Finding 2024-001: Activities Allowed or Unallowed Research and Development Cluster Award Period: July 1, 2023 – June 30, 2024 Criteria: In accordance with 2 CFR 200.430(g), as it relates to time and effort reporting, charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated; be incorporated into the official records of the recipient or subrecipient; and support the distribution of the employee’s salary or wages among specific activities or cost objectives. Condition: Time and effort reporting for full time employees of the College whose labor costs were charged to certain research and development grants did not occur consistently during the fiscal year under audit. Cause: For a portion of the year under audit, there was a lack of full staffing in certain positions within the College’s Office of Grants and Sponsored Research (OGSR), which prevented the required level of detail and consistently around time and effort reporting. Effect: Due to short staffing within the OGSR department, time and effort reporting was not conducted on a timely and consistent basis for all individuals working on research and development grants during the period and the College was therefore not meeting the requirements established in the OMB Uniform Guidance. Questioned Costs: None. Context: The College uses effort reporting to meet its requirements under 2CFR 200.403. Effort reporting is a process to verify that labor charged as direct costs to sponsored awards is accurate, timely, and reflects the actual level or work performed. The College’s Effort Verification Operating Policy, states “For salaried employees and faculty who work on sponsored projects, TCNJ’s verification of effort (and payroll changes) is documented through the periodic preparation and review of Effort Verification Forms (EVFs).” As part of our testing procedures, we selected 40 salary transactions directly charged to awards (comprised of both salaried employees and faculty), of which 10 had no effort verification form certified for any of the transactions during the fiscal year under audit. Repeat Finding: No. Recommendation: Management should follow the applicable guidance as well as the College’s Effort Verification Operating Policy to complete accurate and consistent time and effort reporting on sponsored research grants. Views of Responsible Officials and Planned Corrective Action: For the fiscal year ending June 30, 2024, the College had 7 employees with a combined total of 10 payroll instances with no effort verification form certified for any of the transactions during the fiscal year. The effort was certified after the fiscal year, as part of the year-end process rather than semi-annually which has been the practice in past years following guidance in Effort Verification Operating Policy. The College recognizes the importance of ensuring that labor costs charged to federal awards are based on accurate and timely records and certifications, as required under 2 CFR 200.430(g). Once the staffing was realigned and vacant positions filled, the time and effort certification for the fiscal year labor costs were completed during the months between August 2024 and November 2024. The College is committed to improving its internal controls over time and effort reporting for research and development grants to ensure compliance and has already taken corrective actions to assist. Cause: As noted in the condition above, staffing issues related to vacancies and adequate training resources within the Office of Grants and Sponsored Research (OGSR) during the fiscal year led to inconsistent and untimely preparation of Effort Verification Forms (EVFs). This impacted the department's ability to meet the original time and effort required completion date. Corrective Actions: 1. Reorganized Post-Award Administration tasks to Finance and Business Services (FBS): In response to the identified challenges, the College has transferred a majority of the grant post-award financial and reporting administration responsibilities to the Department of Finance and Business Services (FBS). This transfer allows for a more centralized and streamlined approach to managing time and effort reporting and financial post-award functions. 2. Staffing Gaps Filled: To support the transfer of responsibilities, two new staff members have been hired within FBS to manage the post-award financial and reporting administration, including time and effort reporting tasks. 3. Improved Monitoring and Oversight: The College has implemented a monitoring and oversight process for time and effort reporting to ensure that all required documentation is completed and certified according to required guidelines. Specifically, the College has designated a responsible party within FBS to conduct regular audits of time and effort reports to confirm compliance with both internal policies and federal regulations. 4. Strengthened Training and Communication: FBS staff and relevant personnel will receive enhanced training on the College’s Effort Verification Operating Policy, emphasizing the importance of timely documentation and certification of EVFs. This will help prevent lapses in reporting and ensure that staff are fully aware of their responsibilities under 2 CFR 200.430(g). 5. Action Plan for Corrective Timing: The College has implemented a more proactive scheduling and tracking system to avoid any delays in the preparation and certification of EVFs going forward. Individual Responsible for Corrective Action: Karen Miller, Controller Jeanette Vega, Director of Grant Financial Administration Anticipated Completion Date for Corrective Action: Partially complete in September 2024, with remaining items by June 30, 2025
Finding 2024-001: Activities Allowed or Unallowed Research and Development Cluster Award Period: July 1, 2023 – June 30, 2024 Criteria: In accordance with 2 CFR 200.430(g), as it relates to time and effort reporting, charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated; be incorporated into the official records of the recipient or subrecipient; and support the distribution of the employee’s salary or wages among specific activities or cost objectives. Condition: Time and effort reporting for full time employees of the College whose labor costs were charged to certain research and development grants did not occur consistently during the fiscal year under audit. Cause: For a portion of the year under audit, there was a lack of full staffing in certain positions within the College’s Office of Grants and Sponsored Research (OGSR), which prevented the required level of detail and consistently around time and effort reporting. Effect: Due to short staffing within the OGSR department, time and effort reporting was not conducted on a timely and consistent basis for all individuals working on research and development grants during the period and the College was therefore not meeting the requirements established in the OMB Uniform Guidance. Questioned Costs: None. Context: The College uses effort reporting to meet its requirements under 2CFR 200.403. Effort reporting is a process to verify that labor charged as direct costs to sponsored awards is accurate, timely, and reflects the actual level or work performed. The College’s Effort Verification Operating Policy, states “For salaried employees and faculty who work on sponsored projects, TCNJ’s verification of effort (and payroll changes) is documented through the periodic preparation and review of Effort Verification Forms (EVFs).” As part of our testing procedures, we selected 40 salary transactions directly charged to awards (comprised of both salaried employees and faculty), of which 10 had no effort verification form certified for any of the transactions during the fiscal year under audit. Repeat Finding: No. Recommendation: Management should follow the applicable guidance as well as the College’s Effort Verification Operating Policy to complete accurate and consistent time and effort reporting on sponsored research grants. Views of Responsible Officials and Planned Corrective Action: For the fiscal year ending June 30, 2024, the College had 7 employees with a combined total of 10 payroll instances with no effort verification form certified for any of the transactions during the fiscal year. The effort was certified after the fiscal year, as part of the year-end process rather than semi-annually which has been the practice in past years following guidance in Effort Verification Operating Policy. The College recognizes the importance of ensuring that labor costs charged to federal awards are based on accurate and timely records and certifications, as required under 2 CFR 200.430(g). Once the staffing was realigned and vacant positions filled, the time and effort certification for the fiscal year labor costs were completed during the months between August 2024 and November 2024. The College is committed to improving its internal controls over time and effort reporting for research and development grants to ensure compliance and has already taken corrective actions to assist. Cause: As noted in the condition above, staffing issues related to vacancies and adequate training resources within the Office of Grants and Sponsored Research (OGSR) during the fiscal year led to inconsistent and untimely preparation of Effort Verification Forms (EVFs). This impacted the department's ability to meet the original time and effort required completion date. Corrective Actions: 1. Reorganized Post-Award Administration tasks to Finance and Business Services (FBS): In response to the identified challenges, the College has transferred a majority of the grant post-award financial and reporting administration responsibilities to the Department of Finance and Business Services (FBS). This transfer allows for a more centralized and streamlined approach to managing time and effort reporting and financial post-award functions. 2. Staffing Gaps Filled: To support the transfer of responsibilities, two new staff members have been hired within FBS to manage the post-award financial and reporting administration, including time and effort reporting tasks. 3. Improved Monitoring and Oversight: The College has implemented a monitoring and oversight process for time and effort reporting to ensure that all required documentation is completed and certified according to required guidelines. Specifically, the College has designated a responsible party within FBS to conduct regular audits of time and effort reports to confirm compliance with both internal policies and federal regulations. 4. Strengthened Training and Communication: FBS staff and relevant personnel will receive enhanced training on the College’s Effort Verification Operating Policy, emphasizing the importance of timely documentation and certification of EVFs. This will help prevent lapses in reporting and ensure that staff are fully aware of their responsibilities under 2 CFR 200.430(g). 5. Action Plan for Corrective Timing: The College has implemented a more proactive scheduling and tracking system to avoid any delays in the preparation and certification of EVFs going forward. Individual Responsible for Corrective Action: Karen Miller, Controller Jeanette Vega, Director of Grant Financial Administration Anticipated Completion Date for Corrective Action: Partially complete in September 2024, with remaining items by June 30, 2025
Finding 2024-002 (ACFR Finding 2024-002) – Significant Deficiency Internal Control over Compliance Finding – Allowable Costs Education Stabilization Fund ALN: 84.425U FAIN: S425U210027 Grantor Agency: U.S. Department of Education Pass-Through Agency: State Department of Education Criteria: According to 2 CFR 200.403(a) and (g), for costs to be allowable under a federal awards, they must be necessary, reasonable, and adequately documented. Additionally, 2 CFR 200.430(a) requires that payroll costs charged to federal grants be based on records that accurately reflect the work performed and be properly authorized. Statement of Condition: The District charged payroll expenditures to the Educational Stabilization Fund (ESF) grant for employees who were not approved to be paid from the grant. Additionally, certain employees were paid at rates that were not authorized by the Board. Furthermore, journal entries related to payroll expenses were not supported by adequate documentation. As a result, we identified $51,682 in questioned costs. Context: During our testing of ESF, we tested the payroll expenditures charged to the grant. Our testing included reviewing and reconciling the individual employees to board approvals to be charged to the grant, reviewing the approved pay rates for the grant for hourly or stipend employees, and reconciling the underlying data on payroll-related journal entries and time sheets. Cause and effect: The District did not have adequate internal controls to ensure that only authorized employees and approved pay rates were used for payroll costs charged to the ESF grant. Additionally, there was a lack of review and oversight over payroll-related journal entries to ensure they were properly supported. Without proper controls over payroll charges and documentation, the District risks noncompliance with federal grant requirements, which could result in disallowed costs and potential repayment of federal funds. In this case, $51,682 in payroll expenditures are considered questioned costs, subject to further review by the granting agency. Questioned Costs: $51,682 Recommendation: We recommend that the District strengthen internal controls over payroll processing related to grants to ensure that only authorized employees and approved pay rates are charged to the ESF grant, implement a review process to verify that all payroll-related journal entries are adequately supported before posting, conduct a review of payroll charges to federal grants to identify and correct any additional instances of unapproved costs, provide training to finance and grant management staff on federal grant requirements for payroll expenditures, and coordinate with grantor agency to determine appropriate corrective action regarding the identified questioned costs. Views of Responsible Officials: District management concurs with the finding and has developed a corrective action plan in response to the recommendations above and has begun to take action to address the finding.
