2024-002: Allowable Costs – Social Security State Grants for Work Incentives Assistance to Disabled Beneficiaries – Federal Assistance Listing Number 96.009; Award Period: Year ended September 30, 2024. Allowable costs - Protection and Advocacy for Individuals with Mental Illness Assistance - Federal Assistance Listing Number 93.138; Award Period: Year ended September 30, 2024. Criteria: Per 2 CFR §200.430(i), non-federal entities are required to maintain records that accurately reflect work performed. These records must be supported by a system of internal control which provides reasonable assurance that the time being charged is accurate, allowable and properly allocated, are incorporated in the official records, such as payroll records, reasonably reflect the employee’s total activity, provide a time or percentage breakdown on all activities, both federally and non-federally funded, for the employee, and comply with the non-federal entity’s pre-established accounting practices and procedures. Condition: The Center allowed payroll related costs to be submitted for reimbursement under the grant for time that did not match approved timesheets. This is not in compliance with program allowable cost requirements. Context: The amount allocated to the federal awards for numerous employees differed from the amount that was actually worked on the grant based on timesheet and approved pay rate. Cause: The Center allocates all of payroll based on hours worked on each program, rather than actual dollars spent on payroll for each program. This allocation method is appropriate for administrative employees who do not directly track their time to grants, but not for those who do. Effect: The Center billed the incorrect amount of payroll and related costs to the federal program, resulting in questioned costs. Questioned Costs: The amount of payroll and related costs discovered to be incorrect are under the questioned costs reporting threshold. Recommendation: We recommend the Center change its process to allocate payroll based on actual dollar amount rather than hours for employees who track their time across the grants. This will result in more accurate allocation of expenditures to federal programs. Views of Responsible Officials: dLCV will implement a weighted direct bill process beginning October 1, 2025. Throughout the audit review, and as recently as one month before the final report, the auditors consistently reported to us that this was likely not a compliance issue. Additionally, the auditors were not able to provide any sample for any time period in 2024 showing the potential impact of changing from an hours allocation to a dollars allocation. The auditors did not inform us of their changed opinion until late August, 2025, making it impossible to make any adjustments in the current fiscal year.
2024-003: Allowable Costs – Social Security State Grants for Work Incentives Assistance to Disabled Beneficiaries – Federal Assistance Listing Number 96.009; Award Period: Year ended September 30, 2024. Allowable costs - Protection and Advocacy for Individuals with Mental Illness Assistance - Federal Assistance Listing Number 93.138; Award Period: Year ended September 30, 2024. Criteria: Per 2 CFR §200.430(i), non-federal entities are required to maintain records that accurately reflect work performed. These records must be supported by a system of internal control which provides reasonable assurance that the time being charged is accurate, allowable and properly allocated, are incorporated in the official records, such as payroll records, reasonably reflect the employee’s total activity, provide a time or percentage breakdown on all activities, both federally and non-federally funded, for the employee, and comply with the non-federal entity’s pre-established accounting practices and procedures. Condition: The Center allowed payroll related costs to be submitted for reimbursement under the grant derived from timesheets that were not properly approved. Context: There were several timesheets without proper approval. Cause: There is a lack of proper review of timesheets. Effect: The Center billed payroll based on timesheets that were not properly approved. This risks the amount of payroll billed to the federal programs being inaccurate. Questioned Costs: Unknown. Recommendation: We recommend the Center ensures that timesheets are properly approved prior to processing payroll and billing to federal programs. Views of Responsible Officials: dLCV has refined our policies regarding review of timesheets to ensure that all timesheets are timely submitted and are reviewed and approved by designated staff.
Finding 2024-002 - Significant Deficiency Federal Program: Education Stabilization Fund (ESF) - ALN 84.425 Criteria: In accordance with 2 CFR §200.430, compensation for personal services must be based on records that accurately reflect the work performed and must be consistent with the entity’s established salary schedule. Adequate internal controls must be in place to ensure that payroll disbursements are calculated and paid accurately in accordance with approved compensation policies. Condition: It was noted during single audit testing that certain employees tested were paid less than the amounts specified in the Board’s published salary schedule, thus resulting in underpayment. Cause: The underpayments occurred due to a lack of adequate internal controls to ensure payroll amounts were calculated in accordance with the approved salary schedule. Specifically, there was no documented review or verification process in place to confirm that employee pay amounts aligned with the published salary schedule, which allowed the discrepancies to go undetected. Effect: As a result of this control weakness, the Board’s financial records did not reflect accurate payroll expenses and related liabilities. This error represents a significant potential misstatement and indicates a systemic issue in payroll processing controls. However, since the payroll costs were not charged to the grant, and no unallowable costs were identified, the amounts are not considered questioned costs and no noncompliance was identified. This control deficiency is considered a significant deficiency in internal control over compliance. Recommendation: The Board should strengthen its internal control procedures over payroll processing by implementing a formal, documented review process to ensure all employee compensation is properly calculated in accordance with the published salary schedule prior to payment. Management should also perform periodic reconciliations of payroll amounts to approved salary schedules as part of ongoing monitoring procedures. Views of Responsible Officials: The Board agrees with the finding and acknowledges the payroll errors identified. Upon notification, the Board reviewed the payroll records of the certain employees with identified errors and confirmed the underpayments. Corrective action was taken on the identified employees and the Board issued checks to pay the difference owed. The Board is also implementing additional review procedures to ensure that future payroll is processed in accordance with approved salary schedules.
Program: ALN 84.425V, Department of Education, Education Stabilization Fund, Emergency Assistance to Non-Public Schools, passed through the State of Alaska, grant number CO23.244.01/1004 052132102 2211Criteria: 2 CFR section 200.303(d)(2), states that a non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statues, regulations, and the terms and conditions of the federal award. 2 CFR section 200.430(g)(1), states that charges to Federal awards for salaries and wages must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: SAAMS’ policies require a payroll batch report be reviewed prior to issuing payroll. This payroll batch report specifies employee name, program charged, amount charged to each program, hours, and pay rate. During our testing, we identified that the payroll batch report did not always contain amounts charged to each program or pay rates, making the review ineffective. Cause: Turnover in personnel during the fiscal year led to inadequate training and inconsistent performance of the payroll batch report review. Effect: Unallowable payroll costs may be charged to a federal program. Questioned costs: None Context: During our testing of 11 payroll batch reports, 5 did not contain pay rates or amounts charged to each program. Statistical sampling: No Repeat finding: No Recommendation: We recommend the entity develop policies that incorporate standardized reporting and description of the review objective, along with training to staff.
Finding: 2024-004 Time/Salary Allocations (Significant Deficiency) Information on the Federal Programs: ALN #21.027 Coronavirus State and Local Fiscal Recovery Funds Criteria or Specific Requirement (including Statutory, Regulatory, or Other Citation): CFR §200.430 Compensation—personal services. States; (g) 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. Criteria or Specific Requirement (including Statutory, Regulatory, or Other Citation) (continued): 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; (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: During our audit of DOL’s compensation practices, we noted that salaries and benefits charged to Federal programs were allocated using predetermined estimates rather than contemporaneous records reflecting actual time spent. These allocations were not supported by detailed documentation, such as timekeeping records or personnel activity reports, and the only support available was in the form of internal memos recorded in the general ledger. Cause: DOL has not implemented a system for documenting time and effort in a manner that complies with Federal requirements. The current process relies on estimates rather than actual, verifiable work performed. Effect or Potential Effect: Without accurate and documented time and effort reporting, there is a risk that Federal awards are either overcharged or undercharged for salaries and benefits. This creates the potential for noncompliance with Federal cost principles, and could lead to disallowed costs in the event of a monitoring or program audit. For ALN #21.027, we identified $80,985 in questioned costs, representing the total amount of unsupported salary and benefit charges to this program. Such deficiencies could also impair the Organization's eligibility for future Federal funding. Questioned Costs: $80,985 (all salaries and benefits changed to ALN #21.027) Context: We tested a statistically valid sample of employee salaries charged to Federal awards. The deficiencies noted were consistent across the sample population, indicating a systemic issue rather than isolated exceptions. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We recommend that DOL strengthen its payroll allocation procedures to ensure compliance with 2 CFR §200.430. Specifically, we advise the following steps: 1. Implement Time and Effort Reporting: All employees whose salaries are charged in whole or in part to Federal awards should complete project-specific timesheets that record actual time spent on each cost objective or funding source. 2. Certifications and Approvals: Timesheets should be signed by the employee and reviewed and certified by their direct supervisor to confirm accuracy. 3. Allocate Based on Actual Time: Salaries and benefits should be allocated to funding sources based on the proportion of actual time worked, as indicated in approved timesheets, rather than based on estimates. 4. Incorporate into Internal Controls: These procedures should be incorporated into DOL’s internal control system and formally documented in its accounting policies and procedures manual. 5. Training and Oversight: Staff responsible for managing payroll allocations and Federal reporting should receive training on Federal time and effort requirements. Periodic internal reviews should be conducted to ensure adherence. By implementing these practices, DOL will significantly reduce the risk of questioned costs, improve compliance with Federal grant requirements, and strengthen the reliability of its financial reporting.
2024-039 - Inadequate Oversight of Davis-Bacon Compliance Federal Program 23.002 - Appalachian Area Development 14.228 - Community Development Block Grants/State's Program Award Numbers ARC-20698 ARC-20699 CDBG Subgrant: 1137-21-111-PF-01 Federal Agency U.S. Department of Housing and Urban Development (HUD) Appalachian Regional Commission (ARC) Compliance Requirement Special Tests and Provisions - Davis-Bacon Act (24 CFR §570.603) Type of Finding Internal Control over Compliance - Significant Deficiency Compliance - Noncompliance with Special Tests and Provisions Questioned Costs None Criteria Per 2 CFR §200.430 and Davis-Bacon Act requirements, recipients must ensure that contractors and subcontractors pay laborers and mechanics prevailing wage rates and fringe benefits as determined by the U.S. Department of Labor. Effective oversight includes documented review procedures, monitoring activities, and resolution of discrepancies. Condition For ARC MS-20699 and CDBG 1137-21-111-PF-01, the auditor tested 10 of 33 certified payrolls. Two payrolls (20%) omitted employee classifications, which were not identified during the grant administrator's review. A letter dated September 2, 2025, was later obtained certifying the employees were laborers and paid the appropriate wage and fringe rates. No documentation of prior corrective action was available. For ARC MS-20698, the auditor tested all 17 payrolls submitted. Four certified payrolls from the primary contractor were not submitted and could not be tested. Of the submitted payrolls: Two lacked employer signatures on WH-347 forms Three subcontractor payrolls listed employees as "plumber" or "plumber assistant," classifications not included in the applicable wage determination No SF-1444 conformance request was submitted to the Department of Labor One subcontractor payroll lacked a signed certification page In both grants, the grant administrator relied solely on visual checkmarks to indicate payroll review. No formal checklist, documentation of oversight, or corrective action procedures were maintained. Employee interviews were limited to a single date for ARC MS-20699 and to one employee for ARC MS-20698, with no wage rate recorded. Cause The City did not establish formal internal control procedures for Davis-Bacon oversight, including documented review protocols, periodic employee interviews, and a process for resolving discrepancies or following up on missing or incomplete payrolls. Effect Weaknesses in oversight may result in undetected noncompliance with Davis-Bacon requirements, including misclassification or underpayment of wages. The absence of classification, missing payrolls, and unapproved job categories prevent full verification of wage rate compliance. These deficiencies represent both a significant deficiency in internal control and procedural noncompliance with Davis-Bacon provisions. Recommendation The City should implement formal internal control procedures for Davis-Bacon compliance, including: A documented payroll review checklist Periodic employee interviews throughout the construction period A process for identifying and resolving discrepancies Procedures for submitting SF-1444 conformance requests when needed Follow-up protocols for missing or unsigned certified payroll Views of Responsible Officials Management concurs with the finding. The City acknowledges that oversight of Davis-Bacon compliance was informal and lacked documentation. To strengthen internal controls, the City will implement a formal payroll review checklist and conduct periodic employee interviews throughout future construction projects. Staff will receive training on Davis-Bacon requirements, and a process will be established for identifying and resolving discrepancies in certified payrolls, including submission of conformance requests when necessary.
