Criteria: 2 CFR 200.430(h)(8)(i) requires that amounts of personnel expenses are properly documented and include appropriate controls and documentation to support the distribution of the employee's wages among specific activities if the employee works on more than one award. Condition: Of the testing population of 120 payroll transactions tested, for 2 transactions the Organization was unable to provide a timesheet or other documentation to substantiate the application of the individual's time for that period. In addition for 59 transactions, the allocation on the time sheet provided does not agree to the allocation of the individual's wages to the program in the general ledger and voucher. Cause: Due to limited staffing resources, the Organization was not able to ensure maintenance of adequate documentation. Effect: The Organization is not able to demonstrate that the personnel expenses allocated to the grant was proper and ensure avoidance of duplication of funding requests for the same amounts. Questioned Costs: Unknown Recommendation: Management should review and refine its process of tracking payroll costs by grant to ensure that the costs are supported by a system of internal controls which provides reasonable assurance that the charges are accurate, are properly allocated, and reasonably reflect the total activity for which the employee is compensated. Views of Responsible Officials: Management agrees with the finding; see corrective action plan.
Criteria: 2 CFR 200.430(h)(8)(i) requires that amounts of personnel expenses are properly documented and include appropriate controls and documentation to support the distribution of the employee's wages among specific activities if the employee works on more than one award. Condition: Of the testing population of 120 payroll transactions tested, for 2 transactions the Organization was unable to provide a timesheet or other documentation to substantiate the application of the individual's time for that period. In addition for 59 transactions, the allocation on the time sheet provided does not agree to the allocation of the individual's wages to the program in the general ledger and voucher. Cause: Due to limited staffing resources, the Organization was not able to ensure maintenance of adequate documentation. Effect: The Organization is not able to demonstrate that the personnel expenses allocated to the grant was proper and ensure avoidance of duplication of funding requests for the same amounts. Questioned Costs: Unknown Recommendation: Management should review and refine its process of tracking payroll costs by grant to ensure that the costs are supported by a system of internal controls which provides reasonable assurance that the charges are accurate, are properly allocated, and reasonably reflect the total activity for which the employee is compensated. Views of Responsible Officials: Management agrees with the finding; see corrective action plan.
Criteria: 2 CFR 200.430(h)(8)(i) requires that amounts of personnel expenses are properly documented and include appropriate controls and documentation to support the distribution of the employee's wages among specific activities if the employee works on more than one award. Condition: Of the testing population of 120 payroll transactions tested, for 2 transactions the Organization was unable to provide a timesheet or other documentation to substantiate the application of the individual's time for that period. In addition for 59 transactions, the allocation on the time sheet provided does not agree to the allocation of the individual's wages to the program in the general ledger and voucher. Cause: Due to limited staffing resources, the Organization was not able to ensure maintenance of adequate documentation. Effect: The Organization is not able to demonstrate that the personnel expenses allocated to the grant was proper and ensure avoidance of duplication of funding requests for the same amounts. Questioned Costs: Unknown Recommendation: Management should review and refine its process of tracking payroll costs by grant to ensure that the costs are supported by a system of internal controls which provides reasonable assurance that the charges are accurate, are properly allocated, and reasonably reflect the total activity for which the employee is compensated. Views of Responsible Officials: Management agrees with the finding; see corrective action plan.
Criteria: 2 CFR 200.430(h)(8)(i) requires that amounts of personnel expenses are properly documented and include appropriate controls and documentation to support the distribution of the employee's wages among specific activities if the employee works on more than one award. Condition: Of the testing population of 120 payroll transactions tested, for 2 transactions the Organization was unable to provide a timesheet or other documentation to substantiate the application of the individual's time for that period. In addition for 59 transactions, the allocation on the time sheet provided does not agree to the allocation of the individual's wages to the program in the general ledger and voucher. Cause: Due to limited staffing resources, the Organization was not able to ensure maintenance of adequate documentation. Effect: The Organization is not able to demonstrate that the personnel expenses allocated to the grant was proper and ensure avoidance of duplication of funding requests for the same amounts. Questioned Costs: Unknown Recommendation: Management should review and refine its process of tracking payroll costs by grant to ensure that the costs are supported by a system of internal controls which provides reasonable assurance that the charges are accurate, are properly allocated, and reasonably reflect the total activity for which the employee is compensated. Views of Responsible Officials: Management agrees with the finding; see corrective action plan.
Criteria: 2 CFR 200.430(h)(8)(i) requires that amounts of personnel expenses are properly documented and include appropriate controls and documentation to support the distribution of the employee's wages among specific activities if the employee works on more than one award. Condition: Of the testing population of 120 payroll transactions tested, for 2 transactions the Organization was unable to provide a timesheet or other documentation to substantiate the application of the individual's time for that period. In addition for 59 transactions, the allocation on the time sheet provided does not agree to the allocation of the individual's wages to the program in the general ledger and voucher. Cause: Due to limited staffing resources, the Organization was not able to ensure maintenance of adequate documentation. Effect: The Organization is not able to demonstrate that the personnel expenses allocated to the grant was proper and ensure avoidance of duplication of funding requests for the same amounts. Questioned Costs: Unknown Recommendation: Management should review and refine its process of tracking payroll costs by grant to ensure that the costs are supported by a system of internal controls which provides reasonable assurance that the charges are accurate, are properly allocated, and reasonably reflect the total activity for which the employee is compensated. Views of Responsible Officials: Management agrees with the finding; see corrective action plan.
Finding 2024-010 - Material Weakness - Allowable Costs/Cost Principles Federal Assistance Listing Number: 84.010, 93.600 Federal Program Name: Title I Grants to Local Educational Agencies and Head Start Cluster Federal Agency Name: U.S. Department of Education and U.S. Department of Health and Human Services Pass-Through Entity Name: Wisconsin Department of Public Instruction Pass-Through Entity Identification Number: 2024-403619-DPI-TIA-141, 2024-403619-DPI-CSI-148 Criteria: In accordance with 2 CFR 200.303(a), the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In accordance with 2 CFR 200.430(i), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Additionally, 2 CFR 200.403(g) requires that costs are adequately documented to be allowable under Federal awards. Condition/Context: The District supports time charged to federal awards via semi-annual certifications which are approved by the grant administrator or the building principal. In order for a cost to be supported at the time of final reimbursement, the semi-annual certifications should be approved by the grant administrator or the building principal. Title I Grants to Local Educational Agencies (ALN 84.010) The final reimbursement claim for the Title I Grants to Local Educational Agencies (Title I) program were due to Wisconsin Department of Public Instruction (DPI) on September 30, 2024; however, the final reimbursement claim for the Part A award was not submitted to DPI until November 18, 2024, and the CSI award was not submitted to DPI until October 1, 2024, due to an extension. Five of the 40 individuals sampled had their semi-annual certifications not approved timely and were approved after the due date of the final reimbursement claim, but before the date of the actual submission of the final reimbursement claim. An additional two individuals of the 40 sampled had their semi-annual certifications approved after the final reimbursement claims were submitted. Upon further review of all the spring semi-annual certifications for the Title I awards, there were an additional 50 individuals that had their semi-annual certifications approved by the principal after the due date of the final reimbursement claim but before the submission of the final reimbursement. Additionally, nine individuals had their semi-annual certifications approved after the final reimbursement date of the Part A award and another 59 individuals from Part A did not have their semi-annual certifications approved at all. Head Start Cluster (ALN 93.600) The final reimbursement claim for the program was submitted to the Federal agency on November 22, 2024. Four of the 40 individuals sampled had their semi-annual certifications approved by the Head Start administrator after the submission date of the final reimbursement claims. Upon further review of the all the spring semi-annual certifications, there was an additional individual that had their semi-annual certifications approved by the principal after the due date of the final reimbursement claim and another four individuals that did not have their semi-annual certifications approved at all. The samples were not statistically valid. Cause: There was a lack of internal control over the timely approval of the semi-annual certifications. Effect or Potential Effect: By not having an approved semi-annual certification before the date of the final reimbursement claims, unallowable costs may be submitted for reimbursement. Questioned Costs: The payroll costs and related fringe benefits charged at a rate of 52.48% are unallowable. Title I Grants to Local Educational Agencies (ALN 84.010) • 2024-403619-DPI-CSI-148: The two sampled individuals’ payroll and fringe benefits for the particular transaction totaled $507. • 2024-403619-DPI-TIA-141: The additional individuals' payroll and fringe benefits for the spring semi-annual certifications reviewed that were approved after the final reimbursement submission date and those that were not approved at all totaled $2,077,880. Head Start Cluster (ALN 93.600) • 05CH010537: After the additional testing, the total payroll and related fringe benefits for the spring semi-annual certifications that were approved after the final reimbursement request submission date or not approved at all totaled $241,794. Recommendations: We recommend that controls be implemented that will allow costs to be reviewed and fully supported prior to the date the final reimbursement claims are due to DPI. Views of Responsible Official: Management concurs with the finding.
Finding 2024-010 - Material Weakness - Allowable Costs/Cost Principles Federal Assistance Listing Number: 84.010, 93.600 Federal Program Name: Title I Grants to Local Educational Agencies and Head Start Cluster Federal Agency Name: U.S. Department of Education and U.S. Department of Health and Human Services Pass-Through Entity Name: Wisconsin Department of Public Instruction Pass-Through Entity Identification Number: 2024-403619-DPI-TIA-141, 2024-403619-DPI-CSI-148 Criteria: In accordance with 2 CFR 200.303(a), the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In accordance with 2 CFR 200.430(i), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Additionally, 2 CFR 200.403(g) requires that costs are adequately documented to be allowable under Federal awards. Condition/Context: The District supports time charged to federal awards via semi-annual certifications which are approved by the grant administrator or the building principal. In order for a cost to be supported at the time of final reimbursement, the semi-annual certifications should be approved by the grant administrator or the building principal. Title I Grants to Local Educational Agencies (ALN 84.010) The final reimbursement claim for the Title I Grants to Local Educational Agencies (Title I) program were due to Wisconsin Department of Public Instruction (DPI) on September 30, 2024; however, the final reimbursement claim for the Part A award was not submitted to DPI until November 18, 2024, and the CSI award was not submitted to DPI until October 1, 2024, due to an extension. Five of the 40 individuals sampled had their semi-annual certifications not approved timely and were approved after the due date of the final reimbursement claim, but before the date of the actual submission of the final reimbursement claim. An additional two individuals of the 40 sampled had their semi-annual certifications approved after the final reimbursement claims were submitted. Upon further review of all the spring semi-annual certifications for the Title I awards, there were an additional 50 individuals that had their semi-annual certifications approved by the principal after the due date of the final reimbursement claim but before the submission of the final reimbursement. Additionally, nine individuals had their semi-annual certifications approved after the final reimbursement date of the Part A award and another 59 individuals from Part A did not have their semi-annual certifications approved at all. Head Start Cluster (ALN 93.600) The final reimbursement claim for the program was submitted to the Federal agency on November 22, 2024. Four of the 40 individuals sampled had their semi-annual certifications approved by the Head Start administrator after the submission date of the final reimbursement claims. Upon further review of the all the spring semi-annual certifications, there was an additional individual that had their semi-annual certifications approved by the principal after the due date of the final reimbursement claim and another four individuals that did not have their semi-annual certifications approved at all. The samples were not statistically valid. Cause: There was a lack of internal control over the timely approval of the semi-annual certifications. Effect or Potential Effect: By not having an approved semi-annual certification before the date of the final reimbursement claims, unallowable costs may be submitted for reimbursement. Questioned Costs: The payroll costs and related fringe benefits charged at a rate of 52.48% are unallowable. Title I Grants to Local Educational Agencies (ALN 84.010) • 2024-403619-DPI-CSI-148: The two sampled individuals’ payroll and fringe benefits for the particular transaction totaled $507. • 2024-403619-DPI-TIA-141: The additional individuals' payroll and fringe benefits for the spring semi-annual certifications reviewed that were approved after the final reimbursement submission date and those that were not approved at all totaled $2,077,880. Head Start Cluster (ALN 93.600) • 05CH010537: After the additional testing, the total payroll and related fringe benefits for the spring semi-annual certifications that were approved after the final reimbursement request submission date or not approved at all totaled $241,794. Recommendations: We recommend that controls be implemented that will allow costs to be reviewed and fully supported prior to the date the final reimbursement claims are due to DPI. Views of Responsible Official: Management concurs with the finding.