Finding 2024-002 (ACFR Finding 2024-002) – Significant Deficiency Internal Control over Compliance Finding – Allowable Costs Education Stabilization Fund ALN: 84.425U FAIN: S425U210027 Grantor Agency: U.S. Department of Education Pass-Through Agency: State Department of Education Criteria: According to 2 CFR 200.403(a) and (g), for costs to be allowable under a federal awards, they must be necessary, reasonable, and adequately documented. Additionally, 2 CFR 200.430(a) requires that payroll costs charged to federal grants be based on records that accurately reflect the work performed and be properly authorized. Statement of Condition: The District charged payroll expenditures to the Educational Stabilization Fund (ESF) grant for employees who were not approved to be paid from the grant. Additionally, certain employees were paid at rates that were not authorized by the Board. Furthermore, journal entries related to payroll expenses were not supported by adequate documentation. As a result, we identified $51,682 in questioned costs. Context: During our testing of ESF, we tested the payroll expenditures charged to the grant. Our testing included reviewing and reconciling the individual employees to board approvals to be charged to the grant, reviewing the approved pay rates for the grant for hourly or stipend employees, and reconciling the underlying data on payroll-related journal entries and time sheets. Cause and effect: The District did not have adequate internal controls to ensure that only authorized employees and approved pay rates were used for payroll costs charged to the ESF grant. Additionally, there was a lack of review and oversight over payroll-related journal entries to ensure they were properly supported. Without proper controls over payroll charges and documentation, the District risks noncompliance with federal grant requirements, which could result in disallowed costs and potential repayment of federal funds. In this case, $51,682 in payroll expenditures are considered questioned costs, subject to further review by the granting agency. Questioned Costs: $51,682 Recommendation: We recommend that the District strengthen internal controls over payroll processing related to grants to ensure that only authorized employees and approved pay rates are charged to the ESF grant, implement a review process to verify that all payroll-related journal entries are adequately supported before posting, conduct a review of payroll charges to federal grants to identify and correct any additional instances of unapproved costs, provide training to finance and grant management staff on federal grant requirements for payroll expenditures, and coordinate with grantor agency to determine appropriate corrective action regarding the identified questioned costs. Views of Responsible Officials: District management concurs with the finding and has developed a corrective action plan in response to the recommendations above and has begun to take action to address the finding.
Finding 2024-002 (ACFR Finding 2024-002) – Significant Deficiency Internal Control over Compliance Finding – Allowable Costs Education Stabilization Fund ALN: 84.425U FAIN: S425U210027 Grantor Agency: U.S. Department of Education Pass-Through Agency: State Department of Education Criteria: According to 2 CFR 200.403(a) and (g), for costs to be allowable under a federal awards, they must be necessary, reasonable, and adequately documented. Additionally, 2 CFR 200.430(a) requires that payroll costs charged to federal grants be based on records that accurately reflect the work performed and be properly authorized. Statement of Condition: The District charged payroll expenditures to the Educational Stabilization Fund (ESF) grant for employees who were not approved to be paid from the grant. Additionally, certain employees were paid at rates that were not authorized by the Board. Furthermore, journal entries related to payroll expenses were not supported by adequate documentation. As a result, we identified $51,682 in questioned costs. Context: During our testing of ESF, we tested the payroll expenditures charged to the grant. Our testing included reviewing and reconciling the individual employees to board approvals to be charged to the grant, reviewing the approved pay rates for the grant for hourly or stipend employees, and reconciling the underlying data on payroll-related journal entries and time sheets. Cause and effect: The District did not have adequate internal controls to ensure that only authorized employees and approved pay rates were used for payroll costs charged to the ESF grant. Additionally, there was a lack of review and oversight over payroll-related journal entries to ensure they were properly supported. Without proper controls over payroll charges and documentation, the District risks noncompliance with federal grant requirements, which could result in disallowed costs and potential repayment of federal funds. In this case, $51,682 in payroll expenditures are considered questioned costs, subject to further review by the granting agency. Questioned Costs: $51,682 Recommendation: We recommend that the District strengthen internal controls over payroll processing related to grants to ensure that only authorized employees and approved pay rates are charged to the ESF grant, implement a review process to verify that all payroll-related journal entries are adequately supported before posting, conduct a review of payroll charges to federal grants to identify and correct any additional instances of unapproved costs, provide training to finance and grant management staff on federal grant requirements for payroll expenditures, and coordinate with grantor agency to determine appropriate corrective action regarding the identified questioned costs. Views of Responsible Officials: District management concurs with the finding and has developed a corrective action plan in response to the recommendations above and has begun to take action to address the finding.
Finding 2024-002 (ACFR Finding 2024-002) – Significant Deficiency Internal Control over Compliance Finding – Allowable Costs Education Stabilization Fund ALN: 84.425U FAIN: S425U210027 Grantor Agency: U.S. Department of Education Pass-Through Agency: State Department of Education Criteria: According to 2 CFR 200.403(a) and (g), for costs to be allowable under a federal awards, they must be necessary, reasonable, and adequately documented. Additionally, 2 CFR 200.430(a) requires that payroll costs charged to federal grants be based on records that accurately reflect the work performed and be properly authorized. Statement of Condition: The District charged payroll expenditures to the Educational Stabilization Fund (ESF) grant for employees who were not approved to be paid from the grant. Additionally, certain employees were paid at rates that were not authorized by the Board. Furthermore, journal entries related to payroll expenses were not supported by adequate documentation. As a result, we identified $51,682 in questioned costs. Context: During our testing of ESF, we tested the payroll expenditures charged to the grant. Our testing included reviewing and reconciling the individual employees to board approvals to be charged to the grant, reviewing the approved pay rates for the grant for hourly or stipend employees, and reconciling the underlying data on payroll-related journal entries and time sheets. Cause and effect: The District did not have adequate internal controls to ensure that only authorized employees and approved pay rates were used for payroll costs charged to the ESF grant. Additionally, there was a lack of review and oversight over payroll-related journal entries to ensure they were properly supported. Without proper controls over payroll charges and documentation, the District risks noncompliance with federal grant requirements, which could result in disallowed costs and potential repayment of federal funds. In this case, $51,682 in payroll expenditures are considered questioned costs, subject to further review by the granting agency. Questioned Costs: $51,682 Recommendation: We recommend that the District strengthen internal controls over payroll processing related to grants to ensure that only authorized employees and approved pay rates are charged to the ESF grant, implement a review process to verify that all payroll-related journal entries are adequately supported before posting, conduct a review of payroll charges to federal grants to identify and correct any additional instances of unapproved costs, provide training to finance and grant management staff on federal grant requirements for payroll expenditures, and coordinate with grantor agency to determine appropriate corrective action regarding the identified questioned costs. Views of Responsible Officials: District management concurs with the finding and has developed a corrective action plan in response to the recommendations above and has begun to take action to address the finding.
Finding 2024-002 (ACFR Finding 2024-002) – Significant Deficiency Internal Control over Compliance Finding – Allowable Costs Education Stabilization Fund ALN: 84.425U FAIN: S425U210027 Grantor Agency: U.S. Department of Education Pass-Through Agency: State Department of Education Criteria: According to 2 CFR 200.403(a) and (g), for costs to be allowable under a federal awards, they must be necessary, reasonable, and adequately documented. Additionally, 2 CFR 200.430(a) requires that payroll costs charged to federal grants be based on records that accurately reflect the work performed and be properly authorized. Statement of Condition: The District charged payroll expenditures to the Educational Stabilization Fund (ESF) grant for employees who were not approved to be paid from the grant. Additionally, certain employees were paid at rates that were not authorized by the Board. Furthermore, journal entries related to payroll expenses were not supported by adequate documentation. As a result, we identified $51,682 in questioned costs. Context: During our testing of ESF, we tested the payroll expenditures charged to the grant. Our testing included reviewing and reconciling the individual employees to board approvals to be charged to the grant, reviewing the approved pay rates for the grant for hourly or stipend employees, and reconciling the underlying data on payroll-related journal entries and time sheets. Cause and effect: The District did not have adequate internal controls to ensure that only authorized employees and approved pay rates were used for payroll costs charged to the ESF grant. Additionally, there was a lack of review and oversight over payroll-related journal entries to ensure they were properly supported. Without proper controls over payroll charges and documentation, the District risks noncompliance with federal grant requirements, which could result in disallowed costs and potential repayment of federal funds. In this case, $51,682 in payroll expenditures are considered questioned costs, subject to further review by the granting agency. Questioned Costs: $51,682 Recommendation: We recommend that the District strengthen internal controls over payroll processing related to grants to ensure that only authorized employees and approved pay rates are charged to the ESF grant, implement a review process to verify that all payroll-related journal entries are adequately supported before posting, conduct a review of payroll charges to federal grants to identify and correct any additional instances of unapproved costs, provide training to finance and grant management staff on federal grant requirements for payroll expenditures, and coordinate with grantor agency to determine appropriate corrective action regarding the identified questioned costs. Views of Responsible Officials: District management concurs with the finding and has developed a corrective action plan in response to the recommendations above and has begun to take action to address the finding.
