federal grants, potentially resulting in the overcharge. II. Fringe Rates: The possible effect of the condition found is that the Institution is overcharging future federal grants for an excess of fringe more than what is deemed as allowable. Questioned Costs The known questioned costs are $3,835 (IDC known questioned costs are $1,703 and fringe known questioned costs are $2,132) and the likely questioned costs are $4,767. Statistical Sampling: Neither samples were intended to be, and were not, a statistically valid sample. Repeat Finding: The conditions found do not constitute a repeat finding from the prior year. Recommendation: I. Indirect Cost Expenditures (IDC): We recommend that management review its internal controls and establish a routine audit and monitoring process to regularly review the application of indirect cost rates and ensure compliance with federal regulations.
Finding No.: 2024-002 – Allowability – Significant deficiency Federal Agency: Various Program Name: Research and Development Cluster ALN Number: Various Federal Award Year: July 1, 2023 – June 30, 2024 Criteria: In accordance with 2 CFR 200.303(a), 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 the 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 Committeeof Sponsoring Organizations of the Treadway Commission (COSO).Conditions Found: I. Indirect Cost Expenditures (IDC): To ensure compliance with federally funded grants, particularly concerning indirect cost rates, the institution must adhere to specific criteria. Firstly, compliance with the Uniform Guidance (2 CFR Part 200) is essential. This regulation establishes uniform administrative requirements, cost principles, and audit requirements for federal awards to non-federal entities. The institution must follow these guidelines, which include the proper application and calculation of indirect cost rates. Additionally, adherence to approved indirect cost rates as specified in 2 CFR 200.414 is required. The institution must apply the federally approved indirect cost rates when charging costs to federal awards, ensuring that any deviations, such as using a de minimis rate, are appropriately justified and documented.During our audit we found 3 out of 15 samples selected for our compliance testwork, the College used an incorrect IDC rate. This represents an overcharge, as the IDC rate is intended to cover general administrative expenses that cannot be directly attributed to a specific project. In utilizing a higher rate, the College effectively inflated the administrative costs charged to the federal grants. II. Fringe Rates: When applying fringe rates to federally funded R&D grants, institutions must comply with specific laws, regulations, and requirements to ensure adherence to federal guidelines. The primary regulatory framework is outlined in the OMB Uniform Guidance (2CFR Part 200), which provides the Uniform Administrative Requirements, Cost Principles,and Audit Requirements for Federal Awards. This regulation specifies that fringe benefits,which include employee-related expenses such as health insurance and retirement contributions, are allowable costs only if they are necessary, reasonable, and allocable to the federal award. Additionally, the Federal Acquisition Regulation (FAR) Part 31 outlines the cost principles and procedures for determining the allowability of costs under government contracts, reinforcing the need for costs to be necessary, reasonable, and allocable. Institutions must apply fringe benefit rates that align with the approved rates set by the overseeing federal agency. Overcharging or applying incorrect rates can result in noncompliance with federal regulations. Adequate internal controls are necessary to ensure the correct application of fringe rates, which includes regular monitoring and verification. In cases of noncompliance, corrective actions must be taken to address and rectify discrepancies. Proper documentation and recordkeeping are also essential to support the application of fringe rates and demonstrate compliance with federal guidelines. During our audit we found 5 out of 20 samples selected for our compliance testwork, the College charged an incorrect fringe rate. After inquiry of management, we noted during thefirst quarter of the period under audit, the College charged a fringe benefit rate of 19.9%,instead of the actual rate of 18.65%. KPMG noted for our 15 of 20 samples which were incurred during quarters two, three, and four, the appropriate fringe rate was utilized. Cause: I. Indirect Cost Expenditures (IDC): The cause of the condition is that the College’s internal controls over the review of the rates applied to calculate the IDC charges were not operating effectively to the awards throughout the year. The College manually calculates what the IDC costs are based upon outdated rates and was booked into their financial reporting system without a supplemental review or reconciliation. II. Fringe Rates: The cause of the condition found is the institution not maintaining appropriately functioning controls to review the rates applied to the fringe benefit charges applied to theawards throughout the year. The College manually reviews the fringe benefits charges afterthe expenditure process and therefore is not designed to catch noncompliance prior to the charges to grant. The College identified they were using the incorrect fringe rates during the first quarter, however, did not go back and correct the error as they deemed it to be immaterial. Possible Asserted Effect: I. Indirect Cost Expenditures (IDC): The inflated rate has led to an unwarranted increase in administrative costs charged to federal grants, potentially resulting in the overcharge. II. Fringe Rates: The possible effect of the condition found is that the Institution is overcharging future federal grants for an excess of fringe more than what is deemed as allowable. Questioned Costs The known questioned costs are $3,835 (IDC known questioned costs are $1,703 and fringe known questioned costs are $2,132) and the likely questioned costs are $4,767. Statistical Sampling: Neither samples were intended to be, and were not, a statistically valid sample. Repeat Finding: The conditions found do not constitute a repeat finding from the prior year. Recommendation: I. Indirect Cost Expenditures (IDC): We recommend that management review its internal controls and establish a routine audit and monitoring process to regularly review the application of indirect cost rates and ensure compliance with federal regulations.