2024-038 - Inadequate Documentation of HIDTA Personnel Costs Federal Program 95-001 -- High Intensity Drug Trafficking Areas (HIDTA) Award Number G23-GC0003A Federal Agency Office of National Drug Control Policy Compliance Requirement Allowable Costs/Cost Principles - 2 CFR §200.430 Type of Finding Internal Control over Compliance - Significant Deficiency Compliance - Noncompliance Questioned Costs $14,418 Criteria Per 2 CFR §200.430, personnel costs charged to federal awards must be supported by records that accurately reflect the work performed and be subject to internal control review. Condition Although the HIDTA program was not selected for major program testing under the Single Audit, we identified this issue during the financial statement audit. The Police Department submitted payroll costs totaling $14,418 for HIDTA reimbursement across three quarters. Documentation included overtime forms and manual time cards that lacked sufficient detail, such as start/stop times, activity descriptions, and supervisor approval. These records do not meet the standards for supporting federal personnel costs under 2 CFR §200.430. Cause The City's internal controls over timekeeping and payroll documentation are not sufficient to ensure compliance with federal requirements. Effect Personnel costs totaling $14,418 are considered questioned costs due to inadequate documentation. These costs may be ineligible for reimbursement under the HIDTA program. Recommendation We recommend the City strengthen internal controls over payroll documentation and ensure that all personnel costs charged to federal awards are supported by detailed, approved records that clearly reflect HIDTA-related activities. Views of Responsible Officials Management concurs with the finding. The City acknowledges that payroll documentation submitted for HIDTA reimbursement lacked sufficient detail and formal approval. To address this, the City will implement a standardized timekeeping system that includes start/stop times, activity descriptions, and supervisor sign-off. Staff will receive training on federal documentation standards, and internal controls will be updated to ensure compliance with 2 CFR §200.430.
Criteria Per 2 CFR 200.403, for a cost to be allowable under a Federal award, it must be necessary and reasonable for the performance of the award. Furthermore, 2 CFR 200.430(g) requires that charges for salaries and wages be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition Management's calculation for allowable temporary labor costs charged to the Disaster Grants – Public Assistance program (ALN 97.036) included an error in the data file used for the calculations. Total temporary labor costs charged to this award were $12,770,434. This error led to using incorrect wages for temporary workers who worked standard hours and overtime hours on the same day. This error occurred only for workers from one temporary labor vendor based on the formatting of the invoice information from that vendor. As a result, the temporary labor costs claimed for reimbursement for these workers were overstated by $353,420. Cause and Effect Brown Health’s control for reviewing the allowability of temporary labor invoices was not designed to include a detailed reconciliation of vendor provided data. Specifically, the review process did not verify that the wages for workers that had standard and overtime hours were consistent with the underlying invoice, which allowed the error to be undetected. The control deficiency caused Brown Health to claim temporary labor costs in excess of the actual amounts incurred. As a result, the claim was not in compliance with the Federal cost principles, which require costs to be accurate and based on records that correctly reflect the work performed. The overstated portion of the labor costs claimed for reimbursement are considered questioned costs. Questioned costs $353,420 Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding This is not a repeat finding. Recommendation We recommend that Brown Health management strengthen its internal controls over the review of temporary labor costs to ensure compliance with Federal regulations. Specifically, Brown Health should revise its invoice review procedures to include a detailed reconciliation of hours and wage calculations for temporary labor. Additionally, Brown Health should work with the granting agency to resolve the resulting questioned costs. View of Responsible Officials Brown Health management concurs with this finding. We have already initiated a detailed review to identify and quantify the total amount of the labor cost overstatement. We will report our results to the granting agency and work with them to resolve the questioned costs by May 31, 2026. To prevent recurrence, management will revise our review control of project applications to reconcile the calculation file to invoice support to verify accuracy.
Agency: U.S. Department of Health and Human Services, U.S. Department of Defense, and U.S. Department of the Treasury, Federal Assistance Listing Number: Various under Research and Development cluster; 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award Year: 2024 Pass-Through Entity: University of Vermont, Boston Children’s Hospital, University of North Carolina, Boston Children’s Hospital, University of Connecticut Health Center, Duke University, Redeemer’s University, Oregon Health & Science University, University of Connecticut - Storrs, University of Connecticut Health Center, Public Health Institute, Baylor College of Medicine, Rutgers University, Cincinnati Children’s Hospital Medical Center, Children’s Hospital of Los Angeles, Seattle Children’s, State of Connecticut Judicial Branch, City of Hartford, State of Connecticut Department of Public Health, State of Connecticut Department of Social Services, State of Connecticut Department of Mental Health and Addiction Services Criteria: In accordance with 2 CFR §200.430(i) of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), compensation for personal services charged to federal awards must be based on records that accurately reflect the work performed. When budget estimates are used for interim accounting purposes, they must: produce reasonable approximations of the activity actually performed, be reconciled to actual effort on a regular basis, and be adjusted in a timely manner to reflect significant changes in work activity. Documentation may include timesheets, effort certifications, payroll distribution reports, and other personnel activity records, and must be reviewed and approved by authorized personnel. Condition and Context: The Medical Center did not maintain formal documentation evidencing a hindsight review of employee working hours to verify alignment between actual hours worked and budgeted hours. While a time and effort reporting was lacking for the items included in our sample, there was evidence of work performed on the grants and the amounts allocated aligned closely to the budget. Questioned Costs: We were unable to quantify an amount of questioned costs. While a time and effort reporting was lacking for the items included in our sample, there was evidence of work performed on the grants and the amounts allocated aligned closely to the budget. Therefore, we were unable to quantify the amount of questioned costs. Cause: The Medical Center changed its procedures for documenting employee time allocations; however, formal processes were not established to document and regularly reconcile actual hours worked to budgeted allocations. As a result, hindsight reviews were not formally maintained to verify that payroll allocations were supported by employees’ actual work performed. Effect: The lack of documentation of hindsight review increases the risk of inaccurate payroll cost allocations and potential noncompliance with federal grant requirements. Recommendation: The Medical Center should update its policies and procedures to require and document a formal hindsight review of employee working hours. This review should verify that actual hours worked align with budgeted hours, particularly in cases where payroll costs are allocated across multiple grants. The updated procedures should include clear guidelines for conducting and retaining evidence of such reviews to support accurate cost allocations and ensure compliance with federal grant requirements.
Finding 2024-002 – Allowable costs – payroll Assistance Listing #: 93.671 Criteria: In accordance with the Uniform Guidance’s compensation requirements (2 CFR 200.430), payroll systems must be based on records that accurately reflect the work performed and supported by a system of internal controls that provides reasonable assurances that charges are accurate; allowable and reasonable; and properly allocated. The Uniform Guidance allows for use of budget estimates on an interim basis. When using budget estimates on an interim basis, grantees must reconcile estimates against actual time or effort on a regular basis to ensure that estimates conform to actual staff activity. Grantees must make adjustments in the payroll distribution to align with actual time. Condition: During fiscal year 2024, MSP charged payroll costs to the federal award programs using a set percentage based on budget and not based on employee’s actual time or effort amongst various programs. Cause: Individual payroll amounts were allocated to grant awards based on internally developed budgets of employees' time. Management was unaware that while this is an accepted method, eventually a "true-up" or reconciliation to actual time incurred on specific grants is required. Effect: The salary costs charged to the federal programs may have been under or over reported based on the actual level of effort. Questioned Costs: N/A Repeat Finding: No Recommendation: We recommend MSP make changes overall its timekeeping processes to ensure that payroll costs accurately reflect the work performed and if budget estimates are utilized, that they are reconciled and trued up on a consistent basis. Response: MSP plans to implement changes overall to timekeeping processes to ensure that payroll costs accurately reflect the work performed and to reconcile and true up any budget estimates on a consistent basis.
