2025-002. Payroll (Allowable Costs/Cost Principles) United States Department of Education, Passed-through New York State Department of Education: Education Stabilization Funds COVID 19: American Rescue Plan – Elementary and Secondary School Emergency Relief ALN: 84.425U Criteria: Salaries and wages charged to Federal awards must be supported by documentation prescribed by the Uniform Guidance at Subpart I, 2 CFR §200.430, which requires that records accurately reflect the approved and authorized work performed, and support the distribution of compensation among activities. Condition: Subpart I, 2 CFR §200.430 of the Uniform Guidance requires that charges to “Federal awards for salaries and wages must be based on records that accurately reflect the work performed.” The documentation should support the distribution of the employee’s compensation among specific activities if the employees work on more than one Federal award, or a Federal award and non-Federal award. The preparation of payroll verification forms, or periodic certifications or the equivalent is the most effective way to comply with this requirement. During the current year, it was noted that in one instance, the District’s payroll verification form was not reviewed or signed by either the supervisor or employee that was charged to the grant in order to comply with Subpart I, 2 CFR §200.430. Cause: Employee payroll verification forms should accurately reflect time and effort, as described in Subpart I, 2 CFR §200.430, to support salaries and other forms of compensation charged to a federal program. During our audit testing, we noted that one of the District’s payroll verification forms was not signed off by either the supervisor or employee. Effect: Payroll verification forms that are not signed or approved could result in compliance risk due to unsupported salaries and wages not being reviewed and charged to Federal awards correctly. Questioned Costs: The dollar amount was undetermined as the payroll verification form was not signed by the supervisor or employee. Context: For Education Stabilization Funds, based on a sample of nineteen (19) payroll transactions, we noted one (1) payroll transaction did not have a payroll verification form that was signed by either the supervisor or employee. Identification of a Repeat Finding: This is not a repeat finding. Recommendation: The District should prepare, maintain, and have the proper employee signoffs and supervisor approvals for the appropriate documentation to support salaries and wages charged to Federal awards in accordance with the requirements of the Uniform Guidance at Subpart I, 2 CFR §200.430. Views of Responsible Officials of Auditee: The District acknowledges the finding and will thoroughly review and maintain the payroll verification forms to ensure each employee’s salary, or other forms of compensation are properly approved and signed off by both the supervisor and employee to comply with Subpart I, 2 CFR §200.430.
2025-003. Payroll and Disbursement (Allowable Costs/Cost Principles) United States Department of Education, Passed-through New York State Department of Education: Special Education Cluster: Special Education Grants to States: IDEA Part B ALN: 84.027 Education Stabilization Funds COVID 19: American Rescue Plan – Elementary and Secondary School Emergency Relief ALN: 84.425U Criteria: Ensure that costs charged to federal awards are allowable, reasonable, and allocable in accordance with terms and conditions of the federal award and the approved grant budget, and maintain a financial management system that provides accurate, current, and complete disclosure of expenditures charged to federal awards prescribed by Subpart E, 2 CFR §200.403 through §200.405 and §200.430, and Subpart D, 2 CFR §200.302. Condition: As required under Subpart E, 2 CFR §200.403 through §200.405 and §200.430, and Subpart D, 2 CFR §200.302, which require a financial management system to provide effective control over accountability for federal funds, and to identify the source and application of funds. During the year, we noted that the District recorded journal entries transferring payroll and disbursement related expenditures from the General Fund to the Special Aid Fund under the Special Education Cluster and Education Stabilization Funds grant codes. These journal entries lacked adequate supporting documentation to demonstrate approvals and if the costs were allowable and allocable to the applicable federal awards. Consequently, we were unable to obtain sufficient appropriate audit evidence to conclude whether the journalized transactions were properly charged to the federal programs in order to comply with Subpart E, 2 CFR §200.403 through §200.405 and §200.430, and Subpart D, 2 CFR §200.302. Cause: All journalized transactions should include adequate supporting documentation to substantiate the transfer of funds, especially when recorded to federal awards, as prescribed in Subpart E, 2 CFR §200.430 and Subpart D, 2 CFR §200.302. During the current year, we noted the District did not consistently retain or attach original source documentation to journal entries reallocating General Fund expenditures to the Special