2024-002: Payroll Timecard Approval Federal Departments: Department of Health and Human Services Assistance Listing #: 93.612 and 93.959 Compliance and Internal Controls Significant Deficiency Category of Finding – Allowable Costs/ Cost Principles Criteria – 2 CFR § 200.430 requires that compensation for individual employees be reasonable for the services rendered, be consistently applied to both federal and non-federal activities, follows all of the Organizations written policies, and is adequately documented. Adequately documented as defined by the standard requires the charges must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition – During testing, we noticed multiple timecards for the Executive Director were not approved by the responsible individual so the required supervisors’ review of the timecard for accurate hours and allocations did not occur and was not documented. Cause – Controls in place did not operate as designed so hours charged to the grant were not properly reviewed for accuracy by responsible individuals. Effect – Salaries or wages may be overcharged or undercharged to grant if program allocation is not documented. If the granting agency ever questioned costs, IPTF may not be able to prove that all the funds requested for reimbursement from the agency were for activities allowed under the grant. Context – A nonstatistical sample of 28 payroll transactions were selected for testing. Timecard approval was performed by an unauthorized individual for 7 transactions. Recommendation – We recommend the management implement and enforce a review process to ensure all timecards are reviewed by the responsible individual or responsible individuals in a timely manner. Auditee’s comments and response – IPTF has hired and assigned an experienced individual within the organization who has the responsibility of reviewing and approving the Executive Director's timecard prior to processing. Responsible party for corrective action: Sharon Day, Executive Director Repeat finding – 2023-005
2024-002: Payroll Timecard Approval Federal Departments: Department of Health and Human Services Assistance Listing #: 93.612 and 93.959 Compliance and Internal Controls Significant Deficiency Category of Finding – Allowable Costs/ Cost Principles Criteria – 2 CFR § 200.430 requires that compensation for individual employees be reasonable for the services rendered, be consistently applied to both federal and non-federal activities, follows all of the Organizations written policies, and is adequately documented. Adequately documented as defined by the standard requires the charges must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition – During testing, we noticed multiple timecards for the Executive Director were not approved by the responsible individual so the required supervisors’ review of the timecard for accurate hours and allocations did not occur and was not documented. Cause – Controls in place did not operate as designed so hours charged to the grant were not properly reviewed for accuracy by responsible individuals. Effect – Salaries or wages may be overcharged or undercharged to grant if program allocation is not documented. If the granting agency ever questioned costs, IPTF may not be able to prove that all the funds requested for reimbursement from the agency were for activities allowed under the grant. Context – A nonstatistical sample of 28 payroll transactions were selected for testing. Timecard approval was performed by an unauthorized individual for 7 transactions. Recommendation – We recommend the management implement and enforce a review process to ensure all timecards are reviewed by the responsible individual or responsible individuals in a timely manner. Auditee’s comments and response – IPTF has hired and assigned an experienced individual within the organization who has the responsibility of reviewing and approving the Executive Director's timecard prior to processing. Responsible party for corrective action: Sharon Day, Executive Director Repeat finding – 2023-005
2024-002: Payroll Timecard Approval Federal Departments: Department of Health and Human Services Assistance Listing #: 93.612 and 93.959 Compliance and Internal Controls Significant Deficiency Category of Finding – Allowable Costs/ Cost Principles Criteria – 2 CFR § 200.430 requires that compensation for individual employees be reasonable for the services rendered, be consistently applied to both federal and non-federal activities, follows all of the Organizations written policies, and is adequately documented. Adequately documented as defined by the standard requires the charges must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition – During testing, we noticed multiple timecards for the Executive Director were not approved by the responsible individual so the required supervisors’ review of the timecard for accurate hours and allocations did not occur and was not documented. Cause – Controls in place did not operate as designed so hours charged to the grant were not properly reviewed for accuracy by responsible individuals. Effect – Salaries or wages may be overcharged or undercharged to grant if program allocation is not documented. If the granting agency ever questioned costs, IPTF may not be able to prove that all the funds requested for reimbursement from the agency were for activities allowed under the grant. Context – A nonstatistical sample of 28 payroll transactions were selected for testing. Timecard approval was performed by an unauthorized individual for 7 transactions. Recommendation – We recommend the management implement and enforce a review process to ensure all timecards are reviewed by the responsible individual or responsible individuals in a timely manner. Auditee’s comments and response – IPTF has hired and assigned an experienced individual within the organization who has the responsibility of reviewing and approving the Executive Director's timecard prior to processing. Responsible party for corrective action: Sharon Day, Executive Director Repeat finding – 2023-005
2024-002: Payroll Timecard Approval Federal Departments: Department of Health and Human Services Assistance Listing #: 93.612 and 93.959 Compliance and Internal Controls Significant Deficiency Category of Finding – Allowable Costs/ Cost Principles Criteria – 2 CFR § 200.430 requires that compensation for individual employees be reasonable for the services rendered, be consistently applied to both federal and non-federal activities, follows all of the Organizations written policies, and is adequately documented. Adequately documented as defined by the standard requires the charges must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition – During testing, we noticed multiple timecards for the Executive Director were not approved by the responsible individual so the required supervisors’ review of the timecard for accurate hours and allocations did not occur and was not documented. Cause – Controls in place did not operate as designed so hours charged to the grant were not properly reviewed for accuracy by responsible individuals. Effect – Salaries or wages may be overcharged or undercharged to grant if program allocation is not documented. If the granting agency ever questioned costs, IPTF may not be able to prove that all the funds requested for reimbursement from the agency were for activities allowed under the grant. Context – A nonstatistical sample of 28 payroll transactions were selected for testing. Timecard approval was performed by an unauthorized individual for 7 transactions. Recommendation – We recommend the management implement and enforce a review process to ensure all timecards are reviewed by the responsible individual or responsible individuals in a timely manner. Auditee’s comments and response – IPTF has hired and assigned an experienced individual within the organization who has the responsibility of reviewing and approving the Executive Director's timecard prior to processing. Responsible party for corrective action: Sharon Day, Executive Director Repeat finding – 2023-005
Information on the federal program: Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program Assistance Listing Number: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2023, FY2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.430 states in part: (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity (See paragraph (h)(1)(ii) above for treatment of incidental work for IHEs.); and vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the activities allowed or unallowed and allowable costs/cost principle compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: $2,130 (Known questioned costs) Context: For 5 selections, in a sample of 5 payroll transactions, the School Corporation did not have time and effort logs to support the portion of the employees’ time charged to the grant. The employees’ time was split with a non-federal fund; however, the School Corporation did not have support for the allocation of the time charged to the School Lunch fund. Identification as a repeat finding: No. Recommendation: We recommend management ensure semi-annual certifications are completed for all employees charged to the grant awards at 100% and time and effort logs are maintained for all employees not charged at 100% to support work performed and charged to the grant awards. We recommend management establish a documented review by management of semi-annual certifications and time and effort logs to ensure time charged to grant awards is allowable and allocable based on work performed in accordance with grant requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program Assistance Listing Number: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2023, FY2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.430 states in part: (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity (See paragraph (h)(1)(ii) above for treatment of incidental work for IHEs.); and vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the activities allowed or unallowed and allowable costs/cost principle compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: $2,130 (Known questioned costs) Context: For 5 selections, in a sample of 5 payroll transactions, the School Corporation did not have time and effort logs to support the portion of the employees’ time charged to the grant. The employees’ time was split with a non-federal fund; however, the School Corporation did not have support for the allocation of the time charged to the School Lunch fund. Identification as a repeat finding: No. Recommendation: We recommend management ensure semi-annual certifications are completed for all employees charged to the grant awards at 100% and time and effort logs are maintained for all employees not charged at 100% to support work performed and charged to the grant awards. We recommend management establish a documented review by management of semi-annual certifications and time and effort logs to ensure time charged to grant awards is allowable and allocable based on work performed in accordance with grant requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program Assistance Listing Number: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2023, FY2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.430 states in part: (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity (See paragraph (h)(1)(ii) above for treatment of incidental work for IHEs.); and vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the activities allowed or unallowed and allowable costs/cost principle compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: $2,130 (Known questioned costs) Context: For 5 selections, in a sample of 5 payroll transactions, the School Corporation did not have time and effort logs to support the portion of the employees’ time charged to the grant. The employees’ time was split with a non-federal fund; however, the School Corporation did not have support for the allocation of the time charged to the School Lunch fund. Identification as a repeat finding: No. Recommendation: We recommend management ensure semi-annual certifications are completed for all employees charged to the grant awards at 100% and time and effort logs are maintained for all employees not charged at 100% to support work performed and charged to the grant awards. We recommend management establish a documented review by management of semi-annual certifications and time and effort logs to ensure time charged to grant awards is allowable and allocable based on work performed in accordance with grant requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program Assistance Listing Number: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2023, FY2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.430 states in part: (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity (See paragraph (h)(1)(ii) above for treatment of incidental work for IHEs.); and vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the activities allowed or unallowed and allowable costs/cost principle compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: $2,130 (Known questioned costs) Context: For 5 selections, in a sample of 5 payroll transactions, the School Corporation did not have time and effort logs to support the portion of the employees’ time charged to the grant. The employees’ time was split with a non-federal fund; however, the School Corporation did not have support for the allocation of the time charged to the School Lunch fund. Identification as a repeat finding: No. Recommendation: We recommend management ensure semi-annual certifications are completed for all employees charged to the grant awards at 100% and time and effort logs are maintained for all employees not charged at 100% to support work performed and charged to the grant awards. We recommend management establish a documented review by management of semi-annual certifications and time and effort logs to ensure time charged to grant awards is allowable and allocable based on work performed in accordance with grant requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Federal Agency: U.S. Department of Homeland Security Federal Program Name: COVID-19 - Disaster Grants – Public Assistance (Presidentially Declared Disasters) Assistance Listing Number: 97.036 Federal Award Identification Number and Year: FEMA-4496-DR (1/20/2020) Pass-Through Agency: Massachusetts Emergency Management Agency Pass-Through Number(s): CT CDA CTFEMA4496HINGH Award Period: January 20, 2020 through May 11, 2023 Compliance Requirement: Allowable Costs / Cost Principles Type of Finding: Material weakness in internal control over compliance; Material noncompliance Criteria or specific requirement: The United States Code of Federal Regulations (CFR) Title 2 Part 200.430 indicates charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Such records should support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on a federal award and a non-federal award. Condition: We noted that for a sample of payroll disbursements the total amount charged to the grant was not supported by accurate documentation. Questioned costs: Questioned costs total $3,898. Context: Sixty payroll transactions were selected for testing in our statistically valid sample and the following exceptions were noted: • For 2 of 60 disbursements, the Town requested reimbursement for employee hours which were not supported in the documented time records. • For 1 of 60 disbursements, the Town requested reimbursement for employee hours for which approval documentation was not available in the documented time records. Cause: Policies and procedures were not implemented to ensure that costs charged to the program were based on adequate supporting documentation. Effect: Unallowable costs were charged to the program. Repeat Finding: No. Recommendation: We recommend the Town enhance procedures and controls to ensure that payroll costs charged to the grant are adequately documented. Views of responsible officials: Management agrees with the finding. Please refer to the Corrective Action Plan.
2 CFR § 200.430(g) states in part, “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed and be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Furthermore, Cleveland Municipal School District has adopted a Time and Effort Reporting policy that requires that all federal compensation charges be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated in accordance with 2 CFR § 200.430. In order to address the requirements in their policy and federal regulations, the District established a control procedure in which the Cost Center Manager or higher grant manager is required to certify an employee's charge to a federal grant within the Workday accounting system. Due to insufficient staffing and knowledge of the District policy and federal regulation, 28 of 40 (70%) tested employee compensation charges to the Child Nutrition Cluster and 31 of 40 (78%) charges to the Education Stabilization Grant were certified more than six months from the original pay date. This weakness could lead to a loss of accountability over Federal Time and Effort Reporting and could result in a loss or reduction of funding and potential questioned costs, related to these grants The District should establish procedures to ensure that employee compensation charges, to a federal grant, are timely reviewed for accuracy, allowability and proper allocation. Further, the District should update the existing policy to require the time and effort certifications to be completed within two months of the transaction date.
2 CFR § 200.430(g) states in part, “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed and be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Furthermore, Cleveland Municipal School District has adopted a Time and Effort Reporting policy that requires that all federal compensation charges be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated in accordance with 2 CFR § 200.430. In order to address the requirements in their policy and federal regulations, the District established a control procedure in which the Cost Center Manager or higher grant manager is required to certify an employee's charge to a federal grant within the Workday accounting system. Due to insufficient staffing and knowledge of the District policy and federal regulation, 28 of 40 (70%) tested employee compensation charges to the Child Nutrition Cluster and 31 of 40 (78%) charges to the Education Stabilization Grant were certified more than six months from the original pay date. This weakness could lead to a loss of accountability over Federal Time and Effort Reporting and could result in a loss or reduction of funding and potential questioned costs, related to these grants The District should establish procedures to ensure that employee compensation charges, to a federal grant, are timely reviewed for accuracy, allowability and proper allocation. Further, the District should update the existing policy to require the time and effort certifications to be completed within two months of the transaction date.
2 CFR § 200.430(g) states in part, “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed and be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Furthermore, Cleveland Municipal School District has adopted a Time and Effort Reporting policy that requires that all federal compensation charges be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated in accordance with 2 CFR § 200.430. In order to address the requirements in their policy and federal regulations, the District established a control procedure in which the Cost Center Manager or higher grant manager is required to certify an employee's charge to a federal grant within the Workday accounting system. Due to insufficient staffing and knowledge of the District policy and federal regulation, 28 of 40 (70%) tested employee compensation charges to the Child Nutrition Cluster and 31 of 40 (78%) charges to the Education Stabilization Grant were certified more than six months from the original pay date. This weakness could lead to a loss of accountability over Federal Time and Effort Reporting and could result in a loss or reduction of funding and potential questioned costs, related to these grants The District should establish procedures to ensure that employee compensation charges, to a federal grant, are timely reviewed for accuracy, allowability and proper allocation. Further, the District should update the existing policy to require the time and effort certifications to be completed within two months of the transaction date.
2 CFR § 200.430(g) states in part, “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed and be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Furthermore, Cleveland Municipal School District has adopted a Time and Effort Reporting policy that requires that all federal compensation charges be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated in accordance with 2 CFR § 200.430. In order to address the requirements in their policy and federal regulations, the District established a control procedure in which the Cost Center Manager or higher grant manager is required to certify an employee's charge to a federal grant within the Workday accounting system. Due to insufficient staffing and knowledge of the District policy and federal regulation, 28 of 40 (70%) tested employee compensation charges to the Child Nutrition Cluster and 31 of 40 (78%) charges to the Education Stabilization Grant were certified more than six months from the original pay date. This weakness could lead to a loss of accountability over Federal Time and Effort Reporting and could result in a loss or reduction of funding and potential questioned costs, related to these grants The District should establish procedures to ensure that employee compensation charges, to a federal grant, are timely reviewed for accuracy, allowability and proper allocation. Further, the District should update the existing policy to require the time and effort certifications to be completed within two months of the transaction date.