Finding Number: 2024-018 Prior Year Finding Number: 2023-019 Compliance Requirement: Allowable Costs/Cost Principles – Payroll Activities/ Period of Performance Program: U.S. Department of Agriculture Government Department/Agency: Department of Human Services (DHS) Supplemental Nutrition Assistance Program Cluster (SNAP) ALN: 10.561 Award #: Various Award Period: Various Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its activities allowed or unallowed, allowable cost/cost principal process. CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: • Be incorporated into the organization’s official records. • Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and • Support the distribution of employee salary across multiple activities or cost objectives. Condition – We noted the following: • The SNAP participation report was not properly reconciled to accounting records. • One grant award was overspent by $391,000. No adjustment was made to the SEFA. • During our testing of allowable costs for payroll expenditures incurred throughout the year, we sampled and selected 60 of the 1,806 payroll disbursements and noted the following: o 19 instances in which DHS did not consistently apply the funding allocation. The hours that should have been split 50/50 between federal and local or that should have been 100% local were charged 100% to the program. o 3 instances in which the project code on an employee’s Notice of Personnel Action (NOPA), which is used to record time and effort to the appropriate grant, were expired and had not been updated. o 9 instances in which payroll costs were charged outside of the award’s period of performance. Further, we noted that internal controls identified did not appear to be operating at a level of precision to ensure compliance with the above-mentioned requirements. Cause – DHS does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles and ensure that an appropriate level of review and approval was completed prior to charging costs to a federal program. Effect or Potential Effect – An ineffective control system related to review of transactions to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major programs. Questioned Costs – Not determinable. Given the nature of the finding (e.g. unavailability of supporting documentation), we determined that projecting estimated questioned costs to the entire population was inappropriate. Context – This is a condition identified per review of DHS’ compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to the program in fiscal year 2024 were $4,207,231. The amount sampled is $159,098. The known amount of inconsistencies noted is $38,462. The total food stamps expenditure charged to the program in fiscal year 2024 were $72,308,337. The known amount of unreconciled information is $355,108. Recommendation – We recommend that DHS reevaluate and improve internal controls to ensure adherence to federal regulations related to the fiscal administrative requirement for expending and accounting for payroll and to ensure proper and accurate funding allocation of payroll cost. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. DHS has enhanced the internal control policies and processes to ensure compliance with federal requirements and has adopted an electronic system for payroll, replacing manual processes. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-030 Prior Year Finding Number: 2023-033 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of the Interior Government Department/Agency: Department of Planning and Natural Resources (DPNR) Fish and Wildlife Cluster ALN: 15.605, 15.611 Award #: Various Award Period: Various Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its activities allowed or unallowed and allowable cost/cost principal process. CFR 200.403(g) requires all costs charged to a federal award must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: • Be incorporated into the organization’s official records. • Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and • Support the distribution of employee salary across multiple activities or cost objectives. Condition – During our testing of allowable costs for payroll expenditures incurred throughout the year, we sampled and selected 60 of 620 payroll disbursements and noted the following: • 1 instance in which the approved timesheet for the pay period selected was not available for review, and there was a variance between the hours reported on the payroll register and the Detail Check History. • 13 instances in which the employee assigned project code documented on the Notice of Personnel Action was not associated with the grant. Additionally, the payroll register reflected a different project code for these transactions. As a result, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the compliance requirement. Cause – DPNR does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles and to ensure that an appropriate level of review and approval was completed prior to charging costs to a federal program. Effect or Potential Effect – An ineffective control system related to review of transactions to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major programs. Questioned Costs – $43,593. Context – This is a condition identified per review of the DPNR’s compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to the program in fiscal year 2024 were $1,704,442. The amount sampled is $181,084. The value of transactions with exceptions totaled $43,593. Recommendation – We recommend that DPNR reevaluate and improve internal controls to ensure adherence to federal regulations related to the fiscal administrative requirement for expending and accounting for payroll and to ensure proper and accurate funding allocation of payroll cost. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. DPNR will enhance internal control procedures to include reconciliations and increased review and approval requirements. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-032 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of the Interior Government Department/Agency: Department of Planning and Natural Resources (DPNR) Economic, Social, and Political Development of the Territories ALN: 15.875 Award #: Various Award Period: Various Criteria - The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its activities allowed or unallowed, allowable cost/cost principal process. CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: • Be incorporated into the organization’s official records. • Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and • Support the distribution of employee salary across multiple activities or cost objectives. Condition – The payroll expenditures recorded in the Schedule of Expenditures of Federal Awards (SEFA) agree to the payroll expenditures recorded in the accounting system. The summary level payroll transactions recorded in the accounting system could not be reconciled to the transaction level detail obtained from the payroll system. When comparing the two populations, we identified multiple differences that net to a variance of $38,439. Cause – DPNR did not adhere to their internal policies and procedures to ensure the accuracy of the SEFA. Effect or Potential Effect – The SEFA may not be completely and accurately stated. In addition, the lack of established internal control policies and procedures to ensure the SEFA is completely and accurately stated can lead to noncompliance with federal statutes, regulations, and provisions of grant agreements. Questioned Costs – Not determinable. Given the nature of the finding (e.g. unavailability of supporting documentation), we determined that projecting estimated questioned costs to the entire population was inappropriate. Context – This is a condition identified per review of DPNR system’s population completeness over the compliance requirements for the program. Total payroll expenditure charged to the program for the year is $16,218. Recommendation – We recommend that the DPNR develop policies and procedures and enhance existing their existing reconciliation process to ensure completeness and accuracy of the SEFA, and that amounts reported on the SEFA are supported by transaction level detail. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. DPNR will implement enhanced internal control procedures to ensure that payroll expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) are complete, accurate, and fully supported by transaction-level detail in accordance with Federal statutes and regulations by implementing monthly payroll reconciliations, by developing and enhancing internal controls and procedures, and by providing training to relevant personnel. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-049 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of the Treasury Government Department/Agency: Office of Management and Budget (OMB) COVID-19 - Coronavirus State and Local Fiscal Recovery Funds ALN: 21.027 Award #: N/A Award Period: 03/03/2021 – 12/31/2024 Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: • Be incorporated into the organization’s official records. • Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and • Support the distribution of employee salary across multiple activities or cost objectives. Condition – During our testing of allowable costs for payroll expenditures incurred throughout the year, we sampled and selected 60 of 20,245 payroll disbursements, and noted 1 instance in which the fringe benefit calculation did not agree to the fringe benefits reported on the Detail Check History. Further, we noted that internal controls identified did not appear to be operating at a level of precision to ensure compliance with the above-mentioned requirements. Cause – OMB does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles and to ensure that an appropriate level of review and approval was completed prior to charging costs to a federal program. Effect or Potential Effect – An ineffective control system related to review of transactions to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major program. Questioned Costs - Below reporting threshold. Context – This is a condition identified per review of OMB’s compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to the program in fiscal year 2024 were $72,688,940. The amount sampled is $68,113,730. The known amount of instances of noncompliance is $7,155, which represents the fringe benefits charged to the program that did not agree with the calculation. Recommendation – We recommend that OMB reevaluate and improve internal controls to ensure adherence to federal regulations related to the fiscal administrative requirement for expending and accounting for payroll and to ensure proper and accurate funding allocation of payroll cost. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. OMB will coordinate with the Department of Finance to communicate the identified discrepancy and will work collaboratively to strengthen review procedures over payroll cost allocations charged to federal programs. In addition, OMB will reevaluate its existing oversight controls to ensure that payroll expenditures charged to federal awards are supported by appropriate documentation and reviewed for compliance with applicable federal requirements. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-058 Prior Year Finding Number: N/A Compliance Requirement: Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Environmental Protection Agency Government Department/Agency: Department of Planning and Natural Resources (DPNR) Capitalization Grants for Drinking Water State Revolving Fund ALN: 66.468 Award #: Various Award Period: Various Criteria - The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Management is responsible for establishing, documenting and maintaining a system of internal control that should include controls over its activities allowed or unallowed, and the allowable cost/cost principle process. CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: • Be incorporated into the organization’s official records. • Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and • Support the distribution of employee salary across multiple activities or cost objectives. Condition – During our testing of allowable costs for payroll expenditures incurred throughout the year, we sampled and selected 10 of 91 payroll disbursements. For each of the 10 samples, the employee pay rate documented in the approved Notice of Personnel Action did not agree with the pay rate reflected in the payroll register. As a result, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the compliance requirement. Cause – DPNR does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles and ensure that an appropriate level of review was completed prior to charging costs to a federal program. Effect or Potential Effect – An ineffective control system related to review of transactions to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major program. Questioned Costs – Below reportable threshold. Context – This is a condition identified per review of DPNR’s compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to the program in fiscal year 2024 was $132,646. The amount sampled is $18,936. Recommendation – We recommend that DPNR reevaluate and improve internal controls to ensure adherence to federal regulations related to the fiscal administrative requirement for expending and accounting for payroll transactions. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. DPNR will conduct a comprehensive internal review of the payroll transactions identified in the audit sample to determine the cause of the discrepancies between the payroll registers and the Notices of Personnel Action provided during the audit. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-062 Prior Year Finding Number: 2023-049 Compliance Requirement: Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of Education Government Department/Agency: Department of Education (VIDE) Special Education Cluster ALN: 84.027 (84.027A and 84.027X) Award #: Various Award Period: Various Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its activities allowed or unallowed, allowable cost/cost principal process. CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: • Be incorporated into the organization’s official records. • Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and • Support the distribution of employee salary across multiple activities or cost objectives. Furthermore, CFR 200.113 requires that an applicant, recipient, or subrecipient of a Federal award must promptly disclose, in writing, whenever it has credible evidence of the commission of a violation of Federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations found in Title 18 of the United States Code, or a violation of the civil False Claims Act, in connection with the Federal award (including any activities or subawards thereunder). The disclosure must be made to the Federal agency, the agency's Office of Inspector General, and the pass-through entity (if applicable). Condition – During our testing of allowable costs for payroll expenditures incurred throughout the year, we sampled and selected 40 of 3,392 payroll disbursements and noted the following: • 6 instances where the approved timesheets for the selected pay periods were not available for review. In addition, in 1 of these instances the check detail payment was not available for review. • 1 instance where there was inconsistency between the project code reflected on the check detail and on the NOPA for the selected pay period. • 1 instance where the hours per the timesheet did not agree to the check history detail. As a result, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the compliance requirement. Cause – VIDE does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles and ensure that an appropriate level of review was completed prior to charging costs to a federal program. Effect or Potential Effect – An ineffective control system related to review of transactions to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major programs. Questioned Costs – Below reporting threshold. Context – This is a condition identified per review of VIDE’s compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to the program in fiscal year 2024 was $6,233,846. The amount sampled is $88,200. Recommendation – We recommend that VIDE reevaluate and improve internal controls to ensure adherence to federal regulations related to the fiscal administrative requirement for expending and accounting for payroll transactions. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. VIDE is addressing audit findings related to payroll activities by enhancing internal controls to ensure compliance with federal regulations and by providing mandatory training. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number 2024-068 Prior Year Finding Number: 2023-052 Compliance Requirement: Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of Education Government Department/Agency: Department of Education (VIDE) Consolidated Grant to the Outlying Areas ALN: 84.403A Award #: Various Award Period: Various Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its activities allowed or unallowed, allowable cost/cost principal process. CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: • Be incorporated into the organization’s official records. • Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and • Support the distribution of employee salary across multiple activities or cost objectives. Condition – During our testing of allowable costs for payroll expenditures incurred throughout the year, we sampled and selected 60 of 3,236 payroll disbursements and noted the following: • 4 instances where the approved timesheet for the selected pay period was not available for review. In addition, in 1 of these instances, the NOPA/per diem support was also not available for review. • 1 instance where the project code was not reflected in check detail and NOPA. • 1 instance where the payment support (check detail) and the NOPA/per diem support were not available for review. • 2 instances where recorded timesheet hours did not agree with payroll register. As a result, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the compliance requirement. Cause – VIDE does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles and ensure that an appropriate level of review and approval was completed prior to charging costs to a federal program. Effect or Potential Effect – An ineffective control system related to review of transactions to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major programs. Questioned Costs – Below reporting threshold. Context – This is a condition identified per review of VIDE’s compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to the program in fiscal year 2024 was $6,052,527. The amount sampled is $128,721. Recommendation – We recommend that VIDE reevaluate and improve internal controls to ensure adherence to federal regulations related to the fiscal administrative requirement for expending and accounting for payroll and to ensure proper and accurate funding allocation of payroll cost. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. VIDE is addressing audit findings related to payroll activities by enhancing internal controls to ensure compliance with federal regulations and by providing mandatory training. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-073 Prior Year Finding Number: 2023-056 Compliance Requirement: Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of Education Government Department/Agency: Department of Education (VIDE) Office of Management and Budget (OMB) COVID-19 – Education Stabilization Fund State Educational Agency (Outlying Areas) (ESF-SEA) ALN: 84.425A Award #: S425A200004, S425A210004 Award Period: 06/22/2020 – 09/30/2022 01/13/2021 – 09/30/2023 COVID-19 – American Rescue Plan – Outlying Areas State Educational Agency (ARP-OA SEA) ALN: 84.425X Award #: S425X210004 Award Period: 04/08/2021 – 09/30/2024 Criteria - The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: • Be incorporated into the organization’s official records: • Reasonable reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100% effort); and • Support the distribution of employee salary across multiple activities or cost objectives. Condition – For ALN 84.425 subprograms A and X, we sampled and selected 60 of 5,693 payroll expenditures and noted the following: • 1 instance where the approved timesheet was not available for review. • 1 instance where a duplicate payment of retirement costs was made to an employee. • 2 instances where the hours recorded on the employees’ timesheets did not agree with the hours recorded per the payroll register. • 4 instances where there was inconsistency between the project code reflected on the check detail and the NOPA. Further, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the activities allowed or unallowed and allowable costs/cost principles compliance requirements. Cause – VIDE does not appear to have adequate policies and procedures in place to ensure compliance with applicable cost principles and maintenance of underlying documentation. Effect or Potential Effect – Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding. Questioned Costs – Below reporting threshold. Context – This is a condition identified per review of VIDE’s compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to program in fiscal year 2024 is $7,941,259. Total amount sampled is $112,072. The known amount of the instances of noncompliance is $17,628. Recommendation – We recommend that VIDE improve internal controls to ensure adherence to Federal regulations related to the fiscal and administrative requirements for expending and accounting for payroll expenditures. Where employees work on multiple activities or cost objectives, a distribution of salaries or wages should be supported by personnel activity reports (time and attendance) or equivalent documents. Such information should also be monitored, retained, and approved by a responsible official of VIDE in a timely manner. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. VIDE is addressing audit findings related to payroll activities by enhancing internal controls to ensure compliance with federal regulations and by providing mandatory training. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-078 Prior Year Finding Number: N/A Compliance Requirement: Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of Health and Human Services Government Department/Agency: Department of Health (DOH) Epidemiology and Laboratory Capacity for Infectious Disease ALN: 93.323 Award #: Various Award Period: Various Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its activities allowed or unallowed, allowable cost/cost principle process. CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: • Be incorporated into the organization’s official records; • Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and • Support the distribution of employee salary across multiple activities or cost objectives. Condition – DOH was unable to reconcile the payroll expense include in the SEFA with the payroll expense in the payroll register. As a result, we were not able to establish the completeness of the population and were unable to perform testing procedures. Cause – DOH does not appear to have adequate policies and procedures in place to review and reconcile program expenditures. Effect or Potential Effect – Lack of proper reconciling information can result in noncompliance with laws and regulation along with loss of funding. Questioned Costs – Not determinable. Given the nature of the finding (e.g. unavailability of supporting documentation), we determined that projecting estimated questioned costs to the entire population was inappropriate. Context – This is a condition identified per review of DOH’s compliance with the specified requirements. Recommendation – We recommend that DOH improve internal controls to ensure program data is reconciled, monitored and retained in order to facilitate adherence to federal regulations and compliance requirements. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. The Government’s Audit Committee is leading the development of a structured, three-tier policy and procedures framework under the Public Finance Management project. Regular training sessions will be provided to staff involved in grant management to ensure they understand and adhere to compliance requirements with monitoring and evaluation occurring by the OMB Compliance Unit supported by the Government’s Audit Committee, to assess and improve the effectiveness of controls. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Criteria: 2 CFR §200.403 and §200.430 require all costs charged to Federal awards by recipients to be allowable, allocable, and adequately documented. Specifically, payroll costs must reflect actual time worked and be supported by appropriate review and approval processes. Condition: The Organization was unable to provide sufficient documentary evidence that all payroll-related costs were charged to Federal programs in compliance with the Uniform Guidance requirements. Cause: Due to staff turnover and vacancies, the Organization did not perform regular reconciliations of payroll records to the general ledger and accounting system throughout the year. Effect: Identified controls over the Organization’s compliance with allowed cost requirements for Federal award programs were not functioning as designed. Questioned Costs: None Context: As part of our follow-up procedures required by professional auditing standards with respect to prior year audit findings, we tested whether solutions were implemented by the Organization to address prior year identified deficiencies related to allocating payroll-related costs. Those follow-up procedures did not provide us with documentary evidence to support the assertion that corrective action was taken in the current year. This deficiency was discovered in the prior year as part of testing the Organization’s compliance with allocating indirect costs. The indirect cost allocation compliance requirement was not deemed to be direct and material to the Organization’s major Federal program for the period under audit. Recommendation: The Organization should adhere to its policies and procedures regarding supervisory review of documentation to support the allowability of costs charged to Federal award programs. Furthermore, we recommend that the individual performing reviews of documentation for allowable costs initial or sign off on such support to provide evidence of their actions. In addition, the Organization should review, and possibly revise, its policies and procedures for preventing or detecting and correcting unallowable costs charged to Federal programs to ensure consistent application of those policies and procedures to all costs charged to federal awards. Views of Responsible Officials: See management’s view and corrective action plan at the end of this report.