Finding 2024-010 - Material Weakness - Allowable Costs/Cost Principles Federal Assistance Listing Number: 84.010, 93.600 Federal Program Name: Title I Grants to Local Educational Agencies and Head Start Cluster Federal Agency Name: U.S. Department of Education and U.S. Department of Health and Human Services Pass-Through Entity Name: Wisconsin Department of Public Instruction Pass-Through Entity Identification Number: 2024-403619-DPI-TIA-141, 2024-403619-DPI-CSI-148 Criteria: In accordance with 2 CFR 200.303(a), the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In accordance with 2 CFR 200.430(i), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Additionally, 2 CFR 200.403(g) requires that costs are adequately documented to be allowable under Federal awards. Condition/Context: The District supports time charged to federal awards via semi-annual certifications which are approved by the grant administrator or the building principal. In order for a cost to be supported at the time of final reimbursement, the semi-annual certifications should be approved by the grant administrator or the building principal. Title I Grants to Local Educational Agencies (ALN 84.010) The final reimbursement claim for the Title I Grants to Local Educational Agencies (Title I) program were due to Wisconsin Department of Public Instruction (DPI) on September 30, 2024; however, the final reimbursement claim for the Part A award was not submitted to DPI until November 18, 2024, and the CSI award was not submitted to DPI until October 1, 2024, due to an extension. Five of the 40 individuals sampled had their semi-annual certifications not approved timely and were approved after the due date of the final reimbursement claim, but before the date of the actual submission of the final reimbursement claim. An additional two individuals of the 40 sampled had their semi-annual certifications approved after the final reimbursement claims were submitted. Upon further review of all the spring semi-annual certifications for the Title I awards, there were an additional 50 individuals that had their semi-annual certifications approved by the principal after the due date of the final reimbursement claim but before the submission of the final reimbursement. Additionally, nine individuals had their semi-annual certifications approved after the final reimbursement date of the Part A award and another 59 individuals from Part A did not have their semi-annual certifications approved at all. Head Start Cluster (ALN 93.600) The final reimbursement claim for the program was submitted to the Federal agency on November 22, 2024. Four of the 40 individuals sampled had their semi-annual certifications approved by the Head Start administrator after the submission date of the final reimbursement claims. Upon further review of the all the spring semi-annual certifications, there was an additional individual that had their semi-annual certifications approved by the principal after the due date of the final reimbursement claim and another four individuals that did not have their semi-annual certifications approved at all. The samples were not statistically valid. Cause: There was a lack of internal control over the timely approval of the semi-annual certifications. Effect or Potential Effect: By not having an approved semi-annual certification before the date of the final reimbursement claims, unallowable costs may be submitted for reimbursement. Questioned Costs: The payroll costs and related fringe benefits charged at a rate of 52.48% are unallowable. Title I Grants to Local Educational Agencies (ALN 84.010) • 2024-403619-DPI-CSI-148: The two sampled individuals’ payroll and fringe benefits for the particular transaction totaled $507. • 2024-403619-DPI-TIA-141: The additional individuals' payroll and fringe benefits for the spring semi-annual certifications reviewed that were approved after the final reimbursement submission date and those that were not approved at all totaled $2,077,880. Head Start Cluster (ALN 93.600) • 05CH010537: After the additional testing, the total payroll and related fringe benefits for the spring semi-annual certifications that were approved after the final reimbursement request submission date or not approved at all totaled $241,794. Recommendations: We recommend that controls be implemented that will allow costs to be reviewed and fully supported prior to the date the final reimbursement claims are due to DPI. Views of Responsible Official: Management concurs with the finding.
Finding 2024-010 - Material Weakness - Allowable Costs/Cost Principles Federal Assistance Listing Number: 84.010, 93.600 Federal Program Name: Title I Grants to Local Educational Agencies and Head Start Cluster Federal Agency Name: U.S. Department of Education and U.S. Department of Health and Human Services Pass-Through Entity Name: Wisconsin Department of Public Instruction Pass-Through Entity Identification Number: 2024-403619-DPI-TIA-141, 2024-403619-DPI-CSI-148 Criteria: In accordance with 2 CFR 200.303(a), the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In accordance with 2 CFR 200.430(i), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Additionally, 2 CFR 200.403(g) requires that costs are adequately documented to be allowable under Federal awards. Condition/Context: The District supports time charged to federal awards via semi-annual certifications which are approved by the grant administrator or the building principal. In order for a cost to be supported at the time of final reimbursement, the semi-annual certifications should be approved by the grant administrator or the building principal. Title I Grants to Local Educational Agencies (ALN 84.010) The final reimbursement claim for the Title I Grants to Local Educational Agencies (Title I) program were due to Wisconsin Department of Public Instruction (DPI) on September 30, 2024; however, the final reimbursement claim for the Part A award was not submitted to DPI until November 18, 2024, and the CSI award was not submitted to DPI until October 1, 2024, due to an extension. Five of the 40 individuals sampled had their semi-annual certifications not approved timely and were approved after the due date of the final reimbursement claim, but before the date of the actual submission of the final reimbursement claim. An additional two individuals of the 40 sampled had their semi-annual certifications approved after the final reimbursement claims were submitted. Upon further review of all the spring semi-annual certifications for the Title I awards, there were an additional 50 individuals that had their semi-annual certifications approved by the principal after the due date of the final reimbursement claim but before the submission of the final reimbursement. Additionally, nine individuals had their semi-annual certifications approved after the final reimbursement date of the Part A award and another 59 individuals from Part A did not have their semi-annual certifications approved at all. Head Start Cluster (ALN 93.600) The final reimbursement claim for the program was submitted to the Federal agency on November 22, 2024. Four of the 40 individuals sampled had their semi-annual certifications approved by the Head Start administrator after the submission date of the final reimbursement claims. Upon further review of the all the spring semi-annual certifications, there was an additional individual that had their semi-annual certifications approved by the principal after the due date of the final reimbursement claim and another four individuals that did not have their semi-annual certifications approved at all. The samples were not statistically valid. Cause: There was a lack of internal control over the timely approval of the semi-annual certifications. Effect or Potential Effect: By not having an approved semi-annual certification before the date of the final reimbursement claims, unallowable costs may be submitted for reimbursement. Questioned Costs: The payroll costs and related fringe benefits charged at a rate of 52.48% are unallowable. Title I Grants to Local Educational Agencies (ALN 84.010) • 2024-403619-DPI-CSI-148: The two sampled individuals’ payroll and fringe benefits for the particular transaction totaled $507. • 2024-403619-DPI-TIA-141: The additional individuals' payroll and fringe benefits for the spring semi-annual certifications reviewed that were approved after the final reimbursement submission date and those that were not approved at all totaled $2,077,880. Head Start Cluster (ALN 93.600) • 05CH010537: After the additional testing, the total payroll and related fringe benefits for the spring semi-annual certifications that were approved after the final reimbursement request submission date or not approved at all totaled $241,794. Recommendations: We recommend that controls be implemented that will allow costs to be reviewed and fully supported prior to the date the final reimbursement claims are due to DPI. Views of Responsible Official: Management concurs with the finding.
Finding - Contrary to Federal regulations, District records did not always accurately reflect employee work performed for, and support the distribution of employee salaries and benefits charged to, the SEC. Criteria - Title 2, Section 200.430(i), CFR, requires that charges for Federal awards for salaries be based on records that accurately reflect the work performed and support the distribution of employee salaries among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-Federal award. In addition, Title 2, Section 200.303(a), CFR, requires the District to maintain effective internal controls over the SEC. To ensure that charges are allowable, an appropriate system of internal controls requires that review and approval of program or grant expenditures be performed by personnel (e.g., the Exceptional Student Education Director) who possess adequate knowledge and experience of program requirements. Condition - For the 2023-24 fiscal year the District reported SEC expenditures totaling $1.8 million, including $1.5 million for salaries and benefits for 83 employees. To determine the propriety and allowability of SEC expenditures, we requested for examination District records supporting salaries and benefits totaling $628,953 charged to the SEC for 16 employees. Although we requested, District records were not provided to identify the work that the 16 employees performed to support the salaries and benefits charged to the SEC. Cause - The District did not always maintain records to identify the work employees performed to support the salaries and benefits charged to the SEC, and an employee with knowledge and experience of the SEC requirements was not required to, and did not, document review and approval of the salary and benefit charges. Effect - Absent effective procedures to document support for the distribution of employee salaries and benefits to the SEC, including the documented review and approval of those charges by the Exceptional Student Education Director or other personnel with knowledge and experience of SEC requirements, there is an increased risk that expenditures may be inappropriately charged to the SEC. We expanded our procedures to interview the 16 employees and determined that their salaries and benefits were appropriately charged to the SEC. However, our procedures cannot substitute the District’s responsibility to ensure that salaries and benefits charged to the SEC are properly supported. Recommendation - The District should establish procedures to ensure that District records accurately reflect the work performed to support the distribution of employee salaries and benefits charged to the SEC. Such procedures should require that the Exceptional Student Education Director or other personnel with appropriate knowledge and experience document review and approval of those charges. District Response - The District is in the process of reviewing and updating controls to ensure required time and effort logs are kept in the District's fiscal management system and routine submission of forms is enforced by the grant managers.
Finding - Contrary to Federal regulations, District records did not always accurately reflect employee work performed for, and support the distribution of employee salaries and benefits charged to, the SEC. Criteria - Title 2, Section 200.430(i), CFR, requires that charges for Federal awards for salaries be based on records that accurately reflect the work performed and support the distribution of employee salaries among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-Federal award. In addition, Title 2, Section 200.303(a), CFR, requires the District to maintain effective internal controls over the SEC. To ensure that charges are allowable, an appropriate system of internal controls requires that review and approval of program or grant expenditures be performed by personnel (e.g., the Exceptional Student Education Director) who possess adequate knowledge and experience of program requirements. Condition - For the 2023-24 fiscal year the District reported SEC expenditures totaling $1.8 million, including $1.5 million for salaries and benefits for 83 employees. To determine the propriety and allowability of SEC expenditures, we requested for examination District records supporting salaries and benefits totaling $628,953 charged to the SEC for 16 employees. Although we requested, District records were not provided to identify the work that the 16 employees performed to support the salaries and benefits charged to the SEC. Cause - The District did not always maintain records to identify the work employees performed to support the salaries and benefits charged to the SEC, and an employee with knowledge and experience of the SEC requirements was not required to, and did not, document review and approval of the salary and benefit charges. Effect - Absent effective procedures to document support for the distribution of employee salaries and benefits to the SEC, including the documented review and approval of those charges by the Exceptional Student Education Director or other personnel with knowledge and experience of SEC requirements, there is an increased risk that expenditures may be inappropriately charged to the SEC. We expanded our procedures to interview the 16 employees and determined that their salaries and benefits were appropriately charged to the SEC. However, our procedures cannot substitute the District’s responsibility to ensure that salaries and benefits charged to the SEC are properly supported. Recommendation - The District should establish procedures to ensure that District records accurately reflect the work performed to support the distribution of employee salaries and benefits charged to the SEC. Such procedures should require that the Exceptional Student Education Director or other personnel with appropriate knowledge and experience document review and approval of those charges. District Response - The District is in the process of reviewing and updating controls to ensure required time and effort logs are kept in the District's fiscal management system and routine submission of forms is enforced by the grant managers.
Finding - Contrary to Federal regulations, District records did not always accurately reflect employee work performed for, and support the distribution of employee salaries and benefits charged to, the SEC. Criteria - Title 2, Section 200.430(i), CFR, requires that charges for Federal awards for salaries be based on records that accurately reflect the work performed and support the distribution of employee salaries among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-Federal award. In addition, Title 2, Section 200.303(a), CFR, requires the District to maintain effective internal controls over the SEC. To ensure that charges are allowable, an appropriate system of internal controls requires that review and approval of program or grant expenditures be performed by personnel (e.g., the Exceptional Student Education Director) who possess adequate knowledge and experience of program requirements. Condition - For the 2023-24 fiscal year the District reported SEC expenditures totaling $1.8 million, including $1.5 million for salaries and benefits for 83 employees. To determine the propriety and allowability of SEC expenditures, we requested for examination District records supporting salaries and benefits totaling $628,953 charged to the SEC for 16 employees. Although we requested, District records were not provided to identify the work that the 16 employees performed to support the salaries and benefits charged to the SEC. Cause - The District did not always maintain records to identify the work employees performed to support the salaries and benefits charged to the SEC, and an employee with knowledge and experience of the SEC requirements was not required to, and did not, document review and approval of the salary and benefit charges. Effect - Absent effective procedures to document support for the distribution of employee salaries and benefits to the SEC, including the documented review and approval of those charges by the Exceptional Student Education Director or other personnel with knowledge and experience of SEC requirements, there is an increased risk that expenditures may be inappropriately charged to the SEC. We expanded our procedures to interview the 16 employees and determined that their salaries and benefits were appropriately charged to the SEC. However, our procedures cannot substitute the District’s responsibility to ensure that salaries and benefits charged to the SEC are properly supported. Recommendation - The District should establish procedures to ensure that District records accurately reflect the work performed to support the distribution of employee salaries and benefits charged to the SEC. Such procedures should require that the Exceptional Student Education Director or other personnel with appropriate knowledge and experience document review and approval of those charges. District Response - The District is in the process of reviewing and updating controls to ensure required time and effort logs are kept in the District's fiscal management system and routine submission of forms is enforced by the grant managers.