2 CFR § 200.430(g) states in part, “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed and be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Furthermore, Cleveland Municipal School District has adopted a Time and Effort Reporting policy that requires that all federal compensation charges be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated in accordance with 2 CFR § 200.430. In order to address the requirements in their policy and federal regulations, the District established a control procedure in which the Cost Center Manager or higher grant manager is required to certify an employee's charge to a federal grant within the Workday accounting system. Due to insufficient staffing and knowledge of the District policy and federal regulation, 28 of 40 (70%) tested employee compensation charges to the Child Nutrition Cluster and 31 of 40 (78%) charges to the Education Stabilization Grant were certified more than six months from the original pay date. This weakness could lead to a loss of accountability over Federal Time and Effort Reporting and could result in a loss or reduction of funding and potential questioned costs, related to these grants The District should establish procedures to ensure that employee compensation charges, to a federal grant, are timely reviewed for accuracy, allowability and proper allocation. Further, the District should update the existing policy to require the time and effort certifications to be completed within two months of the transaction date.
2 CFR § 200.430(g) states in part, “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed and be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Furthermore, Cleveland Municipal School District has adopted a Time and Effort Reporting policy that requires that all federal compensation charges be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated in accordance with 2 CFR § 200.430. In order to address the requirements in their policy and federal regulations, the District established a control procedure in which the Cost Center Manager or higher grant manager is required to certify an employee's charge to a federal grant within the Workday accounting system. Due to insufficient staffing and knowledge of the District policy and federal regulation, 28 of 40 (70%) tested employee compensation charges to the Child Nutrition Cluster and 31 of 40 (78%) charges to the Education Stabilization Grant were certified more than six months from the original pay date. This weakness could lead to a loss of accountability over Federal Time and Effort Reporting and could result in a loss or reduction of funding and potential questioned costs, related to these grants The District should establish procedures to ensure that employee compensation charges, to a federal grant, are timely reviewed for accuracy, allowability and proper allocation. Further, the District should update the existing policy to require the time and effort certifications to be completed within two months of the transaction date.
2 CFR § 200.430(g) states in part, “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed and be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Furthermore, Cleveland Municipal School District has adopted a Time and Effort Reporting policy that requires that all federal compensation charges be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated in accordance with 2 CFR § 200.430. In order to address the requirements in their policy and federal regulations, the District established a control procedure in which the Cost Center Manager or higher grant manager is required to certify an employee's charge to a federal grant within the Workday accounting system. Due to insufficient staffing and knowledge of the District policy and federal regulation, 28 of 40 (70%) tested employee compensation charges to the Child Nutrition Cluster and 31 of 40 (78%) charges to the Education Stabilization Grant were certified more than six months from the original pay date. This weakness could lead to a loss of accountability over Federal Time and Effort Reporting and could result in a loss or reduction of funding and potential questioned costs, related to these grants The District should establish procedures to ensure that employee compensation charges, to a federal grant, are timely reviewed for accuracy, allowability and proper allocation. Further, the District should update the existing policy to require the time and effort certifications to be completed within two months of the transaction date.
2 CFR § 200.430(g) states in part, “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed and be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Furthermore, Cleveland Municipal School District has adopted a Time and Effort Reporting policy that requires that all federal compensation charges be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated in accordance with 2 CFR § 200.430. In order to address the requirements in their policy and federal regulations, the District established a control procedure in which the Cost Center Manager or higher grant manager is required to certify an employee's charge to a federal grant within the Workday accounting system. Due to insufficient staffing and knowledge of the District policy and federal regulation, 28 of 40 (70%) tested employee compensation charges to the Child Nutrition Cluster and 31 of 40 (78%) charges to the Education Stabilization Grant were certified more than six months from the original pay date. This weakness could lead to a loss of accountability over Federal Time and Effort Reporting and could result in a loss or reduction of funding and potential questioned costs, related to these grants The District should establish procedures to ensure that employee compensation charges, to a federal grant, are timely reviewed for accuracy, allowability and proper allocation. Further, the District should update the existing policy to require the time and effort certifications to be completed within two months of the transaction date.
2 CFR § 200.430(g) states in part, “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed and be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Furthermore, Cleveland Municipal School District has adopted a Time and Effort Reporting policy that requires that all federal compensation charges be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated in accordance with 2 CFR § 200.430. In order to address the requirements in their policy and federal regulations, the District established a control procedure in which the Cost Center Manager or higher grant manager is required to certify an employee's charge to a federal grant within the Workday accounting system. Due to insufficient staffing and knowledge of the District policy and federal regulation, 28 of 40 (70%) tested employee compensation charges to the Child Nutrition Cluster and 31 of 40 (78%) charges to the Education Stabilization Grant were certified more than six months from the original pay date. This weakness could lead to a loss of accountability over Federal Time and Effort Reporting and could result in a loss or reduction of funding and potential questioned costs, related to these grants The District should establish procedures to ensure that employee compensation charges, to a federal grant, are timely reviewed for accuracy, allowability and proper allocation. Further, the District should update the existing policy to require the time and effort certifications to be completed within two months of the transaction date.
Information on the federal program: Subject: Education Stabilization Fund (ESSER) – Internal controls Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.430 states in part: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity (See paragraph (h)(1)(ii) above for treatment of incidental work for IHEs.); and vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the activities allowed or unallowed and allowable costs/cost principle compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: $6,759 (Known questioned costs) Context: For 5 selections, in a sample of 40 payroll transactions, the School Corporation did not have time and effort logs to support the portion of the employees’ time charged to the grant. The employees’ time was split with a non-federal fund; however, the School Corporation did not have support for the allocation of the time charged to the ESSER II and III funds. Identification as a repeat finding: No. Recommendation: We recommend management ensure semi-annual certifications are completed for all employees charged to the grant awards at 100% and time and effort logs are maintained for all employees not charged at 100% to support work performed and charged to the grant awards. We recommend management establish a documented review by management of semi-annual certifications and time and effort logs to ensure time charged to grant awards is allowable and allocable based on work performed in accordance with grant requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: Education Stabilization Fund (ESSER) – Internal controls Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.430 states in part: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity (See paragraph (h)(1)(ii) above for treatment of incidental work for IHEs.); and vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the activities allowed or unallowed and allowable costs/cost principle compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: $6,759 (Known questioned costs) Context: For 5 selections, in a sample of 40 payroll transactions, the School Corporation did not have time and effort logs to support the portion of the employees’ time charged to the grant. The employees’ time was split with a non-federal fund; however, the School Corporation did not have support for the allocation of the time charged to the ESSER II and III funds. Identification as a repeat finding: No. Recommendation: We recommend management ensure semi-annual certifications are completed for all employees charged to the grant awards at 100% and time and effort logs are maintained for all employees not charged at 100% to support work performed and charged to the grant awards. We recommend management establish a documented review by management of semi-annual certifications and time and effort logs to ensure time charged to grant awards is allowable and allocable based on work performed in accordance with grant requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Criteria: According to 2 CFR §200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Specifically, the Uniform Guidance states that: • Records must reflect an after-the-fact review of the actual activity of each employee, • The review must be documented by the employee or responsible supervisor, • The documentation must account for the total activity for which employees are compensated, and • This documentation must be signed by the employee or supervisor. Condition: During our audit, we reviewed a sample of timesheets for employees whose salaries were charged to the grant award. We found that in one instance, an employee was paid $2,165 for a period of time in which the employee no longer worked for the School District. We found in another instance that an employee’s timesheet was missing the required supervisor’s signature, indicating that no formal review or approval process was documented. This employee was paid $1,128 for time during which no work was performed for the School District. Cause: Insufficient internal controls to ensure compliance with both timekeeping policies and employee termination policies. Effects: Without proper supervisory review and signature, there is an increased risk that salaries and wages charged to the federal award may not be accurately allocated to the correct activities and that time reported may not reflect actual work performed. Additionally, deficiencies in internal control surrounding the employee termination process can result in payments to individuals who no longer work for the School District. Questioned Costs: Known questioned costs, based on the results of our audit procedures, amounted to $3,293. When projecting these known questioned costs to the total population of payroll costs charged to the grant in the amount of $7,445,417, likely questioned costs amount to $40,520. Recommendation: We recommend the School District ensure that all supervisors are trained on the importance of reviewing and signing timesheets to comply with federal requirements. We also recommend that the School District evaluate the root cause of the erroneous payment to an employee who had resigned to ensure that controls surrounding employee resignations and terminations are adequate. Auditee’s Response: We concur with the finding and recommendations.
Criteria: According to 2 CFR §200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Specifically, the Uniform Guidance states that: • Records must reflect an after-the-fact review of the actual activity of each employee, • The review must be documented by the employee or responsible supervisor, • The documentation must account for the total activity for which employees are compensated, and • This documentation must be signed by the employee or supervisor. Condition: During our audit, we reviewed a sample of timesheets for employees whose salaries were charged to the grant award. We found that in one instance, an employee was paid $2,165 for a period of time in which the employee no longer worked for the School District. We found in another instance that an employee’s timesheet was missing the required supervisor’s signature, indicating that no formal review or approval process was documented. This employee was paid $1,128 for time during which no work was performed for the School District. Cause: Insufficient internal controls to ensure compliance with both timekeeping policies and employee termination policies. Effects: Without proper supervisory review and signature, there is an increased risk that salaries and wages charged to the federal award may not be accurately allocated to the correct activities and that time reported may not reflect actual work performed. Additionally, deficiencies in internal control surrounding the employee termination process can result in payments to individuals who no longer work for the School District. Questioned Costs: Known questioned costs, based on the results of our audit procedures, amounted to $3,293. When projecting these known questioned costs to the total population of payroll costs charged to the grant in the amount of $7,445,417, likely questioned costs amount to $40,520. Recommendation: We recommend the School District ensure that all supervisors are trained on the importance of reviewing and signing timesheets to comply with federal requirements. We also recommend that the School District evaluate the root cause of the erroneous payment to an employee who had resigned to ensure that controls surrounding employee resignations and terminations are adequate. Auditee’s Response: We concur with the finding and recommendations.
Criteria: According to 2 CFR §200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Specifically, the Uniform Guidance states that: • Records must reflect an after-the-fact review of the actual activity of each employee, • The review must be documented by the employee or responsible supervisor, • The documentation must account for the total activity for which employees are compensated, and • This documentation must be signed by the employee or supervisor. Condition: During our audit, we reviewed a sample of timesheets for employees whose salaries were charged to the grant award. We found that in one instance, an employee was paid $2,165 for a period of time in which the employee no longer worked for the School District. We found in another instance that an employee’s timesheet was missing the required supervisor’s signature, indicating that no formal review or approval process was documented. This employee was paid $1,128 for time during which no work was performed for the School District. Cause: Insufficient internal controls to ensure compliance with both timekeeping policies and employee termination policies. Effects: Without proper supervisory review and signature, there is an increased risk that salaries and wages charged to the federal award may not be accurately allocated to the correct activities and that time reported may not reflect actual work performed. Additionally, deficiencies in internal control surrounding the employee termination process can result in payments to individuals who no longer work for the School District. Questioned Costs: Known questioned costs, based on the results of our audit procedures, amounted to $3,293. When projecting these known questioned costs to the total population of payroll costs charged to the grant in the amount of $7,445,417, likely questioned costs amount to $40,520. Recommendation: We recommend the School District ensure that all supervisors are trained on the importance of reviewing and signing timesheets to comply with federal requirements. We also recommend that the School District evaluate the root cause of the erroneous payment to an employee who had resigned to ensure that controls surrounding employee resignations and terminations are adequate. Auditee’s Response: We concur with the finding and recommendations.