Criteria: 2 CFR §200.430 states that incentive compensation is allowable if it is based on cost reduction, efficient performance, suggestion awards or safety awards to the extent that the overall compensation is determined to be reasonable and such costs are paid or accrued according to an agreement entered into in good faith between the recipient and the employees before services were rendered, or according to an established plan followed by the recipient so consistently as to imply, in effect, an agreement to make such payment. Condition: The Organization made incentive compensation payments to employees that lacked the elements required by the Uniform Guidance. Cause: The Organization did not establish written policies and procedures outlining the basis, criteria, and extent of incentive compensation payments before the services were rendered by employees. Effect: In the absence of written policies regarding incentive compensation, there is an increased risk of inconsistent or non-compliant cost allocation practices, which may lead to additional scrutiny, such as questioned costs, audit findings, or even indemnification of the Federal awarding agency for amounts expended on unallowable costs. Questioned Costs: $229,998 Context: The Organization made bonus payments to employees totaling $229,998 during the period under audit. The majority of these incentive compensation payments were allocated across several Federal awards as indirect costs despite the absence of written policies or an established plan that facilitates consistent application of indirect costs to both Federal and non-Federal activities. Recommendation: We recommend that management adopts written policies and procedures for making incentive compensation payments to employees for allowable purposes according to an established plan that contains the required elements set forth in the Uniform Guidance. Furthermore, we recommend that management obtains approval in advance from Federal awarding agencies regarding bonus compensation paid with Federal funds. Views of Responsible Officials: See management’s view and corrective action plan at the end of this report.
Finding No. 2024-003: Activities Allowed or Unallowed and Allowable Costs/Cost Principles –Significant Deficiency in Internal Control over Compliance (Payroll) Federal Program Name: All Pass-through Entity: All Federal Assistance Listing Number: All Criteria In accordance with 2 CFR §200.430(i), charges to federal awards for salaries and wages are required to be based on records that accurately reflect the work performed. These records must support the distribution of the employee’s salary or wages among specific activities or cost objectives. Condition The Organization allocates employees’ payroll costs to grants based on an estimate. Although the payroll allocation is periodically reviewed and revised, differences from actual time and effort can result due to an estimate being used. Questioned Costs Unknown. Context The Organization allocated payroll costs to multiple funding sources based on estimates during the audit period and did not maintain formal documentation to support allocations based on actual time and effort. Effect The employee time and payroll costs that are charged to the grant could differ from the actual time and payroll costs expended in support of the grant activities. Cause The Organization does not have established procedures to ensure that salaries and wages charged to federal awards are supported by records that accurately reflect the work performed. Documentation of personnel expenses should 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 allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Repeat Finding No Recommendation We recommend that management strengthen processes over payroll cost allocations to ensure amounts charged to funding sources are supported by documented actual time and effort. This may include implementing a formal methodology for allocating payroll costs, establishing procedures for employees to track or otherwise document time spent by program or funding source, and performing periodic reviews and adjustments based on actual activity. In addition, management should ensure that sufficient documentation is maintained to support how payroll costs are allocated and that such processes are consistently applied. Management’s Response/View of Responsible Officials Management agrees with this finding, see the Corrective Action Plan.
Pass-Through Entity: Federated States of Micronesia National Government Federal Agency: U.S. Department of the Interior Assistance Listing: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D24AF00340, D24AF00341, D23AF00263, D20AP00054, D24AF00350 Area: Allowable Costs/Cost Principles Questioned Costs: $27,217 Criteria: Article VI, section 1(a)(ii) of the FSM-U.S. Fiscal Procedures Agreement requires accounting records sufficient to support the source and application of grant funds, including canceled checks, paid bills, payroll and time-and-attendance records, contracts, subaward documents, and other financial data. Under 2 CFR 200.403, costs charged to a federal award must be necessary, reasonable, allocable, and adequately documented. Under 2 CFR 200.430(g), salary and wage charges must be supported by records that accurately reflect the work performed. Condition: The instances of noncompliance were as follows: 1) For 5 (8%) of 65 nonpayroll transactions tested, from a sample totaling $1,303,256 and a population totaling $24,317,028, the State did not provide sufficient financial or programmatic records, such as vendor invoices, contracts, receiving reports, or approved budgets, to establish allowability:2) For 22 (37%) of 60 payroll transactions tested, from a sample totaling $36,422 and a population totaling $24,317,028, the State either (a) did not provide uniform or departmental timecards or timesheets supporting compensation, taxes, and fringe benefits; (b) provided departmental records supporting fewer hours than the uniform timesheet; (c) had unexplained differences between regular and leave hours in the two records; or (d) did not provide underlying support for retroactive regular pay, as follows:2) For 22 (37%) of 60 payroll transactions tested, from a sample totaling $36,422 and a population totaling $24,317,028, the State either (a) did not provide uniform or departmental timecards or timesheets supporting compensation, taxes, and fringe benefits; (b) provided departmental records supporting fewer hours than the uniform timesheet; (c) had unexplained differences between regular and leave hours in the two records; or (d) did not provide underlying support for retroactive regular pay, as follows: Cause: Documentation-retention controls at the State Treasury and responsible departments were not operating effectively. Departmental and uniform timekeeping records were not consistently reconciled, and supporting personnel records were not consistently retained. • For Conditions 1, 2(a), and 2(d), disbursement and timekeeping records were not consistently filed and retained by the State Treasury and responsible departments. • For Conditions 2(b) and 2(c), departmental controls did not ensure reconciliation of departmental timesheets to the uniform timesheets submitted to the State Treasury. The Treasury did not consistently receive departmental support and relied on agency review and certification. Cause: (continued) • For Conditions 3(a) and 3(b), personnel-record retention controls were not operating effectively. Effect: The State did not comply with applicable allowable-cost and compensation requirements. Unsupported expenditures constitute known questioned costs of $27,217. Likely questioned costs exceeded $25,000 based on projection of the sample results. Recommendation: The State should: • Strengthen centralized documentation filing and retention controls for disbursement, payroll, and personnel records. • Because the State Treasury relies on departmental monitoring, the State should: 1. Enhance monitoring at the departmental level or implement a uniform timekeeping system. 2. Require departments to submit timekeeping reports to the State Treasury for secondary reconciliation. 3. Require retention of explanations and approvals for changes affecting uniform timesheets that are not reflected in departmental records. Identification as a Repeat Finding: 2023-002 View of Responsible Officials: The State’s response and corrective action plan addressing this finding is included in the accompanying corrective action plan.
Finding 2024-009 Pass-Through Entity: Federated States of Micronesia National Government Federal Agency: U.S. Department of Education Assistance Listing: 84.027 Special Education – Grants to States (IDEA, Part B) Federal Award No.: H027A230005 Area: Allowable Costs/Cost Principles Questioned Costs: $4,165 Criteria: Under 2 CFR 200.403, costs must be necessary, reasonable, allocable, and adequately documented. Under 2 CFR 200.430(g), salary and wage charges must be based on records that accurately reflect work performed. 2 CFR 200.441 establishes that expenditures for fines related to the violation of laws or regulations are generally unallowable unless specifically required by the award or approved in writing by the awarding agency. Condition: 1) For 5 (8%) of 60 nonpayroll transactions tested, from a sample totaling $79,617 and a population totaling $951,629, the State either (a) did not provide sufficient financial or programmatic support to establish allowability or (b) charged a cost that was unallowable under 2 CFR 200.441, as follows: 2) For 9 (15%) of 60 payroll transactions tested, from a sample totaling $28,999 and a population totaling $951,629, the State either (a) did not provide timekeeping documentation supporting compensation, taxes, and fringe benefits or (b) reported full regular hours while the time export showed leave and no approved leave request was provided, as follows: Condition: (continued) 3) Of the payroll transactions tested and cited above, we noted that personnel action forms or contracts were unavailable for two employees, and authorized direct-deposit forms were unavailable for three employees. Cause: Documentation-retention and review controls at the State Treasury and responsible departments were not operating effectively, and personnel did not understand or consider 2 CFR 200.441. • For Conditions 1(a), 2(a), and 2(b), disbursement and timekeeping documentation was not consistently filed and retained. • For Condition 1(b), personnel did not consistently understand or apply 2 CFR 200.441. • For Conditions 3(a) and 3(b), personnel-record retention controls were not operating effectively. Effect: The State did not comply with applicable allowable-cost and compensation requirements. Unsupported or unallowable expenditures constitute known questioned costs of $4,165. Likely questioned costs exceeded $25,000 based on projection of the sample results. Recommendation: The State should strengthen document-retention, payroll reconciliation, and personnel-authorization controls and incorporate review of entertainment-cost restrictions into preapproval and payment checklists and periodically monitor compliance. Identification as a Repeat Finding: 2023-006 View of Responsible Officials: The State’s response and corrective action plan addressing this finding is included in the accompanying corrective action plan.