Federal Program Information: Assistance Listing Number: 93.959 Federal Program Title: Block Grants for Substance Use Prevention, Treatment, and Recovery Services Federal Agency: U.S. Department of Health and Human Services Passed Through Entity: County of Los Angeles Public Health Federal Award Number: PH-004383-W2, PH-004383-W1 Federal Award Year: July 1, 2023 to June 30, 2024 Compliance Requirement: Allowable Costs/Cost Principles Assistance Listing Number: 93.531 Federal Program Title: Community Transformation Grants and National Dissemination and Support for Community Transformation Grants Federal Agency: U.S. Department of Health and Human Services Passed Through Entity: County of Los Angeles Public Health Federal Award Number: PH-004921 Federal Award Year: July 1, 2023 to June 30, 2024 Compliance Requirement: Allowable Costs/Cost Principles Criteria: Per the Uniform Guidance, 2 CFR §200.430(i), charges to federal awards for salaries and wages must be based on records that accurately reflect the actual work performed. Budget estimates may be used for interim purposes, but must be supported by contemporaneous documentation, reconciled to actual time worked, and adjusted as necessary. Additionally, 2 CFR §200.403(d) requires that costs be allocated to federal awards in accordance with the relative benefits received. The OMB Compliance Supplement (Part 6 – Internal Control and Part 3 – Compliance Requirements) reinforces that payroll and nonpayroll costs must be supported by reliable records and allocated using reasonable and consistent methodologies. Condition: During the testing of payroll costs, we noted that for Federal Assistance Listings 93.959 and 93.531, payroll charges in 4 out of 40 samples and 2 out of 11 samples, respectively, were based on budgeted rates rather than actual hours worked. Supporting documentation (e.g., timesheets or equivalent records) was not used to substantiate the final charges, and adjustments to actual time and effort were not made. For nonpayroll costs, we identified that in 3 out of 40 samples (93.959) and 5 out of 18 samples (93.531), costs were not allocated using a consistent and reasonable basis across all benefiting programs. Instead, the Organization either charged costs by maximizing the allowable budget under each program or have inadvertently used an incorrect basis due to oversight. Cause: The deficiencies occurred because the Organization’s internal controls were not sufficiently designed or implemented to ensure compliance with Uniform Guidance requirements. Specifically, payroll costs were charged to federal awards based on budget estimates rather than actual time and effort supported by records such as timesheets, and nonpayroll costs were either maximized to the budget or were allocated using an incorrect basis. These control gaps in review and documentation resulted in costs being charged to federal programs in a manner inconsistent with Allowable Costs/Cost Principles. Effect: As a result of these deficiencies, federal program expenditures reported to the awarding agency were misstated. Our testing identified questioned costs across both programs, consisting of payroll and nonpayroll overallocations. These represent unallowable costs under Uniform Guidance and may be subject to disallowance. Inaccurate cost allocations increase the risk of noncompliance with federal requirements, could lead to repayment of disallowed costs, and may negatively affect future federal funding decisions. Questioned Costs: Known and extrapolated costs for payroll and nonpayroll costs for Federal Assistance Listings 93.959 and 93.531 are summarized below. These amounts represent the overallocation to the programs, representing unallowable costs under Uniform Guidance. Recommendation: We recommend that the Organization strengthen its internal controls over payroll and nonpayroll cost allocations by requiring time and effort records to support all payroll charges to federal awards, ensuring nonpayroll costs are allocated using documented and equitable methodologies, and performing regular reconciliations of budgeted amounts to actual costs. In addition, staff responsible for preparing and reviewing cost allocations should receive training on Uniform Guidance requirements to ensure accuracy, compliance, and consistency across all federal programs. Views of responsible officials and planned corrective actions: For payroll, procedures will be implemented to ensure that payroll costs allocated to federal grants are supported by actual time. For nonpayroll, procedures will be enhanced to ensure proper allocation of nonpayroll costs to federal grants. Allocations will be reviewed and monitored on a monthly and quarterly basis to prevent misallocation and ensure compliance with the Uniform Guidance. Personnel responsible for implementation: Executive Director Christy Zamani and Beaulieu Accountancy Corporation. Date of implementation: August 5, 2025
Federal Program Information: Assistance Listing Number: 93.959 Federal Program Title: Block Grants for Substance Use Prevention, Treatment, and Recovery Services Federal Agency: U.S. Department of Health and Human Services Passed Through Entity: County of Los Angeles Public Health Federal Award Number: PH-004383-W2, PH-004383-W1 Federal Award Year: July 1, 2023 to June 30, 2024 Compliance Requirement: Allowable Costs/Cost Principles Assistance Listing Number: 93.531 Federal Program Title: Community Transformation Grants and National Dissemination and Support for Community Transformation Grants Federal Agency: U.S. Department of Health and Human Services Passed Through Entity: County of Los Angeles Public Health Federal Award Number: PH-004921 Federal Award Year: July 1, 2023 to June 30, 2024 Compliance Requirement: Allowable Costs/Cost Principles Criteria: Per the Uniform Guidance, 2 CFR §200.430(i), charges to federal awards for salaries and wages must be based on records that accurately reflect the actual work performed. Budget estimates may be used for interim purposes, but must be supported by contemporaneous documentation, reconciled to actual time worked, and adjusted as necessary. Additionally, 2 CFR §200.403(d) requires that costs be allocated to federal awards in accordance with the relative benefits received. The OMB Compliance Supplement (Part 6 – Internal Control and Part 3 – Compliance Requirements) reinforces that payroll and nonpayroll costs must be supported by reliable records and allocated using reasonable and consistent methodologies. Condition: During the testing of payroll costs, we noted that for Federal Assistance Listings 93.959 and 93.531, payroll charges in 4 out of 40 samples and 2 out of 11 samples, respectively, were based on budgeted rates rather than actual hours worked. Supporting documentation (e.g., timesheets or equivalent records) was not used to substantiate the final charges, and adjustments to actual time and effort were not made. For nonpayroll costs, we identified that in 3 out of 40 samples (93.959) and 5 out of 18 samples (93.531), costs were not allocated using a consistent and reasonable basis across all benefiting programs. Instead, the Organization either charged costs by maximizing the allowable budget under each program or have inadvertently used an incorrect basis due to oversight. Cause: The deficiencies occurred because the Organization’s internal controls were not sufficiently designed or implemented to ensure compliance with Uniform Guidance requirements. Specifically, payroll costs were charged to federal awards based on budget estimates rather than actual time and effort supported by records such as timesheets, and nonpayroll costs were either maximized to the budget or were allocated using an incorrect basis. These control gaps in review and documentation resulted in costs being charged to federal programs in a manner inconsistent with Allowable Costs/Cost Principles. Effect: As a result of these deficiencies, federal program expenditures reported to the awarding agency were misstated. Our testing identified questioned costs across both programs, consisting of payroll and nonpayroll overallocations. These represent unallowable costs under Uniform Guidance and may be subject to disallowance. Inaccurate cost allocations increase the risk of noncompliance with federal requirements, could lead to repayment of disallowed costs, and may negatively affect future federal funding decisions. Questioned Costs: Known and extrapolated costs for payroll and nonpayroll costs for Federal Assistance Listings 93.959 and 93.531 are summarized below. These amounts represent the overallocation to the programs, representing unallowable costs under Uniform Guidance. Recommendation: We recommend that the Organization strengthen its internal controls over payroll and nonpayroll cost allocations by requiring time and effort records to support all payroll charges to federal awards, ensuring nonpayroll costs are allocated using documented and equitable methodologies, and performing regular reconciliations of budgeted amounts to actual costs. In addition, staff responsible for preparing and reviewing cost allocations should receive training on Uniform Guidance requirements to ensure accuracy, compliance, and consistency across all federal programs. Views of responsible officials and planned corrective actions: For payroll, procedures will be implemented to ensure that payroll costs allocated to federal grants are supported by actual time. For nonpayroll, procedures will be enhanced to ensure proper allocation of nonpayroll costs to federal grants. Allocations will be reviewed and monitored on a monthly and quarterly basis to prevent misallocation and ensure compliance with the Uniform Guidance. Personnel responsible for implementation: Executive Director Christy Zamani and Beaulieu Accountancy Corporation. Date of implementation: August 5, 2025
Federal Program Information: Assistance Listing Number: 93.959 Federal Program Title: Block Grants for Substance Use Prevention, Treatment, and Recovery Services Federal Agency: U.S. Department of Health and Human Services Passed Through Entity: County of Los Angeles Public Health Federal Award Number: PH-004383-W2, PH-004383-W1 Federal Award Year: July 1, 2023 to June 30, 2024 Compliance Requirement: Allowable Costs/Cost Principles Assistance Listing Number: 93.531 Federal Program Title: Community Transformation Grants and National Dissemination and Support for Community Transformation Grants Federal Agency: U.S. Department of Health and Human Services Passed Through Entity: County of Los Angeles Public Health Federal Award Number: PH-004921 Federal Award Year: July 1, 2023 to June 30, 2024 Compliance Requirement: Allowable Costs/Cost Principles Criteria: Per the Uniform Guidance, 2 CFR §200.430(i), charges to federal awards for salaries and wages must be based on records that accurately reflect the actual work performed. Budget estimates may be used for interim purposes, but must be supported by contemporaneous documentation, reconciled to actual time worked, and adjusted as necessary. Additionally, 2 CFR §200.403(d) requires that costs be allocated to federal awards in accordance with the relative benefits received. The OMB Compliance Supplement (Part 6 – Internal Control and Part 3 – Compliance Requirements) reinforces that payroll and nonpayroll costs must be supported by reliable records and allocated using reasonable and consistent methodologies. Condition: During the testing of payroll costs, we noted that for Federal Assistance Listings 93.959 and 93.531, payroll charges in 4 out of 40 samples and 2 out of 11 samples, respectively, were based on budgeted rates rather than actual hours worked. Supporting documentation (e.g., timesheets or equivalent records) was not used to substantiate the final charges, and adjustments to actual time and effort were not made. For nonpayroll costs, we identified that in 3 out of 40 samples (93.959) and 5 out of 18 samples (93.531), costs were not allocated using a consistent and reasonable basis across all benefiting programs. Instead, the Organization either charged costs by maximizing the allowable budget under each program or have inadvertently used an incorrect basis due to oversight. Cause: The deficiencies occurred because the Organization’s internal controls were not sufficiently designed or implemented to ensure compliance with Uniform Guidance requirements. Specifically, payroll costs were charged to federal awards based on budget estimates rather than actual time and effort supported by records such as timesheets, and nonpayroll costs were either maximized to the budget or were allocated using an incorrect basis. These control gaps in review and documentation resulted in costs being charged to federal programs in a manner inconsistent with Allowable Costs/Cost Principles. Effect: As a result of these deficiencies, federal program expenditures reported to the awarding agency were misstated. Our testing identified questioned costs across both programs, consisting of payroll and nonpayroll overallocations. These represent unallowable costs under Uniform Guidance and may be subject to disallowance. Inaccurate cost allocations increase the risk of noncompliance with federal requirements, could lead to repayment of disallowed costs, and may negatively affect future federal funding decisions. Questioned Costs: Known and extrapolated costs for payroll and nonpayroll costs for Federal Assistance Listings 93.959 and 93.531 are summarized below. These amounts represent the overallocation to the programs, representing unallowable costs under Uniform Guidance. Recommendation: We recommend that the Organization strengthen its internal controls over payroll and nonpayroll cost allocations by requiring time and effort records to support all payroll charges to federal awards, ensuring nonpayroll costs are allocated using documented and equitable methodologies, and performing regular reconciliations of budgeted amounts to actual costs. In addition, staff responsible for preparing and reviewing cost allocations should receive training on Uniform Guidance requirements to ensure accuracy, compliance, and consistency across all federal programs. Views of responsible officials and planned corrective actions: For payroll, procedures will be implemented to ensure that payroll costs allocated to federal grants are supported by actual time. For nonpayroll, procedures will be enhanced to ensure proper allocation of nonpayroll costs to federal grants. Allocations will be reviewed and monitored on a monthly and quarterly basis to prevent misallocation and ensure compliance with the Uniform Guidance. Personnel responsible for implementation: Executive Director Christy Zamani and Beaulieu Accountancy Corporation. Date of implementation: August 5, 2025
Finding 2024-003 Identification of the Federal Program: 16.575 – Crime Victim Assistance Compliance finding over activities allowed or unallowed and allowable costs/cost principles and significant deficiency in internal controls Criteria: According to CFR 200.430(i), charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Condition: The Organization charged payroll expenditures to the grant which were not based on records maintained which reflected the work performed. Cause: Payroll is processed by an external third party, and the system was setup originally to base pay on time budgets rather than actual hours spent. In addition, there were errors in the payroll allocations to various programs Effect: The Organization charged expenditures to the grant which were unallowable. Likely Questioned Costs: $4,059 Repeat Finding: No Recommendations: We recommend the Organization review the payroll allocations in the payroll system to ensure they are supported by actual time spent on the program. In addition, the payroll calculations should be reviewed to ensure the amounts allocated to the various programs are correct. Views of Responsible Officials: The Organization uses a third-party vendor to process payroll. This system does not have the capability to allocate salaried employees based on time spent on the program recorded in the time keeping system. Because of this, the hours worked in each program need to be converted into percentages before payroll is submitted for processing. To ensure accuracy, the Organization will have a second reviewer confirm the manual entry conversion from hours worked to percentage of time worked for salaried employees for the remaining duration of time in a third-party payroll system. Effective January 2026, the Organization will implement a new payroll system that will be processed in-house. This system has improved functionality that will eliminate the need to make this conversion and the potential for errors.