Aid Fund. Additionally, internal controls were not in place to ensure that such journal entries were reviewed to confirm allowability, reasonableness, allocability, and compliance with the approved budgets for the Special Education Cluster and Education Stabilization Funds prior to being posted, as required by Subpart E, 2 CFR §200.403 through §200.405 and §200.430, and Subpart D, 2 CFR §200.302. Effect: Due to the lack of supporting documentation and approvals, there is an increased risk that unallowable or unsupported costs may have been charged to the Special Education Cluster and Education Stabilization Funds and included in reimbursement requests. As a result, the District could be subject to disallowed costs and potential repayment to the grantor agencies, if costs are determined to be unallowable. Questioned Costs: The dollar amount was undetermined at the time of the audit due to insufficient documentation to support the allowability of the journalized expenditures. Context: For the Special Education Cluster and the Education Stabilization Funds, based on a sample of journal entries, we noted instances where supporting documentation was insufficient. For the Special Education Cluster, one (1) of three (3) journal entries lacked adequate documentation for payroll-related transactions, as original timesheets were not available to verify the employee’s work activity or confirm alignment with the grant’s approved budget. Similarly, for the Education Stabilization Funds, two (2) of three (3) journal entries lacked sufficient supporting documentation. The District did not provide time and effort records for payroll-related transactions or supporting invoices for disbursement transactions, limiting the ability to confirm that these costs were properly documented and consistent with grant requirements. Identification of a Repeat Finding: This is not a repeat finding. Recommendation: The District should implement procedures to ensure all journal entries made that reallocate payroll and disbursement expenditures charged to federal grants are supported by complete and adequate documentation and approvals, including time and effort documentation for payroll, and supporting invoices for disbursements as support for the journal entries in accordance with the requirements of Uniform Guidance at Subpart E, 2 CFR §200.403 through §200.405 and §200.430, and Subpart D, 2 CFR §200.302. Views of Responsible Officials of Auditee: The District acknowledged the finding and noted that procedures have been implemented to prevent recurrence. These procedures are intended to ensure all journal entries contain adequate supporting documentation and approvals, including time and effort records for payroll, and supporting invoices for disbursements. Additionally, documentation will be consistently maintained and reviewed for all payroll and disbursement expenditures reallocated through journal entries and charged to federal grants in compliance with Subpart E, 2 CFR §200.403 through §200.405 and §200.430, and Subpart D, 2 CFR §200.302.
2025-012: Strengthen Controls Over Payroll Costs Charged to Federal Grants Applicable to: Department of Energy Assigned Topic: Federal Grants Management Prior Finding Number: N/A Finding Type: Internal Control and Compliance Finding Severity: Material Weakness Financial Statement Finding: No Federal Awards Finding: Yes ALPT - ALN: Abandoned Mine Land Reclamation (AMLR) - 15.252 Federal Award ID (Year): S24AF00004 (2022); S24AF00039 (2023); S24AF00050 (2024) Federal Agency: U.S. Department of the Interior Compliance Requirement: Activities Allowed or Unallowed - 2 CFR § 200.430(g) Known Questioned Costs: $0 The Department of Energy (Energy) does not have sufficient controls to ensure employee compensation (payroll costs) charged to the Abandoned Mine Land Reclamation (AMLR) federal grant program accurately reflects actual work employees perform. Energy allocates and charges payroll costs to the AMLR grant program based on predetermined percentages assigned to each position. Energy’s management establishes these percentages at the beginning of each grant during the budget development process. However, Energy does not perform and document after-the-fact reviews or reconciliations to verify the allocation methodology reasonably reflects employees’ actual activities related to the federal program. Title 2 Code of Federal Regulations (CFR) § 200.430(g)(1) requires management to maintain records supporting charges to federal awards be supported by a system of internal control that provides reasonable assurance the charges are accurate, allowable, and properly allocated. In addition, when payroll costs are charged to a federal award based on budget estimates, 2 CFR § 200.430(g)(1)(vii) requires an entity’s system of internal control to include processes to review after-the-fact interim charges and adjust the final amounts charged, as necessary. Energy has not established formal written policies or procedures governing the allocation of payroll costs it charges to federal programs, nor has it implemented processes to periodically validate whether payroll charges based on management’s budget estimates are consistent