Criteria: According to 2 CFR §200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Specifically, the Uniform Guidance states that: • Records must reflect an after-the-fact review of the actual activity of each employee, • The review must be documented by the employee or responsible supervisor, • The documentation must account for the total activity for which employees are compensated, and • This documentation must be signed by the employee or supervisor. Condition: During our audit, we reviewed a sample of timesheets for employees whose salaries were charged to the grant award. We found that in one instance, an employee was paid $2,165 for a period of time in which the employee no longer worked for the School District. We found in another instance that an employee’s timesheet was missing the required supervisor’s signature, indicating that no formal review or approval process was documented. This employee was paid $1,128 for time during which no work was performed for the School District. Cause: Insufficient internal controls to ensure compliance with both timekeeping policies and employee termination policies. Effects: Without proper supervisory review and signature, there is an increased risk that salaries and wages charged to the federal award may not be accurately allocated to the correct activities and that time reported may not reflect actual work performed. Additionally, deficiencies in internal control surrounding the employee termination process can result in payments to individuals who no longer work for the School District. Questioned Costs: Known questioned costs, based on the results of our audit procedures, amounted to $3,293. When projecting these known questioned costs to the total population of payroll costs charged to the grant in the amount of $7,445,417, likely questioned costs amount to $40,520. Recommendation: We recommend the School District ensure that all supervisors are trained on the importance of reviewing and signing timesheets to comply with federal requirements. We also recommend that the School District evaluate the root cause of the erroneous payment to an employee who had resigned to ensure that controls surrounding employee resignations and terminations are adequate. Auditee’s Response: We concur with the finding and recommendations.
2024-001 Activities Allowed or Unallowed and Allowable Costs / Cost Principles Research and Development Cluster: National Institutes of Health: Institutional Career Development Costs (ALN 93.350, grant number 5 UL1 TR001866) Statistically valid sample: No, and it was not intended to be. Repeat finding: Not a repeat finding. Finding Type: Noncompliance Criteria: Non-federal entities should ensure that costs are reasonable and necessary for the performance of the Research and Development effort identified in the applicable award. In accordance with the documentation standards of 2 CFR section s200.430(i), costs of compensation for personal services are allowable to the extent total compensation for individual employees: a. Is reasonable for the services rendered and conforms to the established written policy of the non-federal entity consistently applied to both federal and non-federal activities; b. Follows an appointment made in accordance with a non-federal entity’s rules or written policies and meets the requirements of federal statute, where applicable; and c. Is determined and supported as provided in 2 CFR section 200.430(i), including the charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Condition and context: In April 2024, University management became aware that a full-time employee of the University was concurrently employed by Duke-NUS Medical School in Singapore since early 2021. The employee had not previously disclosed to the University his affiliation with, and income from, Duke-NUS Medical School, including on his financial conflict of interest in research disclosure forms that the University requires all researchers to complete and in various documents and certifications in connection with several National Institutes of Health (NIH) grants, which supported a portion of his salary. The University retained external legal counsel to conduct an investigation. After this investigation by external counsel, several actions were taken. First, the University stopped drawing NIH grant funds to support this employee’s salary. The employee’s employment ended. The University conducted a financial conflict of interest in research review as to the employee’s previously undisclosed significant financial interests for the period 2021 to 2024, and other payments from Duke-NUS Medical School, dating back to 2019 and found no evidence that the design, conduct, or reporting of the employee’s NIH-funded work at the University had been adversely affected. Lastly, the University informed NIH of the matter and offered to repay half of the employee’s salary, fringe benefits, and indirect cost recovery charges that had been charged to NIH grants during the time period from January 2021 through May 2024. The proposed repayment amounts to $299,805. The amount charged to NIH grants during fiscal year 2024 was $178,084. Cause: The employee failed to disclose to the University that he was concurrently employed by Duke-NUS Medical School including on his financial conflict of interest in research forms that he was required to complete and in documents and certifications in connection with various NIH grants that supported his salary. Effect: Because the University assumed when calculating the employee’s salary that he was a full-time employee of the University and drew from NIH grants on that basis, but in reality, he was also working at Duke-NUS Medical School, some of the employee’s salary, related fringe benefits and indirect cost charges likely were unallowable under federal grant principles. Questioned Costs: The likely questioned costs are $178,084. Known questioned costs are indeterminable. Recommendation: The University should continue to communicate to University investigators the importance of accurately completing the financial conflicts of interest in research disclosure forms pursuant to applicable, long-standing University policies. Views of Responsible Officials: The University recognizes the seriousness of this matter, involving a former employee who accepted employment and worked at Duke-NUS Medical School in Singapore, without disclosing to the University this concurrent position. Under the University’s Code of Conduct, all members of the University community should conduct themselves ethically, honestly, and with integrity in all dealings and should act with due recognition of their position of trust with respect to the University’s research sponsors. Upon discovering that the employee had a concurrent employment at Duke-NUS, the University acted responsibly in investigating the matter and taking appropriate action, including notifying NIH, offering repayment, and fully cooperating with NIH. No internal controls or protocols were compromised as a result of this matter.
Reference # and title: 2024-002 Internal Control and Compliance over Title I Payroll Federal program and specific federal award identification: AL Number Award Year FEDERAL GRANTER/ PASS THROUGH GRANTOR/PROGRAM NAME United States Department of Education; passed through Louisiana Department of Education Title I Grants to Local Educational Agencies #84.010A 2024 Criteria or specific requirement: For an employee who works in part on the consolidated administrative cost objective and in part on a Federal program whose administrative funds have not been consolidated or on activities funded from other revenue sources, an LEA must maintain time and effort distribution records in accordance with 2 CFR section 200.430(i)(1)(vii) that support the portion of time and effort dedicated to (a) the consolidated cost objective, and (b) each program or other cost objective supported by non-consolidated Federal funds or other revenue sources. Employee pay should be reviewed to ensure that payment amount is correct. Employee attendance should be documented on a consistent basis. Condition found: In testing 25 payroll transactions for the Title I program, the following exception were noted: 2 exceptions noted in which there was inadequate attendance records; 9 exceptions where time records were not initialed or signed by the employee; 2 exceptions where one employee was not paid in accordance with the salary schedule, which resulted in under payment; 14 exceptions where time certifications were completed, but not in a timely manner. Possible asserted effect (cause effect): Cause: Attendance documentation and semi-annual certifications were not maintained throughout the year by the School Board. The salary for one employee was frozen and resulted in an underpayment of wages for the year. Effect: The School Board did not comply with all Title I requirements related to allowable costs and cost principles. Recommendations to prevent future occurrences: The School Board should strengthen policies and procedures to ensure that semi-annual time certifications are signed by all employees in a timely manner, employee pay is correct and employee attendance and leave is adequately documented throughout the year which should include signature or initials, written or electronic, by the employee and supervisor. Origination date and prior year reference (if applicable): This finding originated in the fiscal year ended June 30, 2024. View of responsible official: During the year, there was staff turnover within the Title 1 department. The School Board will ensure that new personnel are properly trained in necessary internal controls over payroll transactions moving forward.
Reference # and title: 2024-002 Internal Control and Compliance over Title I Payroll Federal program and specific federal award identification: AL Number Award Year FEDERAL GRANTER/ PASS THROUGH GRANTOR/PROGRAM NAME United States Department of Education; passed through Louisiana Department of Education Title I Grants to Local Educational Agencies #84.010A 2024 Criteria or specific requirement: For an employee who works in part on the consolidated administrative cost objective and in part on a Federal program whose administrative funds have not been consolidated or on activities funded from other revenue sources, an LEA must maintain time and effort distribution records in accordance with 2 CFR section 200.430(i)(1)(vii) that support the portion of time and effort dedicated to (a) the consolidated cost objective, and (b) each program or other cost objective supported by non-consolidated Federal funds or other revenue sources. Employee pay should be reviewed to ensure that payment amount is correct. Employee attendance should be documented on a consistent basis. Condition found: In testing 25 payroll transactions for the Title I program, the following exception were noted: 2 exceptions noted in which there was inadequate attendance records; 9 exceptions where time records were not initialed or signed by the employee; 2 exceptions where one employee was not paid in accordance with the salary schedule, which resulted in under payment; 14 exceptions where time certifications were completed, but not in a timely manner. Possible asserted effect (cause effect): Cause: Attendance documentation and semi-annual certifications were not maintained throughout the year by the School Board. The salary for one employee was frozen and resulted in an underpayment of wages for the year. Effect: The School Board did not comply with all Title I requirements related to allowable costs and cost principles. Recommendations to prevent future occurrences: The School Board should strengthen policies and procedures to ensure that semi-annual time certifications are signed by all employees in a timely manner, employee pay is correct and employee attendance and leave is adequately documented throughout the year which should include signature or initials, written or electronic, by the employee and supervisor. Origination date and prior year reference (if applicable): This finding originated in the fiscal year ended June 30, 2024. View of responsible official: During the year, there was staff turnover within the Title 1 department. The School Board will ensure that new personnel are properly trained in necessary internal controls over payroll transactions moving forward.
Criteria: Title 2, Subtitle A, Chapter 200, Subpart E, § 200.430 of the Code of Federal Regulations states that “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable and properly allocated” and “(vii) Budget estimated (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed;” and “(C) The recipient’s or subrecipient’s system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable and properly allocated.” Condition: Testing over Assistance Listing #21.027 - Coronavirus State and Local Fiscal Recovery Funds indicated that salaries charged to that Federal award were based on budgeted amount. There was no documentation of the required periodic after-the-fact review of the budgeted amounts applied to ALN 21.027 that management was able to provide during the audit process. Cause: Management was unaware that all salary and benefits charged to a Federal award must be supported by records of actual time incurred on the program. Budgeted or reasonable estimates are not sufficient. Additionally, the size of the Federal award does not impact this requirement. Context and Perspective: This is the first year in which ALN #21.027 was a major program and required an audit. Management had implemented proper time reporting for its Head Start program, which is normally audited as a major program, but had not considered this requirement for other Federal awards. Questioned Costs: We selected vouchers for three months and tested eighty-three salaries and wages charged to grants that were part of the ALN #21.027 program. The amount charged to ALN#21.027 for these amounts was $125,208.35 and of that amount $30,300.18 was for employees that were not 100% charged to the related grant, which would necessitate requirement for periodic after-the-fact reviews of interim charges made to a Federal award. Total salaries and wages charged to grants associated with ALN #21.027 for the year ended June 30, 2024, included with expenditures on the Schedule of Expenditures of Federal Awards were $498,984. Effect: Salary and benefits charged to ALN #21.027 lack proper documentation, which could result in certain costs charged to related awards being disallowed. Identification as a Repeat Finding: This finding was not a repeat finding from prior audits. Recommendation: We recommend that Gads Hill Center management establish a formal procedure to perform periodic after-the-fact reviews of interim charges based on budget estimates made to federal awards for all federal and state funded grant programs. Such reviews should be conducted for employees with time charged to multiple federal awards, and charges should be adjusted to reflect the actual time spent, based on the review findings. One way to achieve this is to require Personnel Activity Reports or similar documentation that clearly documents employee time incurred by program for the pay period or month for employees that work on multiple grants. Views of Responsible Officials and Planned Corrective Actions: Upon reviewing the audit finding, Gads Hill Center (GHC) acknowledges the importance of maintaining accurate and compliant documentation for personal services charged to federal and non-federal awards. To strengthen internal controls and ensure proper time reporting, GHC has implemented enhanced procedures to align with federal requirements. These measures are designed to ensure that all salaries allocated to federal and non-federal awards are appropriately documented and substantiated based on actual work performed. In response to this finding, Gads Hill Center has immediately implemented a structured procedure to ensure compliance with federal regulations regarding time and effort reporting. Effective February 2025, the following corrective actions have been established: • Monthly After-the-Fact Time Reporting: Employees whose salaries are allocated to federal and non-federal awards must complete monthly time reports that accurately reflect the actual time worked on each funding source. • Review Process: These time reports are reviewed and signed by both the employee and their direct supervisor to confirm accuracy and compliance with the documented allocations and make any necessary adjustments. • Internal Monitoring and Compliance: GHC’s finance and program leadership teams will conduct periodic reviews to ensure adherence to this procedure and make any necessary refinements to maintain compliance with federal guidelines. By implementing these enhanced controls, Gads Hill Center is committed to ensuring accurate documentation of personal services and maintaining compliance with all federal funding requirements.