Finding 2024-003 Identification of the Federal Program: 16.575 – Crime Victim Assistance Compliance finding over activities allowed or unallowed and allowable costs/cost principles and significant deficiency in internal controls Criteria: According to CFR 200.430(i), charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Condition: The Organization charged payroll expenditures to the grant which were not based on records maintained which reflected the work performed. Cause: Payroll is processed by an external third party, and the system was setup originally to base pay on time budgets rather than actual hours spent. In addition, there were errors in the payroll allocations to various programs Effect: The Organization charged expenditures to the grant which were unallowable. Likely Questioned Costs: $4,059 Repeat Finding: No Recommendations: We recommend the Organization review the payroll allocations in the payroll system to ensure they are supported by actual time spent on the program. In addition, the payroll calculations should be reviewed to ensure the amounts allocated to the various programs are correct. Views of Responsible Officials: The Organization uses a third-party vendor to process payroll. This system does not have the capability to allocate salaried employees based on time spent on the program recorded in the time keeping system. Because of this, the hours worked in each program need to be converted into percentages before payroll is submitted for processing. To ensure accuracy, the Organization will have a second reviewer confirm the manual entry conversion from hours worked to percentage of time worked for salaried employees for the remaining duration of time in a third-party payroll system. Effective January 2026, the Organization will implement a new payroll system that will be processed in-house. This system has improved functionality that will eliminate the need to make this conversion and the potential for errors.
Finding 2024-003 Identification of the Federal Program: 16.575 – Crime Victim Assistance Compliance finding over activities allowed or unallowed and allowable costs/cost principles and significant deficiency in internal controls Criteria: According to CFR 200.430(i), charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Condition: The Organization charged payroll expenditures to the grant which were not based on records maintained which reflected the work performed. Cause: Payroll is processed by an external third party, and the system was setup originally to base pay on time budgets rather than actual hours spent. In addition, there were errors in the payroll allocations to various programs Effect: The Organization charged expenditures to the grant which were unallowable. Likely Questioned Costs: $4,059 Repeat Finding: No Recommendations: We recommend the Organization review the payroll allocations in the payroll system to ensure they are supported by actual time spent on the program. In addition, the payroll calculations should be reviewed to ensure the amounts allocated to the various programs are correct. Views of Responsible Officials: The Organization uses a third-party vendor to process payroll. This system does not have the capability to allocate salaried employees based on time spent on the program recorded in the time keeping system. Because of this, the hours worked in each program need to be converted into percentages before payroll is submitted for processing. To ensure accuracy, the Organization will have a second reviewer confirm the manual entry conversion from hours worked to percentage of time worked for salaried employees for the remaining duration of time in a third-party payroll system. Effective January 2026, the Organization will implement a new payroll system that will be processed in-house. This system has improved functionality that will eliminate the need to make this conversion and the potential for errors.
Criteria: Federal cost principles, as identified in 2 CFR 200.430, require salaries allocated to more than one federal award activity or cost objective to be supported by records which accurately reflect the distribution of salary or wages. Budget estimates determined before the services are performed do not qualify as support for charges to the federal awards. Personnel activity reports are required when time is allocated between federal awards and cost objectives. Periodic certifications are required when an individual’s salary is charged solely to one federal award or cost objective. Condition: During our testing of compliance with the federal program, we noted that personnel activity reports to document time and effort were not completed for individuals whose salaries were allocated to one single federal award activity and the District’s General Fund. Additionally, individuals charged solely to one federal award activity and cost objective did not complete periodic certifications. Questioned costs: None. Context: Of the District’s payroll charges related to the major programs during fiscal year 2024, we haphazardly selected 31 individual charges from the bi-weekly payroll periods. All employees charged to the grants were selected for testing at least once with the sample representing $91,454 of $547,102 in payroll related charges. During the examination of charges, we noted two instances where an individual who is charged 30% to the Special Education Cluster (IDEA and Preschool) and 70% to the District’s General Fund, did not have a monthly personnel activity report completed and one instance where an individual was charged 100% to the IDEA federal program did not have a semi-annual certification completed. Effect or potential effect: Failure to adequately document personnel activity in accordance with the requirements of the Code of Federal Regulations increases the risk that the District will request reimbursement for expenditures which were not related to employee time spent on the federal awards. Cause: For periodic certifications of time and effort, the District’s grant manager prepared the periodic certification forms for distribution to the employees. The certifications were not returned by the employees in the instances noted above. Recommendation: We recommend whenever an employee’s salary is allocated 100% to a federal award and single cost objective the District prepare, at a minimum, semi-annual certifications of time and effort. Additionally, when an employee’s salary is allocated to multiple federal awards or cost objectives the District should complete, at a minimum, monthly personnel activity reports showing the distribution of the employee’s time and effort. Any changes from the initial budgeted amounts written into the federal awards and actual time and effort as documented in the personnel activity reports must be adjusted such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Views of responsible officials: The Business Office is providing continued training to cost center managers. Throughout the summer we have had the Finance Manager training the Community Education administrative team and responsible grant managers to ensure compliance with the time and effort requirements.
Criteria: Federal cost principles, as identified in 2 CFR 200.430, require salaries allocated to more than one federal award activity or cost objective to be supported by records which accurately reflect the distribution of salary or wages. Budget estimates determined before the services are performed do not qualify as support for charges to the federal awards. Personnel activity reports are required when time is allocated between federal awards and cost objectives. Periodic certifications are required when an individual’s salary is charged solely to one federal award or cost objective. Condition: During our testing of compliance with the federal program, we noted that personnel activity reports to document time and effort were not completed for individuals whose salaries were allocated to one single federal award activity and the District’s General Fund. Additionally, individuals charged solely to one federal award activity and cost objective did not complete periodic certifications. Questioned costs: None. Context: Of the District’s payroll charges related to the major programs during fiscal year 2024, we haphazardly selected 31 individual charges from the bi-weekly payroll periods. All employees charged to the grants were selected for testing at least once with the sample representing $91,454 of $547,102 in payroll related charges. During the examination of charges, we noted two instances where an individual who is charged 30% to the Special Education Cluster (IDEA and Preschool) and 70% to the District’s General Fund, did not have a monthly personnel activity report completed and one instance where an individual was charged 100% to the IDEA federal program did not have a semi-annual certification completed. Effect or potential effect: Failure to adequately document personnel activity in accordance with the requirements of the Code of Federal Regulations increases the risk that the District will request reimbursement for expenditures which were not related to employee time spent on the federal awards. Cause: For periodic certifications of time and effort, the District’s grant manager prepared the periodic certification forms for distribution to the employees. The certifications were not returned by the employees in the instances noted above. Recommendation: We recommend whenever an employee’s salary is allocated 100% to a federal award and single cost objective the District prepare, at a minimum, semi-annual certifications of time and effort. Additionally, when an employee’s salary is allocated to multiple federal awards or cost objectives the District should complete, at a minimum, monthly personnel activity reports showing the distribution of the employee’s time and effort. Any changes from the initial budgeted amounts written into the federal awards and actual time and effort as documented in the personnel activity reports must be adjusted such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Views of responsible officials: The Business Office is providing continued training to cost center managers. Throughout the summer we have had the Finance Manager training the Community Education administrative team and responsible grant managers to ensure compliance with the time and effort requirements.
Criteria: Federal cost principles, as identified in 2 CFR 200.430, require salaries allocated to more than one federal award activity or cost objective to be supported by records which accurately reflect the distribution of salary or wages. Budget estimates determined before the services are performed do not qualify as support for charges to the federal awards. Personnel activity reports are required when time is allocated between federal awards and cost objectives. Periodic certifications are required when an individual’s salary is charged solely to one federal award or cost objective. Condition: During our testing of compliance with the federal program, we noted that personnel activity reports to document time and effort were not completed for individuals whose salaries were allocated to one single federal award activity and the District’s General Fund. Additionally, individuals charged solely to one federal award activity and cost objective did not complete periodic certifications. Questioned costs: None. Context: Of the District’s payroll charges related to the major programs during fiscal year 2024, we haphazardly selected 31 individual charges from the bi-weekly payroll periods. All employees charged to the grants were selected for testing at least once with the sample representing $91,454 of $547,102 in payroll related charges. During the examination of charges, we noted two instances where an individual who is charged 30% to the Special Education Cluster (IDEA and Preschool) and 70% to the District’s General Fund, did not have a monthly personnel activity report completed and one instance where an individual was charged 100% to the IDEA federal program did not have a semi-annual certification completed. Effect or potential effect: Failure to adequately document personnel activity in accordance with the requirements of the Code of Federal Regulations increases the risk that the District will request reimbursement for expenditures which were not related to employee time spent on the federal awards. Cause: For periodic certifications of time and effort, the District’s grant manager prepared the periodic certification forms for distribution to the employees. The certifications were not returned by the employees in the instances noted above. Recommendation: We recommend whenever an employee’s salary is allocated 100% to a federal award and single cost objective the District prepare, at a minimum, semi-annual certifications of time and effort. Additionally, when an employee’s salary is allocated to multiple federal awards or cost objectives the District should complete, at a minimum, monthly personnel activity reports showing the distribution of the employee’s time and effort. Any changes from the initial budgeted amounts written into the federal awards and actual time and effort as documented in the personnel activity reports must be adjusted such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Views of responsible officials: The Business Office is providing continued training to cost center managers. Throughout the summer we have had the Finance Manager training the Community Education administrative team and responsible grant managers to ensure compliance with the time and effort requirements.
Criteria: Federal cost principles, as identified in 2 CFR 200.430, require salaries allocated to more than one federal award activity or cost objective to be supported by records which accurately reflect the distribution of salary or wages. Budget estimates determined before the services are performed do not qualify as support for charges to the federal awards. Personnel activity reports are required when time is allocated between federal awards and cost objectives. Periodic certifications are required when an individual’s salary is charged solely to one federal award or cost objective. Condition: During our testing of compliance with the federal program, we noted that personnel activity reports to document time and effort were not completed for individuals whose salaries were allocated to one single federal award activity and the District’s General Fund. Additionally, individuals charged solely to one federal award activity and cost objective did not complete periodic certifications. Questioned costs: None. Context: Of the District’s payroll charges related to the major programs during fiscal year 2024, we haphazardly selected 31 individual charges from the bi-weekly payroll periods. All employees charged to the grants were selected for testing at least once with the sample representing $91,454 of $547,102 in payroll related charges. During the examination of charges, we noted two instances where an individual who is charged 30% to the Special Education Cluster (IDEA and Preschool) and 70% to the District’s General Fund, did not have a monthly personnel activity report completed and one instance where an individual was charged 100% to the IDEA federal program did not have a semi-annual certification completed. Effect or potential effect: Failure to adequately document personnel activity in accordance with the requirements of the Code of Federal Regulations increases the risk that the District will request reimbursement for expenditures which were not related to employee time spent on the federal awards. Cause: For periodic certifications of time and effort, the District’s grant manager prepared the periodic certification forms for distribution to the employees. The certifications were not returned by the employees in the instances noted above. Recommendation: We recommend whenever an employee’s salary is allocated 100% to a federal award and single cost objective the District prepare, at a minimum, semi-annual certifications of time and effort. Additionally, when an employee’s salary is allocated to multiple federal awards or cost objectives the District should complete, at a minimum, monthly personnel activity reports showing the distribution of the employee’s time and effort. Any changes from the initial budgeted amounts written into the federal awards and actual time and effort as documented in the personnel activity reports must be adjusted such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Views of responsible officials: The Business Office is providing continued training to cost center managers. Throughout the summer we have had the Finance Manager training the Community Education administrative team and responsible grant managers to ensure compliance with the time and effort requirements.