with actual work employees perform due to resource restrictions. As a result, management cannot ensure payroll costs it charges to the AMLR federal grant program are accurate, allowable, and properly allocated. Due to the pervasiveness of this condition and the absence of complementary controls, we consider this deficiency to be a material weakness in internal control. Additionally, because payroll costs are approximately 21 percent of Energy’s total expenses charged to the AMLR grant program, this condition represents material noncompliance with the provisions of 2 CFR § 200.430. Because Energy does not maintain sufficient documentation to demonstrate payroll costs it charges to the AMLR program reflect actual work employees perform, we determined that known questioned costs exist related to employee compensation. However, we cannot determine the dollar amount of questioned costs, as Energy allocated payroll charges based on predetermined percentages without after-the-fact validation, which prevents us from quantifying and reporting known questioned costs for this finding. Energy management should allocate the necessary resources to establish and implement written policies and procedures, supported by an adequate system of internal control, to ensure payroll costs it charges to the AMLR program reflect actual work employees perform in compliance with the requirements of 2 CFR § 200.430. Views of Responsible Officials: The views of responsible officials are included in the report related to their organization, which can be found at www.apa.virginia.gov and, in summary, do not express disagreement with the finding.
2025-023: Strengthen Internal Controls over Payroll Processes Applicable to: Department for Aging and Rehabilitative Services Assigned Topic: Federal Grants Management Prior Finding Number: N/A Finding Type: Internal Control and Compliance Finding Severity: Significant Deficiency Financial Statement Finding: No Federal Awards Finding: Yes ALPT - ALN: Social Security Disability Insurance - 96.001 Federal Award ID (Year): 04-2404VADI00 (2024); 04-2504VADI00 (2025) Federal Agency: U.S. Social Security Administration Compliance Requirement: Allowable Costs/Cost Principles - 2 CFR § 200.303(a); 2 CFR 200.430(g)(1)(i) Known Questioned Costs: $0 Aging and Rehabilitative Services’ Finance Division is not maintaining adequate internal control over several of its key payroll processes. During fiscal year 2025, Aging and Rehabilitative Services spent approximately $213 million in federal funds, of which about $85 million (40%) was for personal service expenses. We identified the following specific weaknesses: Aging and Rehabilitative Services’ Finance Division does not have written, agency-specific payroll policies and procedures governing all critical payroll processes, including payroll reconciliations and payroll certifications. The Department of Accounts’ (Accounts) Commonwealth Accounting Policies and Procedures (CAPP) Manual Topic 10305 requires agencies to develop and maintain their own written policies over critical processes, including payroll, rather than relying solely on system guidance or the CAPP Manual. Aging and Rehabilitative Services’ Finance Division was unable to provide documentation supporting the completion and review of payroll (pay period) reconciliations for five out of the five (100%) payroll (pay period) reconciliations selected. CAPP Manual Topic 50905 requires agencies to complete payroll (pay period) reconciliations to ensure payroll transactions are accurate, complete, and properly reviewed. Aging and Rehabilitative Services’ Finance Division relies on the Accounts’ Cardinal Human Capital Management (HCM) materials and CAPP Manual provisions to support its payroll activities. While the use of Accounts’ guidance provides a foundation for internal control, it is not intended to be a substitute for the agency’s own internal policies and procedures. The absence of documented internal policies and procedures limits consistency, accountability, and management oversight and increases the risk that Aging and Rehabilitative Services will not prevent and/or detect errors or discrepancies in a timely manner. Title 2 CFR § 200.303(a) requires that federal grant recipients establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with Federal statutes, regulations, and the terms and conditions of the federal award. Further, 2 CFR 200.430(g)(1)(i) states that charges to federal awards for salaries and wages must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Aging and Rehabilitative Services’ Finance Division experienced staffing shortages during the period under review because of turnover and was unable to devote the resources necessary to establish internal controls over several of its key payroll processes. Aging and Rehabilitative Services’ management should devote the necessary resources to establish and maintain proper internal control over its payroll processes. Views of Responsible Officials: The views of responsible officials are included in the report related to their organization, which can be found at www.apa.virginia.gov and, in summary, do not express disagreement with the finding.