Criteria: Title 2, Subtitle A, Chapter 200, Subpart E, § 200.430 of the Code of Federal Regulations states that “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable and properly allocated” and “(vii) Budget estimated (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed;” and “(C) The recipient’s or subrecipient’s system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable and properly allocated.” Condition: Testing over Assistance Listing #21.027 - Coronavirus State and Local Fiscal Recovery Funds indicated that salaries charged to that Federal award were based on budgeted amount. There was no documentation of the required periodic after-the-fact review of the budgeted amounts applied to ALN 21.027 that management was able to provide during the audit process. Cause: Management was unaware that all salary and benefits charged to a Federal award must be supported by records of actual time incurred on the program. Budgeted or reasonable estimates are not sufficient. Additionally, the size of the Federal award does not impact this requirement. Context and Perspective: This is the first year in which ALN #21.027 was a major program and required an audit. Management had implemented proper time reporting for its Head Start program, which is normally audited as a major program, but had not considered this requirement for other Federal awards. Questioned Costs: We selected vouchers for three months and tested eighty-three salaries and wages charged to grants that were part of the ALN #21.027 program. The amount charged to ALN#21.027 for these amounts was $125,208.35 and of that amount $30,300.18 was for employees that were not 100% charged to the related grant, which would necessitate requirement for periodic after-the-fact reviews of interim charges made to a Federal award. Total salaries and wages charged to grants associated with ALN #21.027 for the year ended June 30, 2024, included with expenditures on the Schedule of Expenditures of Federal Awards were $498,984. Effect: Salary and benefits charged to ALN #21.027 lack proper documentation, which could result in certain costs charged to related awards being disallowed. Identification as a Repeat Finding: This finding was not a repeat finding from prior audits. Recommendation: We recommend that Gads Hill Center management establish a formal procedure to perform periodic after-the-fact reviews of interim charges based on budget estimates made to federal awards for all federal and state funded grant programs. Such reviews should be conducted for employees with time charged to multiple federal awards, and charges should be adjusted to reflect the actual time spent, based on the review findings. One way to achieve this is to require Personnel Activity Reports or similar documentation that clearly documents employee time incurred by program for the pay period or month for employees that work on multiple grants. Views of Responsible Officials and Planned Corrective Actions: Upon reviewing the audit finding, Gads Hill Center (GHC) acknowledges the importance of maintaining accurate and compliant documentation for personal services charged to federal and non-federal awards. To strengthen internal controls and ensure proper time reporting, GHC has implemented enhanced procedures to align with federal requirements. These measures are designed to ensure that all salaries allocated to federal and non-federal awards are appropriately documented and substantiated based on actual work performed. In response to this finding, Gads Hill Center has immediately implemented a structured procedure to ensure compliance with federal regulations regarding time and effort reporting. Effective February 2025, the following corrective actions have been established: • Monthly After-the-Fact Time Reporting: Employees whose salaries are allocated to federal and non-federal awards must complete monthly time reports that accurately reflect the actual time worked on each funding source. • Review Process: These time reports are reviewed and signed by both the employee and their direct supervisor to confirm accuracy and compliance with the documented allocations and make any necessary adjustments. • Internal Monitoring and Compliance: GHC’s finance and program leadership teams will conduct periodic reviews to ensure adherence to this procedure and make any necessary refinements to maintain compliance with federal guidelines. By implementing these enhanced controls, Gads Hill Center is committed to ensuring accurate documentation of personal services and maintaining compliance with all federal funding requirements.
Criteria: Title 2, Subtitle A, Chapter 200, Subpart E, § 200.430 of the Code of Federal Regulations states that “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable and properly allocated” and “(vii) Budget estimated (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed;” and “(C) The recipient’s or subrecipient’s system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable and properly allocated.” Condition: Testing over Assistance Listing #21.027 - Coronavirus State and Local Fiscal Recovery Funds indicated that salaries charged to that Federal award were based on budgeted amount. There was no documentation of the required periodic after-the-fact review of the budgeted amounts applied to ALN 21.027 that management was able to provide during the audit process. Cause: Management was unaware that all salary and benefits charged to a Federal award must be supported by records of actual time incurred on the program. Budgeted or reasonable estimates are not sufficient. Additionally, the size of the Federal award does not impact this requirement. Context and Perspective: This is the first year in which ALN #21.027 was a major program and required an audit. Management had implemented proper time reporting for its Head Start program, which is normally audited as a major program, but had not considered this requirement for other Federal awards. Questioned Costs: We selected vouchers for three months and tested eighty-three salaries and wages charged to grants that were part of the ALN #21.027 program. The amount charged to ALN#21.027 for these amounts was $125,208.35 and of that amount $30,300.18 was for employees that were not 100% charged to the related grant, which would necessitate requirement for periodic after-the-fact reviews of interim charges made to a Federal award. Total salaries and wages charged to grants associated with ALN #21.027 for the year ended June 30, 2024, included with expenditures on the Schedule of Expenditures of Federal Awards were $498,984. Effect: Salary and benefits charged to ALN #21.027 lack proper documentation, which could result in certain costs charged to related awards being disallowed. Identification as a Repeat Finding: This finding was not a repeat finding from prior audits. Recommendation: We recommend that Gads Hill Center management establish a formal procedure to perform periodic after-the-fact reviews of interim charges based on budget estimates made to federal awards for all federal and state funded grant programs. Such reviews should be conducted for employees with time charged to multiple federal awards, and charges should be adjusted to reflect the actual time spent, based on the review findings. One way to achieve this is to require Personnel Activity Reports or similar documentation that clearly documents employee time incurred by program for the pay period or month for employees that work on multiple grants. Views of Responsible Officials and Planned Corrective Actions: Upon reviewing the audit finding, Gads Hill Center (GHC) acknowledges the importance of maintaining accurate and compliant documentation for personal services charged to federal and non-federal awards. To strengthen internal controls and ensure proper time reporting, GHC has implemented enhanced procedures to align with federal requirements. These measures are designed to ensure that all salaries allocated to federal and non-federal awards are appropriately documented and substantiated based on actual work performed. In response to this finding, Gads Hill Center has immediately implemented a structured procedure to ensure compliance with federal regulations regarding time and effort reporting. Effective February 2025, the following corrective actions have been established: • Monthly After-the-Fact Time Reporting: Employees whose salaries are allocated to federal and non-federal awards must complete monthly time reports that accurately reflect the actual time worked on each funding source. • Review Process: These time reports are reviewed and signed by both the employee and their direct supervisor to confirm accuracy and compliance with the documented allocations and make any necessary adjustments. • Internal Monitoring and Compliance: GHC’s finance and program leadership teams will conduct periodic reviews to ensure adherence to this procedure and make any necessary refinements to maintain compliance with federal guidelines. By implementing these enhanced controls, Gads Hill Center is committed to ensuring accurate documentation of personal services and maintaining compliance with all federal funding requirements.
Criteria: Title 2, Subtitle A, Chapter 200, Subpart E, § 200.430 of the Code of Federal Regulations states that “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable and properly allocated” and “(vii) Budget estimated (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed;” and “(C) The recipient’s or subrecipient’s system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable and properly allocated.” Condition: Testing over Assistance Listing #21.027 - Coronavirus State and Local Fiscal Recovery Funds indicated that salaries charged to that Federal award were based on budgeted amount. There was no documentation of the required periodic after-the-fact review of the budgeted amounts applied to ALN 21.027 that management was able to provide during the audit process. Cause: Management was unaware that all salary and benefits charged to a Federal award must be supported by records of actual time incurred on the program. Budgeted or reasonable estimates are not sufficient. Additionally, the size of the Federal award does not impact this requirement. Context and Perspective: This is the first year in which ALN #21.027 was a major program and required an audit. Management had implemented proper time reporting for its Head Start program, which is normally audited as a major program, but had not considered this requirement for other Federal awards. Questioned Costs: We selected vouchers for three months and tested eighty-three salaries and wages charged to grants that were part of the ALN #21.027 program. The amount charged to ALN#21.027 for these amounts was $125,208.35 and of that amount $30,300.18 was for employees that were not 100% charged to the related grant, which would necessitate requirement for periodic after-the-fact reviews of interim charges made to a Federal award. Total salaries and wages charged to grants associated with ALN #21.027 for the year ended June 30, 2024, included with expenditures on the Schedule of Expenditures of Federal Awards were $498,984. Effect: Salary and benefits charged to ALN #21.027 lack proper documentation, which could result in certain costs charged to related awards being disallowed. Identification as a Repeat Finding: This finding was not a repeat finding from prior audits. Recommendation: We recommend that Gads Hill Center management establish a formal procedure to perform periodic after-the-fact reviews of interim charges based on budget estimates made to federal awards for all federal and state funded grant programs. Such reviews should be conducted for employees with time charged to multiple federal awards, and charges should be adjusted to reflect the actual time spent, based on the review findings. One way to achieve this is to require Personnel Activity Reports or similar documentation that clearly documents employee time incurred by program for the pay period or month for employees that work on multiple grants. Views of Responsible Officials and Planned Corrective Actions: Upon reviewing the audit finding, Gads Hill Center (GHC) acknowledges the importance of maintaining accurate and compliant documentation for personal services charged to federal and non-federal awards. To strengthen internal controls and ensure proper time reporting, GHC has implemented enhanced procedures to align with federal requirements. These measures are designed to ensure that all salaries allocated to federal and non-federal awards are appropriately documented and substantiated based on actual work performed. In response to this finding, Gads Hill Center has immediately implemented a structured procedure to ensure compliance with federal regulations regarding time and effort reporting. Effective February 2025, the following corrective actions have been established: • Monthly After-the-Fact Time Reporting: Employees whose salaries are allocated to federal and non-federal awards must complete monthly time reports that accurately reflect the actual time worked on each funding source. • Review Process: These time reports are reviewed and signed by both the employee and their direct supervisor to confirm accuracy and compliance with the documented allocations and make any necessary adjustments. • Internal Monitoring and Compliance: GHC’s finance and program leadership teams will conduct periodic reviews to ensure adherence to this procedure and make any necessary refinements to maintain compliance with federal guidelines. By implementing these enhanced controls, Gads Hill Center is committed to ensuring accurate documentation of personal services and maintaining compliance with all federal funding requirements.