Criteria: Federal cost principles, as identified in 2 CFR 200.430, require salaries allocated to more than one federal award activity or cost objective to be supported by records which accurately reflect the distribution of salary or wages. Budget estimates determined before the services are performed do not qualify as support for charges to the federal awards. Personnel activity reports are required when time is allocated between federal awards and cost objectives. Periodic certifications are required when an individual’s salary is charged solely to one federal award or cost objective. Condition: During our testing of compliance with the federal program, we noted that personnel activity reports to document time and effort were not completed for individuals whose salaries were allocated to one single federal award activity and the District’s General Fund. Additionally, individuals charged solely to one federal award activity and cost objective did not complete periodic certifications. Questioned costs: None. Context: Of the District’s payroll charges related to the major programs during fiscal year 2024, we haphazardly selected 31 individual charges from the bi-weekly payroll periods. All employees charged to the grants were selected for testing at least once with the sample representing $91,454 of $547,102 in payroll related charges. During the examination of charges, we noted two instances where an individual who is charged 30% to the Special Education Cluster (IDEA and Preschool) and 70% to the District’s General Fund, did not have a monthly personnel activity report completed and one instance where an individual was charged 100% to the IDEA federal program did not have a semi-annual certification completed. Effect or potential effect: Failure to adequately document personnel activity in accordance with the requirements of the Code of Federal Regulations increases the risk that the District will request reimbursement for expenditures which were not related to employee time spent on the federal awards. Cause: For periodic certifications of time and effort, the District’s grant manager prepared the periodic certification forms for distribution to the employees. The certifications were not returned by the employees in the instances noted above. Recommendation: We recommend whenever an employee’s salary is allocated 100% to a federal award and single cost objective the District prepare, at a minimum, semi-annual certifications of time and effort. Additionally, when an employee’s salary is allocated to multiple federal awards or cost objectives the District should complete, at a minimum, monthly personnel activity reports showing the distribution of the employee’s time and effort. Any changes from the initial budgeted amounts written into the federal awards and actual time and effort as documented in the personnel activity reports must be adjusted such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Views of responsible officials: The Business Office is providing continued training to cost center managers. Throughout the summer we have had the Finance Manager training the Community Education administrative team and responsible grant managers to ensure compliance with the time and effort requirements.
Type of Finding: Significant Internal Control over Compliance Compliance Requirement: Allowable Costs Criteria: The program requires the Center to request actual time worked by qualified employees when requesting reimbursement of funds from the City of San Antonio, as per 2 CFR §200.430(g)(vii). Condition: It was noted the supporting documentation submitted for reimbursement was calculated using budgeted percentages of wages for qualified employees instead of actual time worked. Cause: No procedures are in place to review the supporting documentation submitted for reimbursement was for actual time worked by qualified employees. Effect: Not using actual costs incurred when requesting reimbursement under this program can lead to reimbursement overstatements and non-compliance with the program. Recommendation: We recommend the Center report the reimbursement overstatement to City of San Antonio and correct the error. We recommend the Center develop procedures to review that supporting documentation submitted for reimbursement was for actual time worked. This review should be performed by personnel familiar with the program requirements. Views of Responsible Officials: Management agrees with the finding and will work with the City of San Antonio to correct the issue, and develop review procedures to respond to the finding.
Type of Finding: Significant Internal Control over Compliance Compliance Requirement: Allowable Costs Criteria: The program requires the Center to request actual time worked by qualified employees when requesting reimbursement of funds from the City of San Antonio, as per 2 CFR §200.430(g)(vii). Condition: It was noted the supporting documentation submitted for reimbursement was calculated using budgeted percentages of wages for qualified employees instead of actual time worked. Cause: No procedures are in place to review the supporting documentation submitted for reimbursement was for actual time worked by qualified employees. Effect: Not using actual costs incurred when requesting reimbursement under this program can lead to reimbursement overstatements and non-compliance with the program. Recommendation: We recommend the Center report the reimbursement overstatement to City of San Antonio and correct the error. We recommend the Center develop procedures to review that supporting documentation submitted for reimbursement was for actual time worked. This review should be performed by personnel familiar with the program requirements. Views of Responsible Officials: Management agrees with the finding and will work with the City of San Antonio to correct the issue, and develop review procedures to respond to the finding.
2024-003 Lack of Documentation to Support Distribution of Wages (Material Weakness) Federal Agency: Department of Education Pass-through Agency: New Hampshire Department of Education Cluster/Program: Special Education Cluster Assistance Listing Number(s): 84.027, 84.173, 84.027X, 84.173X Passed-through Identification: 20221035, 20221036, 20230212, 2024188, 20240189, 20240190, 20240191, 20240199, 20240308 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Federal regulations 2 CFR 200.303 states, the School Administrative Unit, as a recipient of Federal funds, must establish and maintain effective internal controls 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. In addition, under 2 CFR 200.430, it states that charges to the federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must (1) be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, (2) be incorporated into the official records of the non-Federal entity, (3) reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities, and (4) 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 ward or a federal award and non-Federal award. Condition: During current year testing, it was noted that the School Administrative Unit did not maintain semi-annual certifications for employees whose salaries were charged in whole or in part to federal programs for the second half of the fiscal year. Cause: The absence of certifications appears to be the result of oversight in the School Administrative Unit’s year-end grant compliance procedures. Specifically, management did not have an established monitoring process to ensure that semi-annual certifications were completed and retained for the full fiscal year. Effect: Without proper semi-annual certifications, the School Administrative Unit cannot fully demonstrate that salaries charged to federal programs were based on actual work performed for those programs. This creates the risk of questioned costs under the Uniform Guidance and may jeopardize the allowability of a portion of payroll expenditures charged to federal awards. Questioned Costs: $355,027 Identification as Repeat Finding: As identified in Schedule III, Summary Schedule of Prior Audit Findings, this is a repeat of finding 2023-002. Recommendation: We recommend the School Administrative Unit strengthen its grant compliance procedures by implementing a process to ensure that all required semi-annual certifications are completed timely and retained for each reporting period. This may include assigning responsibility to a specific individual for collecting certifications, establishing reminders at fiscal mid-year and year-end, and periodically reviewing files to confirm compliance. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.
Finding 2024-003: Improve Controls and Document Retention Over Allowable Costs Federal Program Information Federal Agency: Department of Education Award Name: Special Education Cluster Assistance Listing Number: 84.027 and 84.173 Award Year: 2024 Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Type of Finding Compliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement: Uniform Guidance section 2 CFR § 200.430(g) requires non-Federal entities to maintain records that accurately reflect the work performed by employees whose salaries are charged, in whole or in part, to Federal awards. For employees working on a single Federal program, semi-annual certifications are required to document time and effort. Condition and Context: During testing of 40 payroll transactions for employees charged to the Special Education program, the City was unable to provide semi-annual certifications supporting that salaries and wages were properly allocated to the grant. Cause: The City did not have adequate procedures in place to ensure that required time and effort certifications were retained and readily available for payroll charged to Federal awards. Effect or Potential Effect: Failure to maintain required time and effort documentation resulted in the questioned costs documented below. Questioned costs are reported as follows: AL Number(s) Name of Federal Program or Cluster Questioned Costs 84.027 and 84.173 Special Education Cluster $2,572,675 Recommendation: We recommend the City establish and implement procedures to ensure that semiannual certifications are completed, maintained, and reviewed for all personnel whose salaries are charged to Federal awards. Views of Responsible Officials: See corrective action plan.
2024-001 Payroll Allocations Federal Program - U.S. Department of Education – Education Stabilization Fund (ALN 84.425D) Federal Award Number and Year - S425E210046 – FY24 Criteria - Per 2 CFR 200.430, charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed, are supported by a system of internal control, and must reasonably reflect the total activity for which the employee is compensated. Allocations must be made based on actual, not budgeted, time unless subsequently adjusted. Condition - During testing of payroll expenses charged to the ESSER grant, we identified instances where employee time reporting did not agree to the payroll costs allocated and charged to ESSER funding. In 2 out of 25 payroll transactions tested, totaling $6,286 in ESSER payroll charges, employee time reporting did not agree to the amount charged. Cause - The payroll allocation worksheet used to create the postings in the accounting system for payroll transactions was not updated for changes in employee responsibilities. Effect - The Organization charged payroll costs to the ESSER grant for time and effort not spent on the grant initiatives. Questioned Costs - $6,286 Context - Of a sample of 25 payroll transactions tested, 2 included variances between employee time reporting and payroll postings. The total ESSER payroll tested was $61,897, with total ESSER payroll expenditures of approximately $873,128 during the fiscal year. Identification as a Repeat Finding - No, this is a new finding in FY24. Recommendation - We recommend the Organization update the payroll allocation worksheet for changes in employee time and effort reporting on a regular basis with a frequency no less than quarterly. Payroll allocations to federal programs should be based on actual time worked on the program and time and effort reporting should agree to the amount charged. Views of Responsible Officials - we agree with the finding and determined it was due to an oversight by the employee on their time and effort reporting to not reflect an updated allocation based on a review of the job description and work completed by management. All work items performed by the employee would have been eligible and allowable under the grant contract.
Agency: U.S. Department of Health and Human Services Federal Assistance Listing Number: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance. 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 Organization did not maintain documentation evidencing a hindsight review of employee working hours to verify alignment between actual hours worked and budgeted hours. This oversight was noted in instances where payroll costs for individual employees were allocated across multiple federal programs. While a time and effort certification 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 certification 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 Organization has not established or enforced formal policies and procedures requiring the documentation of time and effort for employees. 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 Organization 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 federal programs. 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.
Activities Allowed or Unallowed and Allowable Costs/Cost Principles – Material Weakness in Internal Controls over Compliance and Instance of Noncompliance Department of Education Federal Assistance Listing Number: 84.031 Federal Program Name: Higher Education Institutional Aid Federal Award Number: P031S210057, P031C210038 Award Year: 2023-24, 2022-23, 2021-22 Criteria – Compensation costs are allowable to the extent they satisfy requirements of 2 CFR section 200.430, and the total compensation for individual employees is determined and supported as provided in 2 CFR section 200.430(i), including charges to Federal awards for salaries and wages be based on records that accurately reflect the work performed. Condition/context – A sample of 13 employees out of a population of 24 employees whose compensation was charged to the awards was selected. Of the 13 samples selected we found 5 employees who either had no records to support the actual allocation of time that was charged to each award or the amount allocated to the award did not agree to the time and effort reporting. The personnel action form that is completed upon hire indicated the allocation of time worked in some instances, however in accordance with 2 CFR section 200.430 (i)(1)(viii) estimates determined before the services are performed do not qualify as support for charges to Federal awards. Our sample was not, and was not intended to be, statistically valid. Questioned costs – Undeterminable Cause/effect – The University does not have the proper controls in place to ensure time and effort reporting is completed or completed accurately. The lack of records supporting the actual allocation of time charged increases the risk of unallowable compensation costs being charged to the federal award. Repeat finding – Yes, 2023-002 Recommendation – We recommend the University implement an internal control policy that requires employees whose compensation is charged to a federal award complete time and effort reporting to accurately reflect the work performed on each federal award and ensure supporting documentation is maintained for those who do charge time and agrees to amount allocated to the award. Views of responsible officials and planned corrective actions – Heritage implemented a new system, however Heritage continues to encounter mistakes on correctly completing the time & efforts due to the differences in length of faculty contracts. Even though DOE noted that “this finding resolved and closed.” Heritage continues to work on the process to improve with further training.