Criteria: 2 CFR, section 200.430 states, in part: (i) 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: (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. 2 CFR, section 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. CSAM Procedure 905 states, in part: Periodic (Semiannual) Certification Employees who work solely on a single federal award or cost objective need only complete a periodic certification. The periodic certification must: Be prepared at least semiannually. Be signed by the employee or the supervisory official having firsthand knowledge of the work performed by the employee. State the employee worked solely on that single federal program or cost objective during the period covered by the certification. Where multiple employees work on the same cost objective, a blanket certification may be used as the documentation for all employees who worked on the cost objective. Personnel Activity Report Except as provided in “Substitute Systems for Time Accounting” … employees who work on multiple activities or cost objectives of which at least one is federal must complete a personnel activity report (PAR) or equivalent documentation. A PAR may be as detailed as a document that identifies the employee’s activity daily by hours, or it may be as simple as a report of the total hours or percentage of hours spent in each categorical program or cost objective. The level of detail can generally be determined by the diversity and variation of the employee’s work activities. The safest approach is to provide more documentation rather than less. Condition: The District has five employees who must complete PARs on a monthly basis. Upon review of the PARs the following deficiencies were noted. PARs were not filled out properly from April 2025 through June 2025, which required amendment. Due to errors on the PARs from April 2025 through June 2025, the Districts year end entries to charge salaries and benefits to Title I were incorrect. Context: Exceptions are recurring among the five employees who are required to fill out PAR forms. Questioned Costs: The net overcharge to Title I, Part A was $29,675 for all five employees. Cause: District personnel do not follow the established procedures as to when and how PAR forms must be prepared. In addition, there is a lack of oversight to ensure that PAR forms are collected after the end of each month, filled out accurately, and signed by the employee as well as their supervisor. Effect: Estimated questioned cost of $29,675 for the 2024-25 fiscal year. Recommendation: The District should provide training to employees regarding how to complete PAR forms and enforce timelines. In conjunction, the District should assign an employee who is responsible for reviewing and ensuring that all PAR forms have been collected and signed by the employee and supervisor. Lastly once it has been verified that the PAR form is complete, a copy should be forwarded to Fiscal Services so that they may ratify the salaries and benefits charged to Title I to reflect the percentage noted on the PAR form. Views of Responsible Officials: The District recognizes the finding and is committed to ensuring that all federal time accounting requirements are properly followed for staff funded through Title I programs. The District understands that accurate and complete Personnel Activity Reports (PARs) are necessary to support appropriate salary and benefit charges to federal resources. To address this, the District will reinforce expectations through additional training and support for employees and supervisors on the correct preparation and monthly submission of PAR forms. The District will also strengthen internal review procedures by assigning responsibility for confirming that PARs are completed accurately, collected on time, and signed by both the employee and the supervising administrator. In addition, the District will ensure PAR documentation is consistently forwarded to Fiscal Services to allow for timely review and necessary adjustments so that payroll expenditures align with the actual percentage of time worked on Title I activities.