Criteria: Title 2, Subtitle A, Chapter 200, Subpart E, § 200.430 of the Code of Federal Regulations states that “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable and properly allocated” and “(vii) Budget estimated (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed;” and “(C) The recipient’s or subrecipient’s system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable and properly allocated.” Condition: Testing over Assistance Listing #21.027 - Coronavirus State and Local Fiscal Recovery Funds indicated that salaries charged to that Federal award were based on budgeted amount. There was no documentation of the required periodic after-the-fact review of the budgeted amounts applied to ALN 21.027 that management was able to provide during the audit process. Cause: Management was unaware that all salary and benefits charged to a Federal award must be supported by records of actual time incurred on the program. Budgeted or reasonable estimates are not sufficient. Additionally, the size of the Federal award does not impact this requirement. Context and Perspective: This is the first year in which ALN #21.027 was a major program and required an audit. Management had implemented proper time reporting for its Head Start program, which is normally audited as a major program, but had not considered this requirement for other Federal awards. Questioned Costs: We selected vouchers for three months and tested eighty-three salaries and wages charged to grants that were part of the ALN #21.027 program. The amount charged to ALN#21.027 for these amounts was $125,208.35 and of that amount $30,300.18 was for employees that were not 100% charged to the related grant, which would necessitate requirement for periodic after-the-fact reviews of interim charges made to a Federal award. Total salaries and wages charged to grants associated with ALN #21.027 for the year ended June 30, 2024, included with expenditures on the Schedule of Expenditures of Federal Awards were $498,984. Effect: Salary and benefits charged to ALN #21.027 lack proper documentation, which could result in certain costs charged to related awards being disallowed. Identification as a Repeat Finding: This finding was not a repeat finding from prior audits. Recommendation: We recommend that Gads Hill Center management establish a formal procedure to perform periodic after-the-fact reviews of interim charges based on budget estimates made to federal awards for all federal and state funded grant programs. Such reviews should be conducted for employees with time charged to multiple federal awards, and charges should be adjusted to reflect the actual time spent, based on the review findings. One way to achieve this is to require Personnel Activity Reports or similar documentation that clearly documents employee time incurred by program for the pay period or month for employees that work on multiple grants. Views of Responsible Officials and Planned Corrective Actions: Upon reviewing the audit finding, Gads Hill Center (GHC) acknowledges the importance of maintaining accurate and compliant documentation for personal services charged to federal and non-federal awards. To strengthen internal controls and ensure proper time reporting, GHC has implemented enhanced procedures to align with federal requirements. These measures are designed to ensure that all salaries allocated to federal and non-federal awards are appropriately documented and substantiated based on actual work performed. In response to this finding, Gads Hill Center has immediately implemented a structured procedure to ensure compliance with federal regulations regarding time and effort reporting. Effective February 2025, the following corrective actions have been established: • Monthly After-the-Fact Time Reporting: Employees whose salaries are allocated to federal and non-federal awards must complete monthly time reports that accurately reflect the actual time worked on each funding source. • Review Process: These time reports are reviewed and signed by both the employee and their direct supervisor to confirm accuracy and compliance with the documented allocations and make any necessary adjustments. • Internal Monitoring and Compliance: GHC’s finance and program leadership teams will conduct periodic reviews to ensure adherence to this procedure and make any necessary refinements to maintain compliance with federal guidelines. By implementing these enhanced controls, Gads Hill Center is committed to ensuring accurate documentation of personal services and maintaining compliance with all federal funding requirements.
Criteria: CFR Part 200.430(g) identified standards for documentation of personnel expenses. Internal controls within the organization should be designed and effectively implemented to support these standards for documentation. Condition: In the testing of 40 payroll periods there were 7 instances in which the timecard was not signed by the employee; these instances occurred for a total of 3 employees working on the program. Effect: The allocation on the timecard for the period was not attested to be accurate and properly distributed by the employee. Cause: During the year the Organization was implementing new time tracking processes and during that implementation process some individual timecards were not properly signed of. Recommendation: We recommend that the Organization review its control process for the reviewer and approver of time to ensure that the supervisor does not approve time for which there is no employee signature. Views of Responsible Officials and Planned Corrective Actions: We agree with the finding, see corrective action plan.
FINDING 2024-006 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed or implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Federal funds may only be used to pay staff for work that has occurred supporting the objective of the federal program. As such, proper time and effort documentation is to be maintained by the School Corporation. The purpose of time and effort recording is to provide documentation of the time spent working on specific federal programs to ensure charges are accurate for each program. In a sample of six payroll disbursements charged to the Education Stabilization Fund (ESF) grant, four disbursements were for payments to employees whose time was split between the ESF and nonfederal activity. Time and effort records were not maintained for any of these four employees, and, therefore, we were unable to determine if the total costs were allowable, resulting in $5,572 of questioned costs. INDIANA STATE BOARD OF ACCOUNTS 26 SCHOOL CITY OF MISHAWAKA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities . . . (iv) Encompass federally-assisted and all other activities compensated by the recipient or subrecipient on an integrated basis but may include the use of subsidiary records as defined in the recipient's or subrecipient's written policy; . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." While across the board stipends are not permitted, LEAs may pay staff for COVID-related work that has been documented. Most, if not all, staff likely had extra responsibilities as well as time and effort to respond to the pandemic. ESSER funds can be used to pay staff for that work and LEAs are responsible for documenting that this work occurred. (Indiana Department of Education, ESSER III Frequently Asked Questions (FAQs) updated August 16, 2021) INDIANA STATE BOARD OF ACCOUNTS 27 SCHOOL CITY OF MISHAWAKA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls over the payroll disbursements for employees who worked with both federal and nonfederal programs was not properly designed or implemented by management. The School Corporation did not maintain a record of the actual time spent working on extra responsibilities for COVID-related work to ensure allowability. Effect Noncompliance with the grant agreement and the compliance requirement resulted in questioned costs and could result in the repayment of federal funds. Questioned Costs Known questioned costs of $5,572 were identified as detailed in the Condition and Context. Recommendation We recommended that the School Corporation's management design and implement a system of internal controls to ensure that disbursement documentation will be obtained, retained, and made available for audit and that the disbursements comply with the Allowable Costs/Cost Principles compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-006 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed or implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Federal funds may only be used to pay staff for work that has occurred supporting the objective of the federal program. As such, proper time and effort documentation is to be maintained by the School Corporation. The purpose of time and effort recording is to provide documentation of the time spent working on specific federal programs to ensure charges are accurate for each program. In a sample of six payroll disbursements charged to the Education Stabilization Fund (ESF) grant, four disbursements were for payments to employees whose time was split between the ESF and nonfederal activity. Time and effort records were not maintained for any of these four employees, and, therefore, we were unable to determine if the total costs were allowable, resulting in $5,572 of questioned costs. INDIANA STATE BOARD OF ACCOUNTS 26 SCHOOL CITY OF MISHAWAKA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities . . . (iv) Encompass federally-assisted and all other activities compensated by the recipient or subrecipient on an integrated basis but may include the use of subsidiary records as defined in the recipient's or subrecipient's written policy; . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." While across the board stipends are not permitted, LEAs may pay staff for COVID-related work that has been documented. Most, if not all, staff likely had extra responsibilities as well as time and effort to respond to the pandemic. ESSER funds can be used to pay staff for that work and LEAs are responsible for documenting that this work occurred. (Indiana Department of Education, ESSER III Frequently Asked Questions (FAQs) updated August 16, 2021) INDIANA STATE BOARD OF ACCOUNTS 27 SCHOOL CITY OF MISHAWAKA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls over the payroll disbursements for employees who worked with both federal and nonfederal programs was not properly designed or implemented by management. The School Corporation did not maintain a record of the actual time spent working on extra responsibilities for COVID-related work to ensure allowability. Effect Noncompliance with the grant agreement and the compliance requirement resulted in questioned costs and could result in the repayment of federal funds. Questioned Costs Known questioned costs of $5,572 were identified as detailed in the Condition and Context. Recommendation We recommended that the School Corporation's management design and implement a system of internal controls to ensure that disbursement documentation will be obtained, retained, and made available for audit and that the disbursements comply with the Allowable Costs/Cost Principles compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Federal Program Information: U. S. Department of Education Passed through the State of Vermont Agency of Education ALN: - 10.555 Child Nutrition Cluster Criteria: The following CFR(s) applies to this finding: 2 CFR 200.303 & 2 CFR section 200.430(g). Condition: During audit procedures, it was identified that the School District overpaid employees for 2 charges under this program. Cause: The School District does not have the necessary internal controls over compliance. Effect: Insufficient controls could result in unallowable expenses being charged to the program and subsequently improperly reimbursed by federal funds. Identification of Questioned Costs: None identified. Context: There were 40 payroll charges tested. It was found that the 2 employees were not paid the correct rate on 2 charges tested. This is not a statistically valid sample. Repeat Finding: This is a repeat finding. Recommendation: It is recommended that the School District review their Corrective Action Plan from last year, make necessary adjustments to include more strict procedures, and implement internal control processes and procedures to ensure that they are following the criteria above. Submit new or revised corrective action plan to us. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan issued by the Mount Mansfield Unified Union School District.
2024-010 HOURLY TIMESHEETS - NO PREPARER OR APPROVER SIGNATURES - EDUCATIONAL STABILIZATION FUND GRANT Funding agency:U.S. Department of Education, passed through the New Mexico Public Education Department Federal Program Title and Assistance Listing Number: COVID-19 Education Stabilization Fund - 84.425 Federal Award ID Number: 5425D210023 Award Year:July 1, 2023 to June 30, 2024 Type of Finding: Significant Deficiency Compliance Area: Allowable costs and allowable activities Question Costs: None Condition We tested 10 payroll disbursements and found that four (4) timesheets for hourly employees were missing employee's signature and supervisor's approval. However, no discrepancies in pay amounts were identified. The requirement for signed timesheets was discontinued at the start of FY22. Further control deficiencies in the HR and payroll transaction cycles are detailed in Financial Statement Findings 2024-003 and 2024-007. Criteria 2 CFR § 200.430 (g) Compensation-personal services, Standards for Documentation of Personnel Expenses: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (iii) Reasonably reflect the total activity for which the employee is compensated by the recipient or subrecipient. New Mexico Department of Public Education's (PED) Manual of Procedures, PSAB Supplement 14, Payroll: Timecards are always signed, a procedure exists to verify time or changes, supervisor signature, etc. Effect Without signed timesheets, the District has a limited capacity to verify the accuracy and approval of hours worked, increasing the risk of unauthorized payroll payments or unrecorded errors. This control lapse also indicates a growing weakness in payroll oversight, potentially undermining the integrity of the District's internal control environment over payroll processing. Cause The District discontinued the process at the beginning of FY22, and despite management's efforts to implement timesheet controls in FY24, it was not consistently enforced throughout the fiscal year.