Allowed or Unallowed and Allowable Costs/Cost Principles – Material Weakness in Internal Controls over Compliance and Instance of Noncompliance Department of Education Federal Assistance Listing Number: 84.184 Federal Program Name: Mental Health Service Professional Demonstration Grant Program Federal Award Number: S184X230057 Award Year: 2023-24 Criteria – Compensation costs are allowable to the extent they satisfy requirements of 2 CFR section 200.430, and the total compensation for individual employees is determined and supported as provided in 2 CFR section 200.430(i), including charges to Federal awards for salaries and wages be based on records that accurately reflect the work performed. Condition/context – A sample of 8 employees out of a population of 14 employees whose compensation was charged to the awards was selected. Of the 8 samples selected we found 7 employees who either had no records to support the actual allocation of time that was charged to each award or the amount allocated to the award did not agree to the time and effort reporting. The personnel action form that is completed upon hire indicated the allocation of time worked in some instances, however in accordance with 2 CFR section 200.430 (i)(1)(viii) estimates determined before the services are performed do not qualify as support for charges to Federal awards. Our sample was not, and was not intended to be, statistically valid. Questioned costs – Undeterminable Cause/effect – The University does not have the proper controls in place to ensure time and effort reporting is completed or completed accurately. The lack of records supporting the actual allocation of time charged increases the risk of unallowable compensation costs being charged to the federal award. Repeat finding – No Recommendation – We recommend the University implement an internal control policy that requires employees whose compensation is charged to a federal award complete time and effort reporting to accurately reflect the work performed on each federal award and ensure supporting documentation is maintained for those who do charge time and agrees to amount allocated to the award. Views of responsible officials and planned corrective actions – Heritage implemented a new system, however Heritage continues to encounter mistakes on correctly completing the time & efforts due to the differences in length of faculty contracts. Heritage continues to work on the process to improve with further training.
Activities Allowed or Unallowed and Allowable Costs/Cost Principles – Material Weakness in Internal Controls over Compliance and Instance of Noncompliance National Science Foundation Federal Assistance Listing Number: Various Federal Program Name: Research and Development Cluster Federal Award Number: Various Award Year: 2023-24 Criteria – Compensation costs are allowable to the extent they satisfy requirements of 2 CFR section 200.430, and the total compensation for individual employees is determined and supported as provided in 2 CFR section 200.430(i), including charges to Federal awards for salaries and wages be based on records that accurately reflect the work performed. Condition/context – A sample of 6 employees out of a population of 18 employees whose compensation was charged to the awards was selected. Of the 6 samples selected we found 4 employees who either had no records to support the actual allocation of time that was charged to each award or the amount allocated to the award did not agree to the time and effort reporting. The personnel action form that is completed upon hire indicated the allocation of time worked in some instances, however in accordance with 2 CFR section 200.430 (i)(1)(viii) estimates determined before the services are performed do not qualify as support for charges to Federal awards. Our sample was not, and was not intended to be, statistically valid. Questioned costs – Undeterminable Cause/effect – The University does not have the proper controls in place to ensure time and effort reporting is completed or completed accurately. The lack of records supporting the actual allocation of time charged increases the risk of unallowable compensation costs being charged to the federal award. Repeat finding – No Recommendation – We recommend the University implement an internal control policy that requires employees whose compensation is charged to a federal award complete time and effort reporting to accurately reflect the work performed on each federal award and ensure supporting documentation is maintained for those who do charge time and agrees to amount allocated to the award. Views of responsible officials and planned corrective actions – Heritage implemented a new system, however Heritage continues to encounter mistakes on correctly completing the time & efforts due to the differences in length of faculty contracts. Heritage continues to work on the process to improve with further training.
2 CFR § 3474.1 gives regulatory effect to the Office of Management Budget guidance in 2 CFR § 200 for the Department of Education. 2 CFR § 200 Subpart E which states, in part, costs must be adequately documented in order to be considered allowable. 2 CFR § 200.430(g)(1)(i) states, in part, charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. The Ohio Department of Education and Workforce’s Grants Manual states, in part, semi-annual certifications are allowed when an employee’s compensation is funded by only one federal grant and works solely on a single cost objective. An employee funded by a federal grant and the general fund would fall under this category. The Ohio Department of Education and Workforce’s Grants Management Guidance 2014-002 states, in part, employees who meet [the criteria to use semi-annual certifications] are not required to maintain time-and-effort records if their job description clearly shows the employee is assigned 100% to the program or single cost objective. Each employee must certify in writing, at least semi-annually, that he/she worked solely on the program or single cost objective for the period covered by the certification. The certification is signed by the employee or by the supervisor having first-hand knowledge. Charges to the grant must be supported by these semi-annual certifications. The semi-annual certification is executed after the work has been completed, and not before. Due to insufficient controls over records management, the District did not maintain semi-annual certifications, or other time and effort documentation, for employees paid from the Special Education Cluster. As a result, $170,293 of payroll and benefits charged to the Special Education Cluster were not supported by records that accurately reflect the work performed and are questioned costs under 2 CFR § 200.516. Lack of controls over records management could lead to the District not being able to support charges against federal programs and potentially losing funding. The District should ensure semi-annual certifications are accurately and timely completed and subsequently retained to support payroll and benefits charged to the program. This documentation should be used to determine the allocation of salary among the various programs, grants, activities, etc. We further recommend the District’s management review the requirements of the Uniform Guidance to determine the documentation needed and other requirements related to the allowability of costs to Federal awards to prevent such noncompliance in the future.
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (Continued) Compliance and Internal Control over Compliance Finding Inaccurate Payroll Charges Due to Timesheet Discrepancies (Significant Deficiency) AL Number and Title: 84.362A - Native Hawaiian Education Program Award Number: S362A200024-22 Award Period: October 1, 2022 - September 30, 2024 Federal Agency: Department of Education Criteria: Under 2 CFR § 200.430(g)(1)(i), charges to federal awards for salaries and wages must be based on records that accurately reflect work performed and must be supported by a system of internal controls that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: During our testing of compliance and internal controls over compliance for Activities Allowed or Unallowed and Allowable Costs/Cost Principles, we selected a haphazard sample of 20 payroll disbursements. We noted discrepancies between employee timesheets and corresponding payroll registers for two disbursements, as follows: • For the pay period ending September 2, 2023, the employee’s approved timesheet indicated 44 hours, while the payroll register indicated 45 hours charged to the program. • For the pay period ending December 23, 2023, the employee’s approved timesheet indicated 42.62 hours, while the payroll register indicated 54.54 hours charged to the program. Cause: The discrepancies between the timesheet and payroll register hours appear to have resulted from manual data entry errors during payroll processing. Effect: The lack of adequate review procedures increases the risk that payroll charges to the program may not be based on accurate and approved time documentation. Although the extrapolated error identified during testing was below the $25,000 threshold for reporting questioned costs under 2 CFR §200.516(a)(3), the control deficiency represents a significant deficiency in internal control over compliance. Repeat Finding? No Recommendation: We recommend that the Organization implement a review and reconciliation process to ensure that hours recorded in payroll registers agree to approved timesheets before payroll is processed and charges are allocated to federal programs. Views of Responsible Officials and Planned Corrective Action: Mana Maoli agrees with the finding and the recommendation. See Part V, Corrective Action Plan.
Finding: 2024-001 Time/Salary Allocations (Significant Deficiency) Information on the Federal Programs: ALN #10.937 Partnerships for Climate-Smart Commodities 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. 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 CIF’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. Cause: CIF 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 this program under audit, we identified $466,789 in questioned costs, representing the total amount of unsupported salary charges to this program. Such deficiencies could also impair the Organization's eligibility for future Federal funding.Questioned Costs: $466,789 (all salaries and benefits changed to ALN #10.937) 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 CIF 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 CIF’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, CIF will significantly reduce the risk of questioned costs, improve compliance with Federal grant requirements, and strengthen the reliability of its financial reporting.
2024-008: Payroll Costs Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Section 8 Choice Housing Vouchers Assistance Listing Number: 14.871 Federal Award Identification Number and Year: CA103AF0154-0160, CA103AFR323, CA103EH0005-0006, CA103VO0201-0206, CA103VO0208-0211, and CA103VOPR23; All 2024 Award Period: July 1, 2023 – June 30, 2024 Compliance Requirement Affected: AB Activities Allowed /Allowable Costs Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matter Criteria or Specific Requirement: 2 CFR § 200.430: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: The City did not maintain supporting time and effort documentation for certain employees who partially charged their time to the program. The City used a budgeted payroll allocation to charge employee amounts to the program and did not true-up the budgeted payroll allocation to actual time and effort. Questioned Costs: Costs not supported by time and effort documentation totaled $32,257 for the year. Context: 5 of the 20 payroll transactions tested were not supported by time and effort documentation. Due to system limitations, the City could not produce supervisor timesheet approvals that occurred through the electronic workflow process in the City’s financial system for 7 of the 20 payroll transactions. Total payroll costs charged to this grant program for the year were $516,331. Cause: City used budgeted percentages to determine the allocation of payroll costs for certain employees who provided services to the grant on a part-time basis. The City did not true-up the budgeted amounts to actuals as part of their year-end closing process. In addition, due to system limitations, the City’s ERP system was unable to generate a report evidencing the electronic approval of specific time sheets by the employee’s supervisor. Effect: Unsupported payroll charges for time and effort pertaining to grant programs may be disallowed by the grantor. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the City review and update internal controls to ensure that supporting documentation for allowable time charges to grant programs is properly maintained. Views of Responsible Officials and Corrective Action: Management agrees with this finding. Staff has updated timekeeping for individuals charging partial time to the Housing Section 8 program to track actual hours spent rather than through budget allocation. Staff has in addition identified a method by which the City can produce supervisor approval documentation through the financial system’s electronic workflow.
FA 2024-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Number and Title: 84.010 – Title I Grants to Local Educational Agencies Federal Award Numbers: S010A220010 (Year: 2023), S010A230010 (Year: 2024) Questioned Costs: $9,307.29 Repeat of Prior Year Findings: FA 2023-001, FA 2022-001 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it related to the Title I Grants to Local Educational Agencies program. Background: The Title I Grants to Local Educational Agencies (Title I) program was authorized under the Elementary and Secondary Education Act of 1965 to help local educational agencies (LEAs) improve teaching and learning in high-poverty schools in particular for children failing or most at-risk of failing, to meet challenging State academic standards. LEAs may operate targeted assistance programs in which children who are failing or most at-risk of failing may be served or schoolwide programs in which all children in eligible schools may be served. Title I funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. Title I funds totaling $812,681 were expended and reported on the Talbot County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non- Federal entity… (g) Be adequately documented…” Furthermore, provisions included in the Uniform Guidance, Section 200.430 – Compensation-Personal Services prescribe standards for documentation of personnel expenses and state, in part, that “(a) … Costs for compensation are allowable to the extent that they satisfy… specific requirements…, and that the total compensation for individual employees: (1) is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i)…, [as follows:] (i) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity…” Condition: All journal entries and general ledger adjustments that impacted Title I program expenditures were selected for testing. For six of the 14 items tested, appropriate evidence of review and approval was not maintained. Additionally, a sample of nine employees was randomly selected for testing using a non-statistical sampling approach. Personal services expenditures for these employees were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were noted: • For three employees, supporting documentation was not maintained for additional payments totaling $400.00. • Timesheets to support additional payments totaling $950.00 were not approved for three employees. • One employee was underpaid by $100.00 per review of supporting documentation associated with additional pay amounts. • For one employee, the amount paid did not agree to the contract provided and resulted in an overpayment of $8,907.29. Questioned Costs: Upon testing a sample of $43,178.26 in personal services expenditures, known questioned costs of $9,307.29 were identified for expenditures not supported by adequate documentation. Using the total personal services expenditures population of $381,740.79 (excluding benefits payments), we project the likely questioned costs to be approximately $82,286.14. Cause: In discussing this deficiency with the School District, they believe that these issues are primarily due to improper documentation retention. Effect: The School District is not in compliance with the Uniform Guidance or ED guidance related to the Title I program. Failure to ensure that documentation exists to support the allowability of payments from the Title I fund may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to Title I program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are supported by appropriate documentation. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District's purchasing and employee compensation policies and procedures. Views of Responsible Officials: We concur with this finding.