Finding 2024-011 Federal Agency: U.S. Department of Health and Human Services Assistance Listing: 93.224 – Health Center Program (Community Health Centers, Migrant Health Center Health Care for the Homeless, and Public Housing Primary Care). Federal Award No.: 5 H80CS04302-19-00, 6 H80CS04302-20-02, 2 H80CS04302-20-00, and H80CS04302-20-05 Area: Allowable Costs/Cost Principles Questioned Costs: $3,816 Criteria: Sections 200.403 and 200.430(g) of Title 2 of the CFR require adequately documented costs and compensation records that accurately reflect work performed. Section 200.302(b) requires financial records that identify the source and application of federal funds and permit transactions to be traced to the applicable award. Condition: 1. For 15 (25%) of 60 payroll transactions tested, from a sample totaling $62,084 and a population totaling $1,094,077, the State either (a) did not provide sufficient timekeeping support; (b) provided departmental records supporting fewer hours than the uniform timesheet; (c) had unexplained differences between regular and leave hours; or (d) did not provide support for retroactive regular pay, as follows: Condition: (continued) 2. Of the payroll transactions tested and cited above, we additionally noted the following: a. For two employees, the State did not provide the personnel action form or employment contract applicable to the tested pay period. b. For test items 9, 10, 11, 12, 13, 20, 22, 31, and 33, the general ledger did not identify which of the three Health Center awards was charged. Cause: Payroll documentation-retention controls were ineffective, and the chart of accounts was not designed to identify the specific Health Center award applicable to each transaction. a. For Conditions 1(a) through 1(d) and 2(a), payroll and personnel support was not consistently retained. b. For Condition 2(b), the chart of accounts did not include award-level coding for each Health Center award. Effect: The State did not comply with allowable-cost, compensation, and financial-management requirements. Unsupported payroll charges constitute known questioned costs of $3,816. Likely questioned costs exceeded $25,000 based on projection of the sample results. Recommendation: The State should: 1. Strengthen payroll documentation-retention and departmental monitoring controls or implement a uniform timekeeping system. 2. Require departments to submit supporting timekeeping reports to the State Treasury for secondary reconciliation. 3. Retain explanations for differences between uniform and departmental records and establish award-level codes in the chart of accounts. Identification as a Repeat Finding: Not applicable View of Responsible Officials: The State’s response and corrective action plan addressing this finding is included in the accompanying corrective action plan.
PROGRAM DESCRIPTION Reference Number: 2024-004 Proper review of payroll charges to grant funds ALN 84.425U & 84.425W COVID-19 Education Stabilization Fund Pass through identifying number: 21528001245902 Award Year: 2023-2024 Federal Agency: U.S. Department of Education Passed through State Department of Education Criteria: Non-federal entities are required to establish and maintain effective internal controls over compliance in accordance with 2 CFR 200.303(a) and 2 CFR 200.430(g) which requires that compensation charged to federal awards must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated, of which documentation must be incorporated into the official records of the entity. Condition Found: During our review of payroll charges that were funded through ESSER funds, it was noted that the District did not have adequate controls in place to monitor the payroll transactions charged to the program. Cause: Although the District implemented Skyward in the prior year, the District did not integrate the appropriate approvals into the system in a timely manner. In addition, turnover in the District Chief Financial Officer position caused difficulties in the District obtaining the proper approvals for journal entries. Effect: The District could fail to appropriately support expenditures charged to the program. Questioned Cost: $0 Recommendation: We recommend the District to implement appropriate approvals in the Skyward accounting system to provide for better oversight of transactions. Views of Responsible Officials: Management agrees with the findings. See corrective action plan beginning on page 114.
PROGRAM DESCRIPTION Reference Number: 2024-004 Proper review of payroll charges to grant funds ALN 84.425U & 84.425W COVID-19 Education Stabilization Fund Pass through identifying number: 21528001245902 Award Year: 2023-2024 Federal Agency: U.S. Department of Education Passed through State Department of Education Criteria: Non-federal entities are required to establish and maintain effective internal controls over compliance in accordance with 2 CFR 200.303(a) and 2 CFR 200.430(g) which requires that compensation charged to federal awards must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated, of which documentation must be incorporated into the official records of the entity. Condition Found: During our review of payroll charges that were funded through ESSER funds, it was noted that the District did not have adequate controls in place to monitor the payroll transactions charged to the program. Cause: Although the District implemented Skyward in the prior year, the District did not integrate the appropriate approvals into the system in a timely manner. In addition, turnover in the District Chief Financial Officer position caused difficulties in the District obtaining the proper approvals for journal entries. Effect: The District could fail to appropriately support expenditures charged to the program. Questioned Cost: $0 Recommendation: We recommend the District to implement appropriate approvals in the Skyward accounting system to provide for better oversight of transactions. Views of Responsible Officials: Management agrees with the findings. See corrective action plan beginning on page 114.
PROGRAM DESCRIPTION Reference Number: 2024-004 Proper review of payroll charges to grant funds ALN 84.425U & 84.425W COVID-19 Education Stabilization Fund Pass through identifying number: 21528001245902 Award Year: 2023-2024 Federal Agency: U.S. Department of Education Passed through State Department of Education Criteria: Non-federal entities are required to establish and maintain effective internal controls over compliance in accordance with 2 CFR 200.303(a) and 2 CFR 200.430(g) which requires that compensation charged to federal awards must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated, of which documentation must be incorporated into the official records of the entity. Condition Found: During our review of payroll charges that were funded through ESSER funds, it was noted that the District did not have adequate controls in place to monitor the payroll transactions charged to the program. Cause: Although the District implemented Skyward in the prior year, the District did not integrate the appropriate approvals into the system in a timely manner. In addition, turnover in the District Chief Financial Officer position caused difficulties in the District obtaining the proper approvals for journal entries. Effect: The District could fail to appropriately support expenditures charged to the program. Questioned Cost: $0 Recommendation: We recommend the District to implement appropriate approvals in the Skyward accounting system to provide for better oversight of transactions. Views of Responsible Officials: Management agrees with the findings. See corrective action plan beginning on page 114.
PROGRAM DESCRIPTION Reference Number: 2024-004 Proper review of payroll charges to grant funds ALN 84.425U & 84.425W COVID-19 Education Stabilization Fund Pass through identifying number: 21528001245902 Award Year: 2023-2024 Federal Agency: U.S. Department of Education Passed through State Department of Education Criteria: Non-federal entities are required to establish and maintain effective internal controls over compliance in accordance with 2 CFR 200.303(a) and 2 CFR 200.430(g) which requires that compensation charged to federal awards must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated, of which documentation must be incorporated into the official records of the entity. Condition Found: During our review of payroll charges that were funded through ESSER funds, it was noted that the District did not have adequate controls in place to monitor the payroll transactions charged to the program. Cause: Although the District implemented Skyward in the prior year, the District did not integrate the appropriate approvals into the system in a timely manner. In addition, turnover in the District Chief Financial Officer position caused difficulties in the District obtaining the proper approvals for journal entries. Effect: The District could fail to appropriately support expenditures charged to the program. Questioned Cost: $0 Recommendation: We recommend the District to implement appropriate approvals in the Skyward accounting system to provide for better oversight of transactions. Views of Responsible Officials: Management agrees with the findings. See corrective action plan beginning on page 114.
Allowable Costs/Activities Allowed – Personal Services Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Epidemiology and Laboratory Capacity for Infectious Diseases ALN: 93.323 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 6 NU50CK000501-01-08, 6 NU50CK000501-02-17 August 1, 2019 – July 31, 2024, August 1, 2019 – July 31, 2027 Statistically Valid Sample: No, and not intended to be a statistically valid sample. Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR section 200.303(a), the Texas Department of State Health Services (DSHS) must establish and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.430 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 an internal control system that ensures the charges are accurate, allowable, and properly allocated; (ii) be incorporated into the official records of the non-Federal entity; (iii) reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) comply with the established accounting policies and practices of the non-Federal entity; (vi) 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. (vii) Budget estimates (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; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; 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: DSHS requires its employees to complete monthly time and leave reporting, regardless of whether the employee works solely on a single federal award or cost objective, or on multiple activities or cost objectives. Each employee has a default task profile based on their position in the agency that determines how their payroll and payroll-related dollars are allocated. Employees are instructed and given training on how to report any deviations from their profile as well as report any vacation time, sick time, leave of absence, etc. Employees are required to certify their time by the 10th of the month for the previous months’ time. Like all DSHS employees, supervisors are required to certify their time monthly. However, their time certification includes an additional affirmation which states the supervisor has performed the following: Reviewed the default task profile/labor account code for each of their direct reports. Reviewed the timesheets for all direct reports as compared to the default task profiles/labor account codes for accuracy of time worked and adjusted if necessary. For direct reports who have reported deviations, reviewed and verified the deviations reported and approved the respective timesheet. This documented affirmation provides sufficient documentation to indicate that the supervisors have reviewed after the fact interim payroll and payroll-related charges made to federal awards based on budget estimates. Audit procedures included a selection of 40 payroll-related expenditures incurred during the fiscal year totaling $191,809. For five of the 40 samples selected, the employee supervisor did not certify their monthly timesheet, and thus did not acknowledge neither the review of the employees’ default task profile/account labor code or their timesheets. Questioned costs: None. Context: See “Condition.” Cause: All five of the exceptions noted were directly reporting to the same supervisor. The monthly timesheets selected were during the months of July and August 2024. The supervisor was recently hired in April 2024 and was unaware of the requirement to certify monthly. Effect: Without the supervisor timesheet certification, there is a lack of sufficient documentation to indicate that they have reviewed after-the-fact interim payroll and payroll-related charges made to the federal awards based on budget estimates. Repeat Finding: No Recommendation: DSHS should enhance new hire training policies and procedures to ensure all new hire trainings clearly address labor account codes, monthly time reporting, and task profiles. Views of responsible officials: DSHS has robust timekeeping controls but recognizes this opportunity to enhance training with reinforcement for new supervisors.