Finding Number: 2025-004 Federal Program: Title I Federal Award Identification Number and Year: 2025 Assistance Listing Number (ALN): 84.010A Federal Awarding Agency: U.S. Department of Education Pass-through Entity: Ohio Department of Education and Workforce Compliance Requirements: Allowable Costs/Allowable Activities Repeat Finding: No Significant Deficiency/ Noncompliance – Time & Effort Criteria: 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. Finding Number: 2025-004 (Continued) Significant Deficiency/ Noncompliance – Time & Effort (Continued) Criteria (continued): 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. Condition: We performed a test of controls and compliance over allowable costs/cost principles for payroll expenditures charged during fiscal year 2025. Semi-annual certifications were not completed for one semiannual period for two employees. Cause: Error when completing the semi-annual certifications. Effect: Although we did not identify any unallowable costs, the lack of controls over the time and effort documentation subjects the School District to an increased risk of unallowable costs being charged to the federal programs. Recommendation: We recommend the School District review the individuals paid out of the federal funds to ensure the amounts are allowable. After this review, the School District should ensure the proper time and effort documentation exists in accordance with the requirements above. Views of Responsible Officials and Corrective Action Plan: See Corrective Action Plan.
Name: Airport Improvement Program, Infrastructure Investment and Jobs Act Programs, and COVID-19 Airport Programs; ASL#: 20.106; Federal Grantor: U.S. Department of Transportation; Pass Through Entity: State Department of Transportation; Award No.: 3-06-0193-017, 3-06-0193-019, 3-06-0193-020, 3-06-0193-021; Year: 2024/2025; Compliance Requirement: Allowable Costs/Cosst Principles; Criteria: According to 2CFR 200.430(i)(1) (Standards for Documentation of Personal Expenses), charges to Federal Awards for salaries and wages must be based on records that accurately reflect the work performed. For employees that work on multiple activities or cost objectives (e.g., FAA grant and non-grant activities), documentation must support the distribution of their time.; Condition: During testing of payroll expenditures, we reviewed the one employee’s time that was charged to the FAA grant (ALN 20.106). We noted that the City did not maintain itemized, signed timesheet detailing the specific hours worked on FAA project tasks versus other projects or administrative duties.; Cause: The City did not have established control procedures to ensure that employees working on multiple projects maintained detailed, itemized timesheets tracking time to specific grant and non-grant projects.; Effect: The City is not in compliance with 2CFR 200.430. The lack of proper documentation results in questioned costs, as the federal program may have been charged for time spent on non-federal activities.; Questioned Cost: $9,004.46 (Total payroll charged to 20.106 for the sampled employee during the period); Context: Our sample testing included the payroll charged to the grant for the one employee included in the payroll expenditures for the grant.; Repeat Finding: This is not a repeat finding.; Recommendation: We recommend that the City implement a reporting system that requires all employees paid with federal funds to complete itemized, signed timesheets detailing the specific hours worked on each grant or project on a daily or weekly basis. These timesheets must be reviewed and approved by a supervisor with firsthand knowledge of the work performed.; Views of Responsible Officials and Planned Corrective Action Plan: Refer to separate Management’s Corrective Action Plan for views of responsible officials and management’s responses.
Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Assistance Listing Number: 93.323 Award Period: NU50CK000346 (8/1/2024 – 7/31/2029) (93.323) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or Specific Requirement: Per CFR §200.430 Compensation – personal services, 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. Condition: During our testing we noted for one of twenty-five samples tested, the employee’s wages were improperly allocated to the program. The employee did not work for the program during the sampled period and the timesheet’s project ID had not been updated accordingly. Management was able to properly adjust the error to the correct program. Questioned Costs: None Cause: Lack of management oversight. Effect: Auditor noted instances of noncompliance. Noncompliance results in possible under or over charges to the grants. Repeat Finding: No Recommendation: We recommend the Department provide additional training to ensure supervisors properly review employees’ time and verify that time worked is allocated to the appropriate federal award. Agency Response: The Department acknowledges this finding and provides the following corrective action plan to prevent future findings. The Department agrees that the procedures in place to ensure accuracy can be improved. Newly imposed supervisory review of the bi-weekly payroll correction process will ensure that miscoded employees are detected. Discrepancies will be addressed immediately. The Department is working on remediation of this finding and anticipates completion before June 30, 2026. Responsible Persons: Division Finance Directors, Program Grant Administrators, and Federal Grants Director.