FA 2024-002 Improve Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425W – American Rescue Plan Elementary and Secondary School Emergency Relief Fund – Homeless Children and Youth Federal Award Numbers: S425D210012 (Year: 2021), S425U210012 (Year: 2021), S425W210011 (Year: 2021) Questioned Costs: $8,763.69 Repeat of Prior Year Findings: FA 2023-002, FA 2022-002 Description: A review of expenditures charged to the Elementary and Secondary School Emergency Relief Fund program revealed that the School District’s internal control procedures were not operating to ensure that expenditures were appropriately documented to support allowability. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to the coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $1,581,012 were expended and reported on the Talbot County School District’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” Furthermore, provisions included in the Uniform Guidance, Section 200.430 – Compensation-Personal Services prescribe standards for documentation of personnel expenses and state, in part, that “(a) …Costs for compensation are allowable to the extent that they satisfy… specific requirements…, and that the total compensation for individual employees: (1) is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i)…, [as follows:] (i) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity…” Condition: A sample of 16 nonpersonal services expenditures was randomly selected for testing using a nonstatistical sampling approach. The expenditures were reviewed to determine if internal controls were implemented and applicable compliance requirements met. The following deficiencies were noted: • For three expenditures, evidence of review and approval was not reflected within the voucher package. • For one expenditure, unallowable costs totaling $14.35 were identified. All journal entries and general ledger adjustments impacting program expenditures were selected for testing. The following deficiencies were noted: • For five of the 13 items tested, appropriate evidence of review and approval was not maintained. • Sufficient supporting documentation was not provided for four journal entries posted to reverse expenditure activity. • For two journal entries used to record expenditures totaling $4,263.19 in the ESSER fund, it was determined that the charges recorded were not allowable and were not approved on the GaDOE consolidated application. Additionally, a sample of 23 employees was randomly selected for testing using a non-statistical sampling approach. Personal services expenditures for these employees were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements met. The following deficiencies were noted: • For four employees, supporting documentation was not maintained for additional payments totaling $3,560.05. • For one employee, supporting documentation was not maintained for a pay adjustment resulting in a decrease of $500.00. • For three employees, the amount paid did not agree to board-approved salary scales and resulted in underpayments totaling $1,450.81 for two employees and an overpayment of $926.10 for one employee. Questioned Costs: Upon testing $64,812.64 of nonpersonal services expenditures, known questioned costs of $14.35 were identified for expenditures not supported by adequate documentation. Using the total nonpersonal services expenditures population of $560,743.52, we project the likely questioned costs to be approximately $124.15. In addition, upon testing a sample of $176,911.22 in personal services expenditures, known questioned costs of $4,486.15 were identified for overpayments and expenditures not supported by adequate documentation. Using the total personal services expenditures population of $873,826.11 (excluding benefits payments), we project the likely questioned costs to be approximately $22,158.66. Further, known questioned costs of $4,263.19 were identified for expenditures not supported by adequate journal entry documentation and were not tested as part of a sample; therefore, the known and likely questioned costs identified for unallowable payments throughout the expenditure testing totaled $8,763.69 and $26,546.00, respectively. Cause: In discussing these deficiencies with the School District, they believe these issues are due to improper documentation retention and the need for updated policies and procedures. Effect: The School District is not in compliance with the Uniform Guidance or ED guidance related to the ESSER program. Failure to ensure that documentation exists to support the allowability of payments from the ESSER fund may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures are supported by appropriate documentation. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District’s purchasing and employee compensation policies and procedures. Views of Responsible Officials: We concur with this finding.
FINDING 2024-011 Subject: Title I Grants to Local Educational Agencies - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-010. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls to ensure that proper documentation was retained for audit. A sample of 60 transactions charged to the Title I grant during the audit period was selected for testing. The following errors were noted: • A total of 29 transactions, totaling $13,621, were fringe benefit claims; however, the supporting documentation provided did not include details to identify the employees for which the benefit was paid. As a result, we were unable to determine if the payments were on behalf of allowable staff related to the Title I program. • The School Corporation was unable to provide supporting documentation for 2 transactions totaling $551. As such, these transactions were unable to be verified as allowable activities or costs for the Title I program. The errors noted above were considered questioned costs. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 39 NORTH LAWRENCE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for the Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE's definition of IBS); . . . (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. . . ." Cause Due to turnover of staffing in the School Corporation's administrative office, the School Corporation's management had not established an effective system of internal controls that would have ensured compliance, or that supporting documentation would have been maintained and made available for audit, related to the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. INDIANA STATE BOARD OF ACCOUNTS 40 NORTH LAWRENCE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without a proper system of internal controls in place that operated effectively, the School Corporation did not retain and provide appropriate supporting documentation. This prevented the determination of the School Corporation's compliance with the compliance requirements listed above. Questioned Costs We identified $14,172 in known questioned costs as noted above in the Condition and Context. Recommendation We recommended that the School Corporation's management establish an effective system of internal controls to ensure documentation will be maintained and made available for audit as related to the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Criteria: 2 CFR 200.430 Compensation – personal services. (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. 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; (v) Comply with the established accounting policies and procedures of the recipient or subrecipient Condition: • Timesheets were not submitted for 2 out of 18 of the items selected for testing. • 15 out of 18 timesheets were not approved. Cause: • Written policies and procedures outlined in the entity’s employee handbook were not followed. • Management did not ensure proper approvals for timesheets. Effect: • Time incorrectly charged to federal award programs. • Possible reduction of future funding due to noncompliance with federal award program requirements. Questioned Costs: N/A Repeat Finding: No Recommendation: We recommend that the WIB review its timesheet policy to ensure it aligns with federal award requirements, is communicated to employees, and provide necessary training. We also recommend management ensure that a process is in place for proper timesheet approvals.
2024-004 Federal Agencies: U.S. Department of Agriculture Federal Program Names: The Child Nutrition Cluster: National School Lunch Program Summer Food Service Program Child and Adult Care Food Program Assistance Listing Numbers: 10.555 10.559 10.558 Pass-Through Agency: Commonwealth of Pennsylvania, Department of Education Pass-Through Number: 359-46-477-8 Award Period: July 1, 2023 through June 30, 2024 Type of Finding: • Material Weakness in Internal Control over Compliance Criteria: Per 2 CFR 200.430 (“Compensation—personal services”), compensation charged to federal awards must be accurately documented, supported by appropriate records, and approved in accordance with established personnel policies. Additionally, federal program agreements—including the Commonwealth of Pennsylvania’s SFSP contract—require that any additional employee compensation charged to the award must be authorized, supported by documentation, and allowability must be verifiable. Internal control requirements under 2 CFR 200.303 mandate entities to establish and maintain effective controls over payroll processing, including documented approval of pay rate changes and personnel actions. Condition: As part of our audit procedures, we selected a sample of 40 payroll transactions for review. This process included examination of employee human resource files (such as signed W-4 and I-9 forms), management-approved pay rates, time sheets with supervisory sign-off, and corresponding payroll reports. We recalculated total hours per timesheet using the employees' pay rates and compared these figures to the relevant payroll reports. During our review, we observed that two employees received additional compensation ranging from $25 to $75 for undertaking extra responsibilities related to the administration of the CBS Food Program’s Summer Food Service Program by the former Chief Executive Officer. Management was unable to provide supporting documentation evidencing approval by the former Chief Executive Officer or confirmation from the Commonwealth of Pennsylvania, Department of Education, indicating that such additional compensation complied with the contractual agreement governing the Summer Food Service Program. Additionally, of the 40 payroll transactions sampled, we noted one employee’s required payroll change documentation (e.g., an approved payroll change form) was not present in their personnel file. Questioned Costs: None Cause: Management did not consistently maintain or enforce internal controls over payroll documentation, including the requirement for retaining approval of supplemental compensation and payroll change forms. Additionally, there was no centralized electronic document management system to ensure secure and consistent retention of personnel and payroll support. Effect: Without proper documentation and approval, the Organization may have charged unallowable or inadequately supported compensation to the federal program. Payroll changes could be processed without appropriate authorization, increasing the risk of errors or unauthorized transactions. The lack of adequate payroll documentation may lead to questioned costs and reduce the reliability of payroll charges reported to the federal awarding agency. Recommendation: We recommend that management improve internal controls for payroll authorization by making sure every payroll change form and supplemental compensation approval is filled out, approved, and kept on file. Introducing a central electronic document management system will help securely store records, standardize documentation, and create clear audit trails for all payroll and personnel files. Management should also regularly review payroll records to confirm that all necessary paperwork, such as personnel forms, pay rate approvals, and backup for extra pay, is included. Views of Responsible Officers and Corrective Action Plan: Please refer to Community Benefit Solutions dba CBS Food Program’s Corrective Action Plan.
Finding 2024-003 – Lack of Internal Controls over Expenditure Documentation (Material Weakness) Name of Federal Agency: U.S. Environmental Protection Agency Federal Program Name: Nonpoint Source Implementation Grants Assistance Listing Numbers: 66.460 Pass-Through Entity: Oregon Department of Environmental Quality Name of Federal Agency: U.S. Department of Commerce – National Oceanic and Atmospheric Administration Federal Program Name: Pacific Coast Salmon Recovery Program Assistance Listing Numbers: 11.438, 15.015, 15.244 Pass-Through Entity: State of Oregon – Oregon Watershed Enhancement Board (OWEB) Name of Federal Agency: U.S. Department of Agriculture Federal Program Name: National Fish and Wildlife Foundation Assistance Listing Numbers: 10.665 Pass-Through Entity: U.S. Forest Service Name of Federal Agency: U.S. Department of Agriculture Federal Program Name: Natural Resources Conservation ServiceName of Federal Agency: U.S. Department of the Interior Federal Program Name: Wildlife, Sport Fish and Restoration Program Assistance Listing Numbers: 15.244 Pass-Through Entity: Bureau of Land Management Name of Federal Agency: U.S. Department of the Interior Federal Program Name: Secure Rural Schools and community Self-Determination – Watershed and water-quality improvements Assistance Listing Numbers: 15.234 Pass-Through Entity: Bureau of Land Management Criteria: Title 2 CFR §200.303 requires nonfederal entities to establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing the awards in compliance with federal statutes, regulations, and the terms and conditions of the award. Additionally, 2 CFR §200.302(b)(3) requires entities to maintain records that adequately identify the source and application of funds, including supporting documentation for expenditures, and 2 CFR §200.430 requires documentation for compensation for personal services. Condition: During our review of expenditures charged to the federal programs, the entity was unable to provide invoice copies or other sufficient supporting documentation for certain expenditures tested. As a result, we could not verify the allowability, accuracy, and proper approval of these costs in accordance with federal requirements. In addition, records were unavailable for Personnel expenditures that were charged to grant awards, and no support or evidence of time per grant was available. Cause: Partnership for the Umpqua Rivers does not have effective internal controls in place to ensure that invoice documentation and other supporting records are retained, centrally filed, and readily available for audit and monitoring purposes. In addition, management did not perform ongoing monitoring to verify that required documentation was maintained prior to reimbursement or reporting. Effect or Potential Effect: because supporting documentation was not available, expenditures from detail documentation could not be substantiated. This increases the risk that the unallowable, unsupported, or inaccurate costs may be charged to the federal program and reported in the Schedule of Expenditures of Federal Awards (SEFA). Questioned Cost: Yes, $332,409 related to Personnel costs, equipment and other purchases that were not documented with detailed support. Context: During our audit, it was found that the Partnership for the Umpqua Rivers experienced complete staff turnover in Financial Management for the year being audited. No current finance employees had worked for the organization during the year being audited. No financial files for Accounts Payable, invoices, or reporting were available to the current financial staff. Not adequately retaining supporting documents and invoices to support the expenditures of the general ledger and requests for reimbursement for grants, the organization records may be insufficient for testing and review, for internal controls or meeting federal documentation and reporting requirements. Repeat of a Prior-Year Finding: No, Prior- year did not require a Single Audit.Recommendation: Partnership for the Umpqua Rivers should implement policies and procedures requiring invoice copies and supporting documentation to be maintained for all grant expenditures. Management should strengthen record retention practices, provide training to staff on documentation requirements, and implement periodic internal reviews to ensure compliance. District Response: Partnership for the Umpqua Rivers acknowledges the deficiencies. Corrective Action Plan: _____________ (To be completed by Partnership for the Umpqua Rivers) Planned Implementation Date: _________ Responsible Person: Partnership for the Umpqua Rivers Finance Manager
Reference Number: 2024-015 Prior Year Finding: 2023-009 Federal Agency: U.S. Department of the Treasury State Agency: Department of Housing and Community Development Federal Program: COVID-19 – Homeowner Assistance Fund Assistance Listing Number: 21.026 Award Number and Year: 11/1/2021 – 9/30/2026 Compliance Requirement: Allowable Costs/Activities – Time and Effort Reporting Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: 2 CFR Section 200.430 (8)(i) Standards for Documentation of Personnel Expenses states that: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass both federally assisted, and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; (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. Internal Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Department of Housing and Community Development (Department) did not have effective controls in place for monitoring and obtaining adequate support to validate actual payroll expenses charged to the federal program. Context: One of sixty timesheets selected for testing could not be located by the Department and was unavailable for testing. Cause: Controls were not operating effectively to ensure that time and effort reporting was performed and documented in a timely manner in accordance with federal requirements. Effect: Documentation could not be provided for costs charged to the program. Questioned costs: Undetermined. Recommendation: The Department should reevaluate current process, implement proper controls, and perform additional training over time and effort reporting. The Department should not seek federal reimbursement unless they can substantiate that the time and effort was dedicated to the federal program. Documentation should be readily available for audit. Views of responsible officials: Management agrees with the finding.