Allowable Costs/Activities Allowed – Personal Services Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Epidemiology and Laboratory Capacity for Infectious Diseases ALN: 93.323 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 6 NU50CK000501-01-08, 6 NU50CK000501-02-17 August 1, 2019 – July 31, 2024, August 1, 2019 – July 31, 2027 Statistically Valid Sample: No, and not intended to be a statistically valid sample. Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR section 200.303(a), the Texas Department of State Health Services (DSHS) must establish and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.430 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 an internal control system that ensures the charges are accurate, allowable, and properly allocated; (ii) be incorporated into the official records of the non-Federal entity; (iii) reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) comply with the established accounting policies and practices of the non-Federal entity; (vi) 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. (vii) Budget estimates (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; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; 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: DSHS requires its employees to complete monthly time and leave reporting, regardless of whether the employee works solely on a single federal award or cost objective, or on multiple activities or cost objectives. Each employee has a default task profile based on their position in the agency that determines how their payroll and payroll-related dollars are allocated. Employees are instructed and given training on how to report any deviations from their profile as well as report any vacation time, sick time, leave of absence, etc. Employees are required to certify their time by the 10th of the month for the previous months’ time. Like all DSHS employees, supervisors are required to certify their time monthly. However, their time certification includes an additional affirmation which states the supervisor has performed the following: Reviewed the default task profile/labor account code for each of their direct reports. Reviewed the timesheets for all direct reports as compared to the default task profiles/labor account codes for accuracy of time worked and adjusted if necessary. For direct reports who have reported deviations, reviewed and verified the deviations reported and approved the respective timesheet. This documented affirmation provides sufficient documentation to indicate that the supervisors have reviewed after the fact interim payroll and payroll-related charges made to federal awards based on budget estimates. Audit procedures included a selection of 40 payroll-related expenditures incurred during the fiscal year totaling $191,809. For five of the 40 samples selected, the employee supervisor did not certify their monthly timesheet, and thus did not acknowledge neither the review of the employees’ default task profile/account labor code or their timesheets. Questioned costs: None. Context: See “Condition.” Cause: All five of the exceptions noted were directly reporting to the same supervisor. The monthly timesheets selected were during the months of July and August 2024. The supervisor was recently hired in April 2024 and was unaware of the requirement to certify monthly. Effect: Without the supervisor timesheet certification, there is a lack of sufficient documentation to indicate that they have reviewed after-the-fact interim payroll and payroll-related charges made to the federal awards based on budget estimates. Repeat Finding: No Recommendation: DSHS should enhance new hire training policies and procedures to ensure all new hire trainings clearly address labor account codes, monthly time reporting, and task profiles. Views of responsible officials: DSHS has robust timekeeping controls but recognizes this opportunity to enhance training with reinforcement for new supervisors.
Activities Allowed and Unallowed, Allowable Costs/Cost Principles – Personal Services Federal Agency: U.S. Department of Labor Federal Program Title: Employment Service Cluster ALN: 17.207, 17.801 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: DV373362255548–01, 23555DV000036–01, 24555DV000076–01 October 1, 2021 – December 31, 2023, October 1, 2022 – December 31, 2024, October 1, 2023 – December 31, 2025 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Nonompliance Criteria or specific requirement: Per 2 CFR section 200.303(a), Texas Veterans Commission (TVC) must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Per 2 CFR 200.430 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; (ii) Be incorporated into the official records of the recipient or subrecipient; (iii) Reasonably reflect the total activity for which the employee is compensated by the recipient or subrecipient, not exceeding 100 percent 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; (v) Comply with the established accounting policies and procedures of the recipient or subrecipient (vi) 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 allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (vii) Budget estimates (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; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; 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: Audit procedures included a sample of 40 expenditures for incurred for personnel services during the fiscal year to test whether the expenditures for salaries and wages were allowable and based on the records that accurately reflect the work performed. We noted that TVC prepares monthly budget reports that are reviewed by the program’s budget analyst and the respective program director or manager. Expenditures related to personnel services are recorded based on the budgeted amount for each individual. No periodic after-the-fact review is performed to verify that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Questioned costs: None Context: See “Condition.” Cause: The employees working on the federal grant program are budgeted to work on the grant 100% of their time. Management deemed this sufficient to substantiate the final amounts charged to the grant. Effect: Lack of a periodic after-the-fact review to verify that the final amounts charged to the Federal award are accurate, allowable, and properly allocated may result in noncompliance with grant terms and conditions and questioned costs. Repeat Finding: No Recommendation: We recommend that management establish procedures and internal controls to perform an after-the-fact review of personnel services to verify that the final amounts charged to the Federal award are accurate, allowable, and properly allocated. This can be accomplished by a supervisor’s review and approval of the employee’s timesheet each pay period or an annual review where necessary adjustments are made. Views of responsible officials: TVC agrees to the recommendation of documenting review and approvals. To note, the monthly Veteran Employment Services (VES) Forecasts and Payroll reports had been reviewed with VES’s Director and/or Operations Manager as well as VES’s Annual State Plan before submission to the U.S. Department of Labor. VES’s Director or Operations Manager’s signature of approval was never documented for confirmation of review.
Activities Allowed and Unallowed, Allowable Costs/Cost Principles – Personal Services Federal Agency: U.S. Department of Labor Federal Program Title: Employment Service Cluster ALN: 17.207, 17.801 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: DV373362255548–01, 23555DV000036–01, 24555DV000076–01 October 1, 2021 – December 31, 2023, October 1, 2022 – December 31, 2024, October 1, 2023 – December 31, 2025 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Nonompliance Criteria or specific requirement: Per 2 CFR section 200.303(a), Texas Veterans Commission (TVC) must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Per 2 CFR 200.430 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; (ii) Be incorporated into the official records of the recipient or subrecipient; (iii) Reasonably reflect the total activity for which the employee is compensated by the recipient or subrecipient, not exceeding 100 percent 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; (v) Comply with the established accounting policies and procedures of the recipient or subrecipient (vi) 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 allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (vii) Budget estimates (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; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; 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: Audit procedures included a sample of 40 expenditures for incurred for personnel services during the fiscal year to test whether the expenditures for salaries and wages were allowable and based on the records that accurately reflect the work performed. We noted that TVC prepares monthly budget reports that are reviewed by the program’s budget analyst and the respective program director or manager. Expenditures related to personnel services are recorded based on the budgeted amount for each individual. No periodic after-the-fact review is performed to verify that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Questioned costs: None Context: See “Condition.” Cause: The employees working on the federal grant program are budgeted to work on the grant 100% of their time. Management deemed this sufficient to substantiate the final amounts charged to the grant. Effect: Lack of a periodic after-the-fact review to verify that the final amounts charged to the Federal award are accurate, allowable, and properly allocated may result in noncompliance with grant terms and conditions and questioned costs. Repeat Finding: No Recommendation: We recommend that management establish procedures and internal controls to perform an after-the-fact review of personnel services to verify that the final amounts charged to the Federal award are accurate, allowable, and properly allocated. This can be accomplished by a supervisor’s review and approval of the employee’s timesheet each pay period or an annual review where necessary adjustments are made. Views of responsible officials: TVC agrees to the recommendation of documenting review and approvals. To note, the monthly Veteran Employment Services (VES) Forecasts and Payroll reports had been reviewed with VES’s Director and/or Operations Manager as well as VES’s Annual State Plan before submission to the U.S. Department of Labor. VES’s Director or Operations Manager’s signature of approval was never documented for confirmation of review.
Section 2 - Federal and State Award Findings and Questioned Costs Significant Deficiency 2024-001 Payroll costs were allocated to incorrect programs Prevention and Treatment of Substance Abuse, CFDA #93.959, Pass-Through Grant #HHS000539700192 Criteria: In accordance with Uniform Guidance (2 CFR § 200.430g), payroll costs must be charged accurately to federal awards and should be supported by records that appropriately reflect the work performed. Condition: Payroll costs reported for the associated programs under pass-through grant #HHS000539700192 totaling approximately $30,242 were erroneously charged to the incorrect program. Cause: The issue was caused by coding errors in the accounting system during payroll processing. The responsible personnel mistakenly allocated the employees' hours to incorrect program codes for certain employees and pay periods without adequate review and reconciliation to the source timesheets. Effect: Payroll costs for the individual programs under CFDA #93.959, Pass-Through Grant #HHS000539700192 were overstated in total by approximately $30,242. Questioned Costs: Approximately $30,242 Context: The finding was isolated to payroll costs and for only certain employees and pay periods, and no findings were identified related to other non-personnel direct or indirect costs or other compliance requirements. Repeat Finding: No Recommendation: We recommend that the Organization strengthen internal controls over payroll cost allocations, including adding an additional layer of review over payroll and ensuring the payroll data in the accounting system is properly reconciled to the employees' timesheets each pay period. Additionally, as possible, we recommend configuring validation controls in the accounting system to help prevent employees from being charged to incorrect program codes. Views of Responsible Officials and Planned Corrections Actions: Management agrees with the audit finding and a response is included in the corrective action plan.
Health Center Program Cluster AL No. 93.224 and 93.527 U.S. Department of Health and Human Services Award No. H80CS00438, H8FCS40427, H8GCS47600 Healthy Start Initiative AL No. 93.926 Us. Department of Health and Human Services Award No. H49MC00156 Criteria: Under 2 CFR 200.430, payroll expenses must be based on records that accurately reflect the work performed and supported by a system of internal control that provides reasonable assurance that charges are accurate, allowable, and properly allocated. Condition: During the testing performed, it was noted that the Organization transferred payroll costs between programs, however, no time and effort certification or equivalent documentation was updated to reflect the changes. Additionally, the transfer of payroll costs between grants was not properly reflected within the accounting system records by grant. These transfers between grants were completed after the end of the fiscal year. Cause: During the year the Organization had new grants, but the payroll system was not updated to reflect the changes. Effect: Allocation of payroll costs to the federal award program may be inaccurate or not properly documented. Questioned costs: n/a Context: The Organization did not maintain supporting documentation for payroll costs that were reallocated to a new grant. These costs were reallocated from the Health Center Program and from the Healthy Start Initiative funding to the new award. Repeat Finding: No Recommendation: The Organization should review and update the policies and procedures regarding payroll costs. Additionally, the Organization should provide training to staff on grant tracking and documentation. Views of Responsible Officials: Management agrees with this finding. Staff will be trained to ensure future changes in payroll costs are updated timely within the system and documentation maintained.
Health Center Program Cluster AL No. 93.224 and 93.527 U.S. Department of Health and Human Services Award No. H80CS00438, H8FCS40427, H8GCS47600 Healthy Start Initiative AL No. 93.926 Us. Department of Health and Human Services Award No. H49MC00156 Criteria: Under 2 CFR 200.430, payroll expenses must be based on records that accurately reflect the work performed and supported by a system of internal control that provides reasonable assurance that charges are accurate, allowable, and properly allocated. Condition: During the testing performed, it was noted that the Organization transferred payroll costs between programs, however, no time and effort certification or equivalent documentation was updated to reflect the changes. Additionally, the transfer of payroll costs between grants was not properly reflected within the accounting system records by grant. These transfers between grants were completed after the end of the fiscal year. Cause: During the year the Organization had new grants, but the payroll system was not updated to reflect the changes. Effect: Allocation of payroll costs to the federal award program may be inaccurate or not properly documented. Questioned costs: n/a Context: The Organization did not maintain supporting documentation for payroll costs that were reallocated to a new grant. These costs were reallocated from the Health Center Program and from the Healthy Start Initiative funding to the new award. Repeat Finding: No Recommendation: The Organization should review and update the policies and procedures regarding payroll costs. Additionally, the Organization should provide training to staff on grant tracking and documentation. Views of Responsible Officials: Management agrees with this finding. Staff will be trained to ensure future changes in payroll costs are updated timely within the system and documentation maintained.
Health Center Program Cluster AL No. 93.224 and 93.527 U.S. Department of Health and Human Services Award No. H80CS00438, H8FCS40427, H8GCS47600 Healthy Start Initiative AL No. 93.926 Us. Department of Health and Human Services Award No. H49MC00156 Criteria: Under 2 CFR 200.430, payroll expenses must be based on records that accurately reflect the work performed and supported by a system of internal control that provides reasonable assurance that charges are accurate, allowable, and properly allocated. Condition: During the testing performed, it was noted that the Organization transferred payroll costs between programs, however, no time and effort certification or equivalent documentation was updated to reflect the changes. Additionally, the transfer of payroll costs between grants was not properly reflected within the accounting system records by grant. These transfers between grants were completed after the end of the fiscal year. Cause: During the year the Organization had new grants, but the payroll system was not updated to reflect the changes. Effect: Allocation of payroll costs to the federal award program may be inaccurate or not properly documented. Questioned costs: n/a Context: The Organization did not maintain supporting documentation for payroll costs that were reallocated to a new grant. These costs were reallocated from the Health Center Program and from the Healthy Start Initiative funding to the new award. Repeat Finding: No Recommendation: The Organization should review and update the policies and procedures regarding payroll costs. Additionally, the Organization should provide training to staff on grant tracking and documentation. Views of Responsible Officials: Management agrees with this finding. Staff will be trained to ensure future changes in payroll costs are updated timely within the system and documentation maintained.
Health Center Program Cluster AL No. 93.224 and 93.527 U.S. Department of Health and Human Services Award No. H80CS00438, H8FCS40427, H8GCS47600 Healthy Start Initiative AL No. 93.926 Us. Department of Health and Human Services Award No. H49MC00156 Criteria: Under 2 CFR 200.430, payroll expenses must be based on records that accurately reflect the work performed and supported by a system of internal control that provides reasonable assurance that charges are accurate, allowable, and properly allocated. Condition: During the testing performed, it was noted that the Organization transferred payroll costs between programs, however, no time and effort certification or equivalent documentation was updated to reflect the changes. Additionally, the transfer of payroll costs between grants was not properly reflected within the accounting system records by grant. These transfers between grants were completed after the end of the fiscal year. Cause: During the year the Organization had new grants, but the payroll system was not updated to reflect the changes. Effect: Allocation of payroll costs to the federal award program may be inaccurate or not properly documented. Questioned costs: n/a Context: The Organization did not maintain supporting documentation for payroll costs that were reallocated to a new grant. These costs were reallocated from the Health Center Program and from the Healthy Start Initiative funding to the new award. Repeat Finding: No Recommendation: The Organization should review and update the policies and procedures regarding payroll costs. Additionally, the Organization should provide training to staff on grant tracking and documentation. Views of Responsible Officials: Management agrees with this finding. Staff will be trained to ensure future changes in payroll costs are updated timely within the system and documentation maintained.
Finding Number 2024-001: Represents a significant deficiency in internal control over compliance with Western Maine Community Action, Inc.’s major federal programs. Repeat Finding: Yes Type of Finding: Significant Deficiency in Internal Control Over Compliance Description: Payroll Expenditures – Approval of Time Sheets Major Programs: AL#10.557 - WIC Special Supplemental Nutrition Program for Women, Infants and Children – Award numbers: CD3-22-4658B and CD3-24-4658A; AL#81.042 – Weatherization – 80224, 80225, 81323, and 84023; AL#93.569 – Community Services Block Grant – Award numbers: CFS-23-7009 and CFS-24-7009 Questioned Costs: None How the questioned costs were computed: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs, Cost Principles Condition: Out of a sample of 80 payroll transactions there were 3 where the timesheet was not properly approved by the supervisor prior to payroll being processed. Criteria: 2 CFR 200.430(i) states that “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”. Cause: The Organization does not have the proper review process in place to ensure that the timesheets are reviewed by supervisors prior to payroll being processed. Effect: Without proper review and approval of the hours allocated to the grants on the employee timesheets, it is possible that grants could be over or undercharged. Recommendation: We recommend the Organization implement systems and procedures to ensure timesheets are approved by supervisors prior to payroll being processed, to ensure grants are charged for the correct amount of payroll expenses. View of Responsible Officials: Management agrees with the findings and has committed to a corrective action plan.
Finding Number 2024-001: Represents a significant deficiency in internal control over compliance with Western Maine Community Action, Inc.’s major federal programs. Repeat Finding: Yes Type of Finding: Significant Deficiency in Internal Control Over Compliance Description: Payroll Expenditures – Approval of Time Sheets Major Programs: AL#10.557 - WIC Special Supplemental Nutrition Program for Women, Infants and Children – Award numbers: CD3-22-4658B and CD3-24-4658A; AL#81.042 – Weatherization – 80224, 80225, 81323, and 84023; AL#93.569 – Community Services Block Grant – Award numbers: CFS-23-7009 and CFS-24-7009 Questioned Costs: None How the questioned costs were computed: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs, Cost Principles Condition: Out of a sample of 80 payroll transactions there were 3 where the timesheet was not properly approved by the supervisor prior to payroll being processed. Criteria: 2 CFR 200.430(i) states that “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”. Cause: The Organization does not have the proper review process in place to ensure that the timesheets are reviewed by supervisors prior to payroll being processed. Effect: Without proper review and approval of the hours allocated to the grants on the employee timesheets, it is possible that grants could be over or undercharged. Recommendation: We recommend the Organization implement systems and procedures to ensure timesheets are approved by supervisors prior to payroll being processed, to ensure grants are charged for the correct amount of payroll expenses. View of Responsible Officials: Management agrees with the findings and has committed to a corrective action plan.
Finding Number 2024-001: Represents a significant deficiency in internal control over compliance with Western Maine Community Action, Inc.’s major federal programs. Repeat Finding: Yes Type of Finding: Significant Deficiency in Internal Control Over Compliance Description: Payroll Expenditures – Approval of Time Sheets Major Programs: AL#10.557 - WIC Special Supplemental Nutrition Program for Women, Infants and Children – Award numbers: CD3-22-4658B and CD3-24-4658A; AL#81.042 – Weatherization – 80224, 80225, 81323, and 84023; AL#93.569 – Community Services Block Grant – Award numbers: CFS-23-7009 and CFS-24-7009 Questioned Costs: None How the questioned costs were computed: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs, Cost Principles Condition: Out of a sample of 80 payroll transactions there were 3 where the timesheet was not properly approved by the supervisor prior to payroll being processed. Criteria: 2 CFR 200.430(i) states that “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”. Cause: The Organization does not have the proper review process in place to ensure that the timesheets are reviewed by supervisors prior to payroll being processed. Effect: Without proper review and approval of the hours allocated to the grants on the employee timesheets, it is possible that grants could be over or undercharged. Recommendation: We recommend the Organization implement systems and procedures to ensure timesheets are approved by supervisors prior to payroll being processed, to ensure grants are charged for the correct amount of payroll expenses. View of Responsible Officials: Management agrees with the findings and has committed to a corrective action plan.
Finding Number 2024-001: Represents a significant deficiency in internal control over compliance with Western Maine Community Action, Inc.’s major federal programs. Repeat Finding: Yes Type of Finding: Significant Deficiency in Internal Control Over Compliance Description: Payroll Expenditures – Approval of Time Sheets Major Programs: AL#10.557 - WIC Special Supplemental Nutrition Program for Women, Infants and Children – Award numbers: CD3-22-4658B and CD3-24-4658A; AL#81.042 – Weatherization – 80224, 80225, 81323, and 84023; AL#93.569 – Community Services Block Grant – Award numbers: CFS-23-7009 and CFS-24-7009 Questioned Costs: None How the questioned costs were computed: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs, Cost Principles Condition: Out of a sample of 80 payroll transactions there were 3 where the timesheet was not properly approved by the supervisor prior to payroll being processed. Criteria: 2 CFR 200.430(i) states that “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”. Cause: The Organization does not have the proper review process in place to ensure that the timesheets are reviewed by supervisors prior to payroll being processed. Effect: Without proper review and approval of the hours allocated to the grants on the employee timesheets, it is possible that grants could be over or undercharged. Recommendation: We recommend the Organization implement systems and procedures to ensure timesheets are approved by supervisors prior to payroll being processed, to ensure grants are charged for the correct amount of payroll expenses. View of Responsible Officials: Management agrees with the findings and has committed to a corrective action plan.
Finding Number 2024-001: Represents a significant deficiency in internal control over compliance with Western Maine Community Action, Inc.’s major federal programs. Repeat Finding: Yes Type of Finding: Significant Deficiency in Internal Control Over Compliance Description: Payroll Expenditures – Approval of Time Sheets Major Programs: AL#10.557 - WIC Special Supplemental Nutrition Program for Women, Infants and Children – Award numbers: CD3-22-4658B and CD3-24-4658A; AL#81.042 – Weatherization – 80224, 80225, 81323, and 84023; AL#93.569 – Community Services Block Grant – Award numbers: CFS-23-7009 and CFS-24-7009 Questioned Costs: None How the questioned costs were computed: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs, Cost Principles Condition: Out of a sample of 80 payroll transactions there were 3 where the timesheet was not properly approved by the supervisor prior to payroll being processed. Criteria: 2 CFR 200.430(i) states that “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”. Cause: The Organization does not have the proper review process in place to ensure that the timesheets are reviewed by supervisors prior to payroll being processed. Effect: Without proper review and approval of the hours allocated to the grants on the employee timesheets, it is possible that grants could be over or undercharged. Recommendation: We recommend the Organization implement systems and procedures to ensure timesheets are approved by supervisors prior to payroll being processed, to ensure grants are charged for the correct amount of payroll expenses. View of Responsible Officials: Management agrees with the findings and has committed to a corrective action plan.
2024-007 Lack of Semi-Annual Certifications for Special Education Personnel Type of Finding: Material Weakness in Internal Control Over Compliance New or Repeat Finding: New Federal Program: Special Education Cluster (ALNs 84.027, 84.173) Federal Agency: U.S. Department of Education Pass-through Entity(ies): Texas Education Agency (246600010849086600, 246610010849086610, 66002406, 225350020849025000, 225360020849025360), Region 10 Education Service Center (236600497110001) Compliance Requirement: B - Allowable Costs / Costs Principles Criteria: Under 2 CFR 200.430(g), when employees work solely on a single federal award or cost objective, charges for their salaries must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. One allowable method is through completion of semi-annual certifications signed by the employee or a supervisory official with firsthand knowledge. These certifications provide assurance that salary costs charged to the federal program reflects the total activity for which the employee is compensated by the District, not exceeding 100% of compensated activities. Condition: The district did not maintain required semi-annual certifications for employees who worked solely on the Special Education Cluster (IDEA) programs. These certifications, which confirm that the employee worked 100% on the program for the period covered, were missing for all employees. Cause: The district did not have adequate procedures in place to ensure the forms were prepared, signed, and retained in accordance with federal requirements. Staff turnover and limited awareness of the documentation rules contributed to the oversight. Effect or Potential Effect: Without semi-annual certifications, the district lacks required documentation to fully support salary costs charged to the Special Education Cluster. This raises the risk that unallowable or unsupported personnel costs were charged to the program, even if employees were appropriately assigned. Questioned Costs: No questioned costs were identified, as auditors were able to verify through alternative procedures that employees worked solely on the program. The personnel records of the employees sampled contained approval of the employee to be hired into the appropriate job duties to be funded by special education cluster grant funds. Context: The district was unable to provide required semi-annual certifications for 14 out of 14 employees selected in our sample for testing. Recommendation: We recommend that the district develop and implement written procedures to ensure that semiannual certifications are prepared, signed, and retained for all employees working solely on federal programs. The district should provide training to finance and program staff to ensure continued compliance with federal documentation requirements. Views of Responsible Officials: District officials agree with the finding. The District has implemented new procedures in fiscal year 2025 to ensure semi-annual certifications are completed appropriately.