Reference # and title: 2025-004 Internal Control over Allowable Costs Federal program and specific federal award identification: AL # Grant Year FEDERAL GRANTOR/ PASS-THROUGH GRANTOR/PROGRAM NAME Passed through Louisiana Department of Education Child Nutrition Cluster: School Breakfast Program 10.553 2025 National School Lunch Program 10.555 2025 Summer Food Program 10.559 2025 Criteria or specific requirement: 2 CFR section 200.430(g) requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on a Federal award and a non-Federal award. Condition found: No time certification was completed by Child Nutrition Supervisor for six months of the year. The Child Nutrition Supervisor retired in December 2024. Context: There was no documentation of time spent on the Child Nutrition Program by the Supervisor when the payroll expenditures were tested. Possible asserted effect (cause and effect): Cause: The auditor was unable to determine the cause. Effect: Unallowable costs may have been paid by federal program. Known questioned costs: The known questioned amount of unallowable cost for salary and benefits is $62,078. Known questioned costs were taken from employee’s payroll history for salary and benefits charged to federal program. Recommendation to prevent future occurrences: Monthly and semi-annual certifications of time spent on a federal program should be maintained and verified by program supervisors. Origination date and prior year reference (if applicable): This finding originated in the fiscal year ended June 30, 2025. View of responsible official: See Corrective Action Plan.
Reference # and title: 2025-001 Untimely Completion of Time Certifications Federal program and specific federal award identification: AL Number Award Year FEDERAL GRANTER/ PASS THROUGH GRANTOR/PROGRAM NAME United States Department of Agriculture; passed through Louisiana Department of Education Child Nutrition Cluster: School Breakfast Program 10.553 National Lunch Program 10.555 2025 2025 Criteria or specific requirement: Federal regulations require that salaries and wages charged to federal programs be supported by time and effort documentation that accurately reflects the work performed and is completed in a timely manner, in accordance with 2 CFR §200.430. Condition found: In testing a sample of Child Nutrition payroll, it was noted for all eleven employees tested, the Child Nutrition Program did not complete required time certifications in a timely manner. Several certifications were completed after an extensive amount of time, resulting in noncompliance with federal documentation requirements. Context: This finding appears to be systemic. Possible asserted effect (cause effect): Cause: The School Board did not have an sufficient procedures or monitoring controls to ensure that time certifications for Child Nutrition Program employees are completed timely and in accordance with federal requirements. Effect: The School Board’s internal controls over allowable costs were weakened. Recommendations to prevent future occurrences: The School Board should implement written procedures to ensure all Child Nutrition Program employees complete time certifications timely and in accordance with federal requirements. Management should also establish a review and monitoring process to verify certifications are completed accurately and retained on file prior to charging payroll costs to the program. Origination date and prior year reference (if applicable): This finding originated fiscal year ended June 30, 2025. View of responsible official: The School Board agrees and will comply with the recommendations.