Audit Finding 2024-005 – Lack of Required Time and Effort Documentation Identification of the Federal Programs: Title I, Part A; Assistance Listing Number 84.010; Year 2024 Education Stabilization Funds; Assistance Listing Number 84.425D, 84.425U, 84.425W; Year 2024 Criteria: Under 2 CFR 200.430(i), 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 controls; • Be incorporated into the official records of the non‑Federal entity; • Reasonably reflect total activity for which the employee is compensated; • Support distribution among specific activities or cost objectives. Commonly accepted forms of support include Personal Activity Reports (PARs), timesheets, or an equivalent system documenting actual time worked. Condition: During our testing of payroll charges for employees whose salaries were allocated to the programs, we noted that the entity did not maintain Personal Activity Reports or other acceptable time‑and‑effort documentation supporting the distribution of time to the federal program. Context: Documentation was not maintained for support of all employees' salaries and wages tested. Cause: The District has had vacancies in certain positions that are key parts of the District's control processes which led to the District not maintaining proper documentation. Effect or Potential Effect: Without adequate time and effort documentation, there is an increased risk that payroll costs charged to the federal award are inaccurate or unallowable. The lack of supporting records may result in questioned costs related to unsupported salary expenditures. Questioned Costs: None Recommendation: We recommend that the entity: • Implement and enforce policies requiring Personal Activity Reports or an equivalent method that meets 2 CFR 200.430. • Train employees and supervisors responsible for documenting and approving time charged to federal programs. • Maintain documentation that accurately reflects actual time worked on federal awards.
Finding 2024-002: Improper Controls over Personnel Expenses Federal Agency: U.S. Department of Treasury Program Name: COVID-19: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Year: June 1, 2023 – May 31, 2024 Program Expenditures: $1,119,206 Questioned Costs: None Criteria: Uniform Grant Guidance (2 CFR 200.430(g)(1)(i)) states charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure personnel activity reports are approved. Condition: A KHSU supervisor did not properly document approval for one employee’s personnel activity reports. Cause: KHSU officials stated that this issue was an isolated incident resulting from an unintentional oversight at multiple levels of approval. While established procedures generally ensure proper documentation of personnel activity reports, in this case, the required documentation was inadvertently missed during the review and approval process. Effect: If employee’s personnel activity reports are not properly reviewed and approved, KHSU could submit unallowable costs for the program. Questioned Costs: None Context: Of the 8 employee personnel activity reports sampled, one report did not contain the proper approval by a KHSU supervisor. Repeat Finding: No. Recommendation: We recommend KHSU strengthen internal controls around the approval of personnel activity reports to confirm that a reasonable person can confirm the control occurred. Views of Responsible Officials: Management agrees with the finding. Please see corrective action plan attached.
Finding 2024-002: Improper Controls over Personnel Expenses Federal Agency: U.S. Department of Treasury Program Name: COVID-19: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Year: June 1, 2023 – May 31, 2024 Program Expenditures: $1,119,206 Questioned Costs: None Criteria: Uniform Grant Guidance (2 CFR 200.430(g)(1)(i)) states charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure personnel activity reports are approved. Condition: A KHSU supervisor did not properly document approval for one employee’s personnel activity reports. Cause: KHSU officials stated that this issue was an isolated incident resulting from an unintentional oversight at multiple levels of approval. While established procedures generally ensure proper documentation of personnel activity reports, in this case, the required documentation was inadvertently missed during the review and approval process. Effect: If employee’s personnel activity reports are not properly reviewed and approved, KHSU could submit unallowable costs for the program. Questioned Costs: None Context: Of the 8 employee personnel activity reports sampled, one report did not contain the proper approval by a KHSU supervisor. Repeat Finding: No. Recommendation: We recommend KHSU strengthen internal controls around the approval of personnel activity reports to confirm that a reasonable person can confirm the control occurred. Views of Responsible Officials: Management agrees with the finding. Please see corrective action plan attached.
#2024-001: Grant Program: Department of Health and Human Services – National Institutes for Health Research and Development Cluster – Cancer Control – Assistance Listing #93.399 – Lack of Required Written Policies Condition: The Consortium does not have written policies and procedures in place as required by 2 CFR § 200.302 and § 200.313. Specifically, the Consortium lacks documented policies for: • The timing of federal cash draws; • The allowability of costs charged to federal awards; and • Documentation of time-and-effort for personal services. Criteria: 2 CFR § 200.302(b)(6)–(7) requires nonfederal entities to have written procedures for (a) cash drawdowns and (b) determining cost allowability. § 200.305 requires written cash-management procedures that minimize the time between draw and disbursement. § 200.430 requires a written policy that is consistently applied to both federal and nonfederal activities for documentation of compensation for personal services. Context: At the time of completion of the audit for the year ended May 31, 2024, the written policies were not in place. Cause: The Consortium has not yet developed or adopted the required written policies due to limited administrative capacity and reliance on informal practices. Effect: The absence of written policies increases the risk of noncompliance with federal requirements, mismanagement of federal funds, and audit findings in future periods. It may also impair the Consortium’s ability to consistently apply federal cost principles and properly safeguard assets. Recommendation: We recommend that the Consortium develop and implement written policies and procedures that comply with the requirements of Uniform Guidance. Management Response: See Corrective Action Plan.
Health Center Program Cluster – Assistance Listing Nos. 93.224 and 93.527 U.S. Department of Health and Human Services Award No. 6 H80CS00751-22-03, April 1, 2023 – March 31, 2024 Community Health Center Program – State Identifying No. 435.151301 Wisconsin Department of Health Agreement No. 435100-G24-3919588107-90, July 1, 2023 – June 30, 2024 Criteria or Specific Requirement – Period of Performance – Federal: 45 CFR 75.309. State: 2 CFR 200.430. Condition – Costs charged to the grant award were incurred prior to the start of the period of performance. Questioned Costs – Federal: $103,466. State: $5,195. Questioned costs were determined by identifying salaries and wages incurred prior to the beginning of the period of performance based on payroll periods and pay dates. Questioned costs by federal or state award identification number are: • Assistance Listing No. 93.527 Award No. 6 H80CS00751 – $103,466 • Agreement No. 435100-G24-3919588107-90 – $5,195 Context – Salaries and wages from the first pay period paid during the period of performance was charged to the federal and state awards. For Award No. 6 H80CS00751 within Health Center Program Cluster (HCP), payroll paid on April 7, 2023, was charged to the federal award, while 100% of payroll costs were incurred as of March 31, 2023. For Agreement No. 435100-G24-3919588107-90 within Wisconsin Department of Health Community Health Center Program (CHCG), payroll paid on June 14, 2023, was charged to the state award, while 50% of payroll costs were incurred as of June 30, 2023. Effect – The Organization charged salaries and wages incurred prior to the beginning of the period of performance in both HCP and CHCG. Cause – Salaries and wages are charged to federal and state awards based on payroll documentation summarized monthly based on pay date rather than accrual-based salary and wage expense. Identification as a repeat finding, if applicable – Not a repeat finding Recommendation – The Organization should implement cut-off procedures to ensure grant expenditures are captured on the accrual-basis consistent with period of performance compliance requirements and generally accepted accounting principles. To more easily accomplish this, the Organization should identify allowable salaries and wages by payroll period rather than from payroll data summarized monthly by pay date. Views of responsible officials and planned corrective actions – Upon identification of costs incurred prior to the beginning of the period of performance, the Organization identified allowable costs incurred within the period of performance and previously charged to program income in order to reallocate grant expenditures without creating other instances of noncompliance (such as cash management). Although the initial support provided to auditors contained instances of expenditures incurred prior to the beginning of the period of performance, expenditure justification has been updated to reflect corrections and all subsequent grant expenditure detail has been reviewed to ensure no recurrence in the subsequent period. The Organization has also reviewed our internal processes for cut-off procedures related to grant expenditures. We will implement additional internal controls at the end of the grant and the beginning of the grant to ensure accuracy of the salaries being posted are in the correct period of performance. We are also working with our accounting software vendor and payroll vendor to automate the allocation of grant salaries based on time and effort of each individual rather than after-the-fact allocations to grants. This will reduce the need to maintain manual spreadsheets to track staff by lining up grant expenditures with pay periods instead of monthly allocations. Further, relevant staff participated in a training focused on CHC grants management matters in December 2024 and will continue to look for learning opportunities to support and challenge compliance matters.
Health Center Program Cluster – Assistance Listing Nos. 93.224 and 93.527 U.S. Department of Health and Human Services Award No. 6 H80CS00751-22-03, April 1, 2023 – March 31, 2024 Community Health Center Program – State Identifying No. 435.151301 Wisconsin Department of Health Agreement No. 435100-G24-3919588107-90, July 1, 2023 – June 30, 2024 Criteria or Specific Requirement – Period of Performance – Federal: 45 CFR 75.309. State: 2 CFR 200.430. Condition – Costs charged to the grant award were incurred prior to the start of the period of performance. Questioned Costs – Federal: $103,466. State: $5,195. Questioned costs were determined by identifying salaries and wages incurred prior to the beginning of the period of performance based on payroll periods and pay dates. Questioned costs by federal or state award identification number are: • Assistance Listing No. 93.527 Award No. 6 H80CS00751 – $103,466 • Agreement No. 435100-G24-3919588107-90 – $5,195 Context – Salaries and wages from the first pay period paid during the period of performance was charged to the federal and state awards. For Award No. 6 H80CS00751 within Health Center Program Cluster (HCP), payroll paid on April 7, 2023, was charged to the federal award, while 100% of payroll costs were incurred as of March 31, 2023. For Agreement No. 435100-G24-3919588107-90 within Wisconsin Department of Health Community Health Center Program (CHCG), payroll paid on June 14, 2023, was charged to the state award, while 50% of payroll costs were incurred as of June 30, 2023. Effect – The Organization charged salaries and wages incurred prior to the beginning of the period of performance in both HCP and CHCG. Cause – Salaries and wages are charged to federal and state awards based on payroll documentation summarized monthly based on pay date rather than accrual-based salary and wage expense. Identification as a repeat finding, if applicable – Not a repeat finding Recommendation – The Organization should implement cut-off procedures to ensure grant expenditures are captured on the accrual-basis consistent with period of performance compliance requirements and generally accepted accounting principles. To more easily accomplish this, the Organization should identify allowable salaries and wages by payroll period rather than from payroll data summarized monthly by pay date. Views of responsible officials and planned corrective actions – Upon identification of costs incurred prior to the beginning of the period of performance, the Organization identified allowable costs incurred within the period of performance and previously charged to program income in order to reallocate grant expenditures without creating other instances of noncompliance (such as cash management). Although the initial support provided to auditors contained instances of expenditures incurred prior to the beginning of the period of performance, expenditure justification has been updated to reflect corrections and all subsequent grant expenditure detail has been reviewed to ensure no recurrence in the subsequent period. The Organization has also reviewed our internal processes for cut-off procedures related to grant expenditures. We will implement additional internal controls at the end of the grant and the beginning of the grant to ensure accuracy of the salaries being posted are in the correct period of performance. We are also working with our accounting software vendor and payroll vendor to automate the allocation of grant salaries based on time and effort of each individual rather than after-the-fact allocations to grants. This will reduce the need to maintain manual spreadsheets to track staff by lining up grant expenditures with pay periods instead of monthly allocations. Further, relevant staff participated in a training focused on CHC grants management matters in December 2024 and will continue to look for learning opportunities to support and challenge compliance matters.
2 CFR §2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR §200.303(a) which states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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). Furthermore, 2 CFR §200.430(i)(1)(i) states "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 controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. The “City of Columbus Fiscal Policies and Procedures for the Administration of HUD Grants Manual” Part II Section C – Standards for Documentation of Personal Services provides the following: All grant funded staff (both city staff and subrecipient staff) will utilize personal activity reports (timesheets). All timesheets will reflect total hours worked, identify the federal grant hours worked, and be signed by either the employee or the supervisor. Furthermore, the City of Columbus Department of Development has established a procedure of timesheet review which requires supervisors review employee timesheets within one week of the pay period end date. This review is evidenced by an electronic signature on the employee-completed timesheet. While the City does have an internal control policy in place in accordance with 2 CFR 430(i)(1)(i), supervisors were not always adhering to the policy which resulted in a deficiency in the application of the control process. Payroll control testing over AL #14.239 Home Investment Partnership Program, it was noted 13 out of the 19 selected worklogs (68%) were not signed by the supervisor within the one-week requirement as required by City policy. Supervisory sign offs occurred between 7 and 102 working days (not including weekends) following the end of the pay period. Failure to follow the established internal control policy and ensuring all time sheets are appropriately approved by a knowledgeable supervisor, within one week of the pay period end date, could result in unallowable costs being allocated to a federal program and could ultimately result in noncompliance and/or a questioned cost. The City should review established policies and procedures with supervisory personnel and evaluate if additional control procedures should be in place to ensure all timesheets are appropriately reviewed timely prior to allocation to a federal program.