2024-007 Lack of Semi-Annual Certifications for Special Education Personnel Type of Finding: Material Weakness in Internal Control Over Compliance New or Repeat Finding: New Federal Program: Special Education Cluster (ALNs 84.027, 84.173) Federal Agency: U.S. Department of Education Pass-through Entity(ies): Texas Education Agency (246600010849086600, 246610010849086610, 66002406, 225350020849025000, 225360020849025360), Region 10 Education Service Center (236600497110001) Compliance Requirement: B - Allowable Costs / Costs Principles Criteria: Under 2 CFR 200.430(g), when employees work solely on a single federal award or cost objective, charges for their salaries must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. One allowable method is through completion of semi-annual certifications signed by the employee or a supervisory official with firsthand knowledge. These certifications provide assurance that salary costs charged to the federal program reflects the total activity for which the employee is compensated by the District, not exceeding 100% of compensated activities. Condition: The district did not maintain required semi-annual certifications for employees who worked solely on the Special Education Cluster (IDEA) programs. These certifications, which confirm that the employee worked 100% on the program for the period covered, were missing for all employees. Cause: The district did not have adequate procedures in place to ensure the forms were prepared, signed, and retained in accordance with federal requirements. Staff turnover and limited awareness of the documentation rules contributed to the oversight. Effect or Potential Effect: Without semi-annual certifications, the district lacks required documentation to fully support salary costs charged to the Special Education Cluster. This raises the risk that unallowable or unsupported personnel costs were charged to the program, even if employees were appropriately assigned. Questioned Costs: No questioned costs were identified, as auditors were able to verify through alternative procedures that employees worked solely on the program. The personnel records of the employees sampled contained approval of the employee to be hired into the appropriate job duties to be funded by special education cluster grant funds. Context: The district was unable to provide required semi-annual certifications for 14 out of 14 employees selected in our sample for testing. Recommendation: We recommend that the district develop and implement written procedures to ensure that semiannual certifications are prepared, signed, and retained for all employees working solely on federal programs. The district should provide training to finance and program staff to ensure continued compliance with federal documentation requirements. Views of Responsible Officials: District officials agree with the finding. The District has implemented new procedures in fiscal year 2025 to ensure semi-annual certifications are completed appropriately.
2024-007 Lack of Semi-Annual Certifications for Special Education Personnel Type of Finding: Material Weakness in Internal Control Over Compliance New or Repeat Finding: New Federal Program: Special Education Cluster (ALNs 84.027, 84.173) Federal Agency: U.S. Department of Education Pass-through Entity(ies): Texas Education Agency (246600010849086600, 246610010849086610, 66002406, 225350020849025000, 225360020849025360), Region 10 Education Service Center (236600497110001) Compliance Requirement: B - Allowable Costs / Costs Principles Criteria: Under 2 CFR 200.430(g), when employees work solely on a single federal award or cost objective, charges for their salaries must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. One allowable method is through completion of semi-annual certifications signed by the employee or a supervisory official with firsthand knowledge. These certifications provide assurance that salary costs charged to the federal program reflects the total activity for which the employee is compensated by the District, not exceeding 100% of compensated activities. Condition: The district did not maintain required semi-annual certifications for employees who worked solely on the Special Education Cluster (IDEA) programs. These certifications, which confirm that the employee worked 100% on the program for the period covered, were missing for all employees. Cause: The district did not have adequate procedures in place to ensure the forms were prepared, signed, and retained in accordance with federal requirements. Staff turnover and limited awareness of the documentation rules contributed to the oversight. Effect or Potential Effect: Without semi-annual certifications, the district lacks required documentation to fully support salary costs charged to the Special Education Cluster. This raises the risk that unallowable or unsupported personnel costs were charged to the program, even if employees were appropriately assigned. Questioned Costs: No questioned costs were identified, as auditors were able to verify through alternative procedures that employees worked solely on the program. The personnel records of the employees sampled contained approval of the employee to be hired into the appropriate job duties to be funded by special education cluster grant funds. Context: The district was unable to provide required semi-annual certifications for 14 out of 14 employees selected in our sample for testing. Recommendation: We recommend that the district develop and implement written procedures to ensure that semiannual certifications are prepared, signed, and retained for all employees working solely on federal programs. The district should provide training to finance and program staff to ensure continued compliance with federal documentation requirements. Views of Responsible Officials: District officials agree with the finding. The District has implemented new procedures in fiscal year 2025 to ensure semi-annual certifications are completed appropriately.
2024-007 Lack of Semi-Annual Certifications for Special Education Personnel Type of Finding: Material Weakness in Internal Control Over Compliance New or Repeat Finding: New Federal Program: Special Education Cluster (ALNs 84.027, 84.173) Federal Agency: U.S. Department of Education Pass-through Entity(ies): Texas Education Agency (246600010849086600, 246610010849086610, 66002406, 225350020849025000, 225360020849025360), Region 10 Education Service Center (236600497110001) Compliance Requirement: B - Allowable Costs / Costs Principles Criteria: Under 2 CFR 200.430(g), when employees work solely on a single federal award or cost objective, charges for their salaries must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. One allowable method is through completion of semi-annual certifications signed by the employee or a supervisory official with firsthand knowledge. These certifications provide assurance that salary costs charged to the federal program reflects the total activity for which the employee is compensated by the District, not exceeding 100% of compensated activities. Condition: The district did not maintain required semi-annual certifications for employees who worked solely on the Special Education Cluster (IDEA) programs. These certifications, which confirm that the employee worked 100% on the program for the period covered, were missing for all employees. Cause: The district did not have adequate procedures in place to ensure the forms were prepared, signed, and retained in accordance with federal requirements. Staff turnover and limited awareness of the documentation rules contributed to the oversight. Effect or Potential Effect: Without semi-annual certifications, the district lacks required documentation to fully support salary costs charged to the Special Education Cluster. This raises the risk that unallowable or unsupported personnel costs were charged to the program, even if employees were appropriately assigned. Questioned Costs: No questioned costs were identified, as auditors were able to verify through alternative procedures that employees worked solely on the program. The personnel records of the employees sampled contained approval of the employee to be hired into the appropriate job duties to be funded by special education cluster grant funds. Context: The district was unable to provide required semi-annual certifications for 14 out of 14 employees selected in our sample for testing. Recommendation: We recommend that the district develop and implement written procedures to ensure that semiannual certifications are prepared, signed, and retained for all employees working solely on federal programs. The district should provide training to finance and program staff to ensure continued compliance with federal documentation requirements. Views of Responsible Officials: District officials agree with the finding. The District has implemented new procedures in fiscal year 2025 to ensure semi-annual certifications are completed appropriately.
2024-007 Lack of Semi-Annual Certifications for Special Education Personnel Type of Finding: Material Weakness in Internal Control Over Compliance New or Repeat Finding: New Federal Program: Special Education Cluster (ALNs 84.027, 84.173) Federal Agency: U.S. Department of Education Pass-through Entity(ies): Texas Education Agency (246600010849086600, 246610010849086610, 66002406, 225350020849025000, 225360020849025360), Region 10 Education Service Center (236600497110001) Compliance Requirement: B - Allowable Costs / Costs Principles Criteria: Under 2 CFR 200.430(g), when employees work solely on a single federal award or cost objective, charges for their salaries must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. One allowable method is through completion of semi-annual certifications signed by the employee or a supervisory official with firsthand knowledge. These certifications provide assurance that salary costs charged to the federal program reflects the total activity for which the employee is compensated by the District, not exceeding 100% of compensated activities. Condition: The district did not maintain required semi-annual certifications for employees who worked solely on the Special Education Cluster (IDEA) programs. These certifications, which confirm that the employee worked 100% on the program for the period covered, were missing for all employees. Cause: The district did not have adequate procedures in place to ensure the forms were prepared, signed, and retained in accordance with federal requirements. Staff turnover and limited awareness of the documentation rules contributed to the oversight. Effect or Potential Effect: Without semi-annual certifications, the district lacks required documentation to fully support salary costs charged to the Special Education Cluster. This raises the risk that unallowable or unsupported personnel costs were charged to the program, even if employees were appropriately assigned. Questioned Costs: No questioned costs were identified, as auditors were able to verify through alternative procedures that employees worked solely on the program. The personnel records of the employees sampled contained approval of the employee to be hired into the appropriate job duties to be funded by special education cluster grant funds. Context: The district was unable to provide required semi-annual certifications for 14 out of 14 employees selected in our sample for testing. Recommendation: We recommend that the district develop and implement written procedures to ensure that semiannual certifications are prepared, signed, and retained for all employees working solely on federal programs. The district should provide training to finance and program staff to ensure continued compliance with federal documentation requirements. Views of Responsible Officials: District officials agree with the finding. The District has implemented new procedures in fiscal year 2025 to ensure semi-annual certifications are completed appropriately.
2024-007 Lack of Semi-Annual Certifications for Special Education Personnel Type of Finding: Material Weakness in Internal Control Over Compliance New or Repeat Finding: New Federal Program: Special Education Cluster (ALNs 84.027, 84.173) Federal Agency: U.S. Department of Education Pass-through Entity(ies): Texas Education Agency (246600010849086600, 246610010849086610, 66002406, 225350020849025000, 225360020849025360), Region 10 Education Service Center (236600497110001) Compliance Requirement: B - Allowable Costs / Costs Principles Criteria: Under 2 CFR 200.430(g), when employees work solely on a single federal award or cost objective, charges for their salaries must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. One allowable method is through completion of semi-annual certifications signed by the employee or a supervisory official with firsthand knowledge. These certifications provide assurance that salary costs charged to the federal program reflects the total activity for which the employee is compensated by the District, not exceeding 100% of compensated activities. Condition: The district did not maintain required semi-annual certifications for employees who worked solely on the Special Education Cluster (IDEA) programs. These certifications, which confirm that the employee worked 100% on the program for the period covered, were missing for all employees. Cause: The district did not have adequate procedures in place to ensure the forms were prepared, signed, and retained in accordance with federal requirements. Staff turnover and limited awareness of the documentation rules contributed to the oversight. Effect or Potential Effect: Without semi-annual certifications, the district lacks required documentation to fully support salary costs charged to the Special Education Cluster. This raises the risk that unallowable or unsupported personnel costs were charged to the program, even if employees were appropriately assigned. Questioned Costs: No questioned costs were identified, as auditors were able to verify through alternative procedures that employees worked solely on the program. The personnel records of the employees sampled contained approval of the employee to be hired into the appropriate job duties to be funded by special education cluster grant funds. Context: The district was unable to provide required semi-annual certifications for 14 out of 14 employees selected in our sample for testing. Recommendation: We recommend that the district develop and implement written procedures to ensure that semiannual certifications are prepared, signed, and retained for all employees working solely on federal programs. The district should provide training to finance and program staff to ensure continued compliance with federal documentation requirements. Views of Responsible Officials: District officials agree with the finding. The District has implemented new procedures in fiscal year 2025 to ensure semi-annual certifications are completed appropriately.
PROGRAM DESCRIPTION Reference Number: 2024-004 Proper review of payroll charges to grant funds ALN 84.425U & 84.425W COVID-19 Education Stabilization Fund Pass through identifying number: 21528001245902 Award Year: 2023-2024 Federal Agency: U.S. Department of Education Passed through State Department of Education Criteria: Non-federal entities are required to establish and maintain effective internal controls over compliance in accordance with 2 CFR 200.303(a) and 2 CFR 200.430(g) which requires that compensation charged to federal awards must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated, of which documentation must be incorporated into the official records of the entity. Condition Found: During our review of payroll charges that were funded through ESSER funds, it was noted that the District did not have adequate controls in place to monitor the payroll transactions charged to the program. Cause: Although the District implemented Skyward in the prior year, the District did not integrate the appropriate approvals into the system in a timely manner. In addition, turnover in the District Chief Financial Officer position caused difficulties in the District obtaining the proper approvals for journal entries. Effect: The District could fail to appropriately support expenditures charged to the program. Questioned Cost: $0 Recommendation: We recommend the District to implement appropriate approvals in the Skyward accounting system to provide for better oversight of transactions. Views of Responsible Officials: Management agrees with the findings. See corrective action plan beginning on page 114.