Program: AL 21.027 – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – Subrecipient Monitoring Grant Number & Year: SLFRP1965, March 3, 2021, through December 31, 2024 Federal Grantor Agency: U.S. Department of the Treasury Criteria: 2 CFR § 200.332 (January 1, 2024) states, in relevant part, the following: All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal award identification. * * * * (ii) Subrecipient’s unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date . . . . * * * * (x) Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; (xii) Assistance Listings title and number; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at the time of disbursement; * * * * (5) A requirement that the subrecipient permit the pass-through entity and auditors to access the subrecipient’s records and financial statements for the pass-through entity to fulfill its monitoring requirements; and (6) Appropriate terms and conditions concerning the closeout of the subaward. * * * * (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the passthrough entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the passthrough entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward . . . . * * * * (f) Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501. 2 CFR § 200.318 (January 1, 2024) states, in relevant part, the following: (a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in §§200.317 through 200.327. * * * * (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. 2 CFR § 180.300 (January 1, 2024) requires that the pass-through entity take specific steps to document that subrecipients are not suspended or debarred, as outlined below: When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. 2 CFR § 200.430(i) (January 1, 2024) states the following in relevant part: (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: * * * * (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. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards[.] Good internal controls and sound business practices require policies and procedures to ensure that adequate monitoring is performed to verify that subrecipients are using funds in accordance with all Federal and grant requirements. Condition: The State lacked procedures to ensure that: • Subrecipient use of funds was monitored to ensure compliance with all Federal and grant requirements. • Subrecipients obtained audits required by Federal requirements, and those audits were obtained and reviewed in a timely manner. Repeat Finding: No Questioned Costs: None Statistical Sample: No Context: The State paid $172,943,444 to subrecipients for 143 subawards during the fiscal year ended June 30, 2025. We selected 17 subrecipients to test. Additionally, we reviewed the single audit tracking procedures for all State agencies acting as pass-through entities. We noted the following: Insufficient Subrecipient Monitoring Procedures For 5 of 17 subawards tested, the APA noted that subrecipient monitoring was insufficient to ensure that the subrecipient complied with all Federal and grant requirements. Additionally, for one of the subawards tested, the APA noted that the pass-through entity did not have documentation on file to support it verified the subrecipient was not suspended or otherwise debarred. Deficiencies noted included the following: • One $86,650,000 subaward tested was issued by the Military Department (Military) to the University of Nebraska Board of Regents (University). During testing, the APA noted that the only monitoring performed by the Military was a review of the University’s single audit for fiscal year ended June 30, 2024. A total of $47,533,117 was paid to the University for the fiscal year ended June 30, 2025. • During our audit, we observed that for two subawards, one issued by the Department of Natural Resources (DNR) and one by the Department of Health and Human Services (DHHS), each valued at $2,000,000 for capital riverfront improvements and the construction of a youth activity center, respectively, significant disbursements were used to cover construction costs. However, neither pass-through entity could provide documentation supporting that subrecipient monitoring performed or planned included adequate procedures to ensure that the subrecipient had followed its written procurement policies, and procurement procedures were adequately documented. These subrecipients were paid $1,362,909 and $841,446, respectively, during the fiscal year ended June 30, 2025. • For one subaward tested, issued by the Department of Correctional Services (Corrections) for $1,505,826 to implement a transitional living and vocational skills program for former inmates, the APA did not observe any documentation supporting that Corrections had verified the subrecipient was not suspended or otherwise debarred from receiving Federal funds. Additionally, the APA noted that the subaward included significant costs for subrecipient payroll and benefit costs. For those salaried employees who had only a portion of their payroll coded to the grant, Corrections relied on budget estimates submitted at the beginning of the subaward to ensure the cost allocation was proper. The APA observed that six salaried employees had payroll costs coded to the grant, ranging from 2% - 98% of their total salaries. During the fiscal year ended June 30, 2025, the total paid to the subrecipient for this subaward was $204,302. • For one subaward issued by DHHS for $4,000,000 to be used towards increasing childcare license capacity, the APA noted that DHHS failed to perform the subrecipient monitoring procedures outlined in their monitoring policy. The monitoring policy for the subaward indicated that 10% of all expenses would be reviewed. DHHS claimed to have reviewed 10% of all