2024-003 Controls over Payroll (Material Weakness in Internal Controls over Compliance and Material Noncompliance) Title: Research and Development Cluster Funding Agency, Federal Award, Agreement Number, Award Year, Assistance Listing Number: National Science Foundation, 2122108, 2024,47.049 National Science Foundation, 1953487, 2024,47.076 United States Department of Education, P031C160248, 2024, 84.031C United States Department of Health and Human Services, 1R16GM146669-01 & Q02067J, 2024, 93.859 Title: Southwest Forest Health and Wildfire Prevention Funding Agency: United States Department of Agriculture Federal Award Agreement Number:21-DG-11030000-020, 22-DG-11030000-013, 23-DG-11030000-014 Award Year:2024 Assistance Listing Number:10.694 Title: Foster Care-Title IV-E Funding Agency: United States Department of Health and Human Services Federal Award Agreement Number:N/A Award Year:2024 Assistance Listing Number:93.658 Pass-Through Agency:CYFD Pass-Through Identification Number:23-690-500-25581 Condition: In testing 25 payroll items from each program listed above, CRI noted exceptions as described in the following table. No exceptions were noted in the items tested for the Foster Care program. (See table in report pg 120) Questioned Costs: Known and likely questioned costs of $4,547 and $506,209 are associated with the R&D Cluster related to discrepancies in time and effort documentation. No questioned costs were noted in the Southwest Forest Health and Wildfire Prevention Program or the Foster Care program. Criteria: Per Title 2 US Code of Federal Regulations Part 200.303a, 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 should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.403 – Factors affecting allowability of costs – Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: paragraph (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles; paragraph (g) Be adequately documented. Per 2 CFR section 200.430 – Compensation – personal services, paragraph (i) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Cause: The University does not have sufficient controls in place to ensure the accuracy of the amounts paid to employees nor include appropriate approvals documented to be allowable to be charged to the federal grant. The University has deficiencies recording and processing payroll as described in finding 2024-001. Effect: The University may unintentionally charge expenses to the program that do not qualify and in turn lead to questioned costs and/or repayment of funds to the Grantor agency.
2024-003 Controls over Payroll (Material Weakness in Internal Controls over Compliance and Material Noncompliance) Title: Research and Development Cluster Funding Agency, Federal Award, Agreement Number, Award Year, Assistance Listing Number: National Science Foundation, 2122108, 2024,47.049 National Science Foundation, 1953487, 2024,47.076 United States Department of Education, P031C160248, 2024, 84.031C United States Department of Health and Human Services, 1R16GM146669-01 & Q02067J, 2024, 93.859 Title: Southwest Forest Health and Wildfire Prevention Funding Agency: United States Department of Agriculture Federal Award Agreement Number:21-DG-11030000-020, 22-DG-11030000-013, 23-DG-11030000-014 Award Year:2024 Assistance Listing Number:10.694 Title: Foster Care-Title IV-E Funding Agency: United States Department of Health and Human Services Federal Award Agreement Number:N/A Award Year:2024 Assistance Listing Number:93.658 Pass-Through Agency:CYFD Pass-Through Identification Number:23-690-500-25581 Condition: In testing 25 payroll items from each program listed above, CRI noted exceptions as described in the following table. No exceptions were noted in the items tested for the Foster Care program. (See table in report pg 120) Questioned Costs: Known and likely questioned costs of $4,547 and $506,209 are associated with the R&D Cluster related to discrepancies in time and effort documentation. No questioned costs were noted in the Southwest Forest Health and Wildfire Prevention Program or the Foster Care program. Criteria: Per Title 2 US Code of Federal Regulations Part 200.303a, 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 should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.403 – Factors affecting allowability of costs – Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: paragraph (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles; paragraph (g) Be adequately documented. Per 2 CFR section 200.430 – Compensation – personal services, paragraph (i) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Cause: The University does not have sufficient controls in place to ensure the accuracy of the amounts paid to employees nor include appropriate approvals documented to be allowable to be charged to the federal grant. The University has deficiencies recording and processing payroll as described in finding 2024-001. Effect: The University may unintentionally charge expenses to the program that do not qualify and in turn lead to questioned costs and/or repayment of funds to the Grantor agency.
2024-003 Controls over Payroll (Material Weakness in Internal Controls over Compliance and Material Noncompliance) Title: Research and Development Cluster Funding Agency, Federal Award, Agreement Number, Award Year, Assistance Listing Number: National Science Foundation, 2122108, 2024,47.049 National Science Foundation, 1953487, 2024,47.076 United States Department of Education, P031C160248, 2024, 84.031C United States Department of Health and Human Services, 1R16GM146669-01 & Q02067J, 2024, 93.859 Title: Southwest Forest Health and Wildfire Prevention Funding Agency: United States Department of Agriculture Federal Award Agreement Number:21-DG-11030000-020, 22-DG-11030000-013, 23-DG-11030000-014 Award Year:2024 Assistance Listing Number:10.694 Title: Foster Care-Title IV-E Funding Agency: United States Department of Health and Human Services Federal Award Agreement Number:N/A Award Year:2024 Assistance Listing Number:93.658 Pass-Through Agency:CYFD Pass-Through Identification Number:23-690-500-25581 Condition: In testing 25 payroll items from each program listed above, CRI noted exceptions as described in the following table. No exceptions were noted in the items tested for the Foster Care program. (See table in report pg 120) Questioned Costs: Known and likely questioned costs of $4,547 and $506,209 are associated with the R&D Cluster related to discrepancies in time and effort documentation. No questioned costs were noted in the Southwest Forest Health and Wildfire Prevention Program or the Foster Care program. Criteria: Per Title 2 US Code of Federal Regulations Part 200.303a, 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 should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.403 – Factors affecting allowability of costs – Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: paragraph (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles; paragraph (g) Be adequately documented. Per 2 CFR section 200.430 – Compensation – personal services, paragraph (i) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Cause: The University does not have sufficient controls in place to ensure the accuracy of the amounts paid to employees nor include appropriate approvals documented to be allowable to be charged to the federal grant. The University has deficiencies recording and processing payroll as described in finding 2024-001. Effect: The University may unintentionally charge expenses to the program that do not qualify and in turn lead to questioned costs and/or repayment of funds to the Grantor agency.
2024-003 Controls over Payroll (Material Weakness in Internal Controls over Compliance and Material Noncompliance) Title: Research and Development Cluster Funding Agency, Federal Award, Agreement Number, Award Year, Assistance Listing Number: National Science Foundation, 2122108, 2024,47.049 National Science Foundation, 1953487, 2024,47.076 United States Department of Education, P031C160248, 2024, 84.031C United States Department of Health and Human Services, 1R16GM146669-01 & Q02067J, 2024, 93.859 Title: Southwest Forest Health and Wildfire Prevention Funding Agency: United States Department of Agriculture Federal Award Agreement Number:21-DG-11030000-020, 22-DG-11030000-013, 23-DG-11030000-014 Award Year:2024 Assistance Listing Number:10.694 Title: Foster Care-Title IV-E Funding Agency: United States Department of Health and Human Services Federal Award Agreement Number:N/A Award Year:2024 Assistance Listing Number:93.658 Pass-Through Agency:CYFD Pass-Through Identification Number:23-690-500-25581 Condition: In testing 25 payroll items from each program listed above, CRI noted exceptions as described in the following table. No exceptions were noted in the items tested for the Foster Care program. (See table in report pg 120) Questioned Costs: Known and likely questioned costs of $4,547 and $506,209 are associated with the R&D Cluster related to discrepancies in time and effort documentation. No questioned costs were noted in the Southwest Forest Health and Wildfire Prevention Program or the Foster Care program. Criteria: Per Title 2 US Code of Federal Regulations Part 200.303a, 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 should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.403 – Factors affecting allowability of costs – Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: paragraph (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles; paragraph (g) Be adequately documented. Per 2 CFR section 200.430 – Compensation – personal services, paragraph (i) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Cause: The University does not have sufficient controls in place to ensure the accuracy of the amounts paid to employees nor include appropriate approvals documented to be allowable to be charged to the federal grant. The University has deficiencies recording and processing payroll as described in finding 2024-001. Effect: The University may unintentionally charge expenses to the program that do not qualify and in turn lead to questioned costs and/or repayment of funds to the Grantor agency.
2024-003 Controls over Payroll (Material Weakness in Internal Controls over Compliance and Material Noncompliance) Title: Research and Development Cluster Funding Agency, Federal Award, Agreement Number, Award Year, Assistance Listing Number: National Science Foundation, 2122108, 2024,47.049 National Science Foundation, 1953487, 2024,47.076 United States Department of Education, P031C160248, 2024, 84.031C United States Department of Health and Human Services, 1R16GM146669-01 & Q02067J, 2024, 93.859 Title: Southwest Forest Health and Wildfire Prevention Funding Agency: United States Department of Agriculture Federal Award Agreement Number:21-DG-11030000-020, 22-DG-11030000-013, 23-DG-11030000-014 Award Year:2024 Assistance Listing Number:10.694 Title: Foster Care-Title IV-E Funding Agency: United States Department of Health and Human Services Federal Award Agreement Number:N/A Award Year:2024 Assistance Listing Number:93.658 Pass-Through Agency:CYFD Pass-Through Identification Number:23-690-500-25581 Condition: In testing 25 payroll items from each program listed above, CRI noted exceptions as described in the following table. No exceptions were noted in the items tested for the Foster Care program. (See table in report pg 120) Questioned Costs: Known and likely questioned costs of $4,547 and $506,209 are associated with the R&D Cluster related to discrepancies in time and effort documentation. No questioned costs were noted in the Southwest Forest Health and Wildfire Prevention Program or the Foster Care program. Criteria: Per Title 2 US Code of Federal Regulations Part 200.303a, 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 should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.403 – Factors affecting allowability of costs – Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: paragraph (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles; paragraph (g) Be adequately documented. Per 2 CFR section 200.430 – Compensation – personal services, paragraph (i) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Cause: The University does not have sufficient controls in place to ensure the accuracy of the amounts paid to employees nor include appropriate approvals documented to be allowable to be charged to the federal grant. The University has deficiencies recording and processing payroll as described in finding 2024-001. Effect: The University may unintentionally charge expenses to the program that do not qualify and in turn lead to questioned costs and/or repayment of funds to the Grantor agency.
2024-003 Controls over Payroll (Material Weakness in Internal Controls over Compliance and Material Noncompliance) Title: Research and Development Cluster Funding Agency, Federal Award, Agreement Number, Award Year, Assistance Listing Number: National Science Foundation, 2122108, 2024,47.049 National Science Foundation, 1953487, 2024,47.076 United States Department of Education, P031C160248, 2024, 84.031C United States Department of Health and Human Services, 1R16GM146669-01 & Q02067J, 2024, 93.859 Title: Southwest Forest Health and Wildfire Prevention Funding Agency: United States Department of Agriculture Federal Award Agreement Number:21-DG-11030000-020, 22-DG-11030000-013, 23-DG-11030000-014 Award Year:2024 Assistance Listing Number:10.694 Title: Foster Care-Title IV-E Funding Agency: United States Department of Health and Human Services Federal Award Agreement Number:N/A Award Year:2024 Assistance Listing Number:93.658 Pass-Through Agency:CYFD Pass-Through Identification Number:23-690-500-25581 Condition: In testing 25 payroll items from each program listed above, CRI noted exceptions as described in the following table. No exceptions were noted in the items tested for the Foster Care program. (See table in report pg 120) Questioned Costs: Known and likely questioned costs of $4,547 and $506,209 are associated with the R&D Cluster related to discrepancies in time and effort documentation. No questioned costs were noted in the Southwest Forest Health and Wildfire Prevention Program or the Foster Care program. Criteria: Per Title 2 US Code of Federal Regulations Part 200.303a, 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 should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.403 – Factors affecting allowability of costs – Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: paragraph (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles; paragraph (g) Be adequately documented. Per 2 CFR section 200.430 – Compensation – personal services, paragraph (i) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Cause: The University does not have sufficient controls in place to ensure the accuracy of the amounts paid to employees nor include appropriate approvals documented to be allowable to be charged to the federal grant. The University has deficiencies recording and processing payroll as described in finding 2024-001. Effect: The University may unintentionally charge expenses to the program that do not qualify and in turn lead to questioned costs and/or repayment of funds to the Grantor agency.