reimbursements between July 2023 – April 2024; however, the APA observed $628,610 of reimbursed costs after April 2024, all of which was disbursed in August 2024 for which no review was performed. Additionally, the APA noted DHHS did not obtain appropriate documentation to support $387 of payroll costs coded to the grant. A total of $627,110 was paid to this subrecipient during the fiscal year ended June 30, 2025. Failure to Communicate all Required Subaward Information During our review of subrecipient monitoring, the APA noted that, for 4 of 17 subawards tested, the subaward did not contain all required information or contained erroneous information, as follows: • In two instances of subawards issued by DHHS, the subaward listed the Federal Award Identification Number (FAIN) as SLFRP3145; however, the primary CLSFRF award to the State of Nebraska was SLFRP1965, while the SLFRP3145 award merely passed through the State to various Non-Entitlement Units (NEU’s) in the State that were the primary recipients. • One subaward issued by DNR and one subaward issued by Corrections lacked required information, as noted below. Neither department could provide documentation showing that this information had otherwise been communicated to the subrecipient. See Schedule of Findings and Questioned Costs for chart/table. Single Audit Tracking Procedures During our review of single audit tracking procedures implemented by the State, we noted the following: • DNR and the Department of Labor (DOL) lacked procedures for determining if subrecipients were required to have a single audit or obtain and review such audits. DOL had 10 subrecipients who had received cumulative payments as of June 30, 2025, ranging from $1,000 to $318,669. DNR had 13 subrecipients that received cumulative payments as of June 30, 2025, ranging from $12,557 to $32,256,022. Three of DNR’s subrecipients have received payments over $750,000 as of June 30, 2025. In reviewing the Federal Audit Clearinghouse (FAC), two of these subrecipients had single audits for the subrecipients’ fiscal year 2024, which listed CSLFRF (ALN 21.027) as a major program and reported no findings. • During testing, the APA identified three instances of DHHS failing to obtain and review subrecipient single audits due to errors in that agency’s tracking procedures. The three subrecipients had received $2,209,137 in CSLFRF funds as of June 30, 2025. The APA obtained the fiscal year 2024 single audits for all three subrecipients from the FAC and noted that ALN 21.027 was listed as a major program on all three audits. None of the audits noted any program-related findings. Cause: Inadequate procedures to ensure that subrecipients complied with all Federal and grant requirements or to ensure that subrecipients obtained single audits when required. Effect: Without adequate monitoring and review procedures, there is an increased risk of Federal awards being used for unallowable costs. Recommendation: We recommend the State strengthen procedures to ensure that subrecipient monitoring is designed properly to ensure compliance with all Federal and grant requirements. We also recommend the State strengthen procedures to ensure that subrecipient single audit requirements are tracked properly, and all single audits are reviewed in a timely manner. Management Response: Military Department The Department of Military disagrees with this finding. The subrecipient submitted an independent audit on 4/1/2025. The independent auditor employed auditing standards generally accepted in the United States (GAAS). Major federal programs included COVID-19, Coronavirus State and Local Fiscal Recovery Funds, Assistance Listing Number 21.027. The independent auditor concluded there were no significant deficiencies or material weaknesses. The auditee was deemed “low risk.” In NEMA’s risk evaluation, it considers two separate University of Nebraska offices whose responsibility includes work to monitor and ensure compliance with Federal regulations. When determining risk appetite and risk tolerance, the “…cost of internal control should never exceed anticipated benefits. Thus, an entity must accept a certain level of risk.” Findings by the independent auditor and Auditor of Public Accounts exceed any benefit that might have been gained by additional subrecipient monitoring. In October 2025, the Agency formally adopted the Subrecipient Monitoring policy and procedure it has informally used the last several years. APA Response: 2 CFR § 200.332(d)(4) (January 1, 2024) requires pass-through entities to perform subrecipient monitoring, which includes obtaining and reviewing subrecipient Single Audit reports. Subsection (d)(4) of this regulation states: If a subrecipient has a current Single Audit report posted in the Federal Audit Clearinghouse and has not otherwise been excluded from receipt of Federal funding (e.g., has been debarred or suspended), the pass-through entity may rely on the subrecipient’s cognizant audit agency or cognizant oversight agency to perform audit follow-up . . . . Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. Department of Natural Resources While DNR conducted general subrecipient monitoring activities, documentation did not sufficiently demonstrate that monitoring procedures included a review of subrecipient procurement practices for compliance. DNR communicated the required federal award information to the subrecipient through other means, it was not consistently incorporated into the formal subaward agreement as required. While DNR does require Single Audits per their contracts, they did not have formalized, written procedures to consistently determine whether subrecipients met the Single Audit threshold, to ensure timely receipt and review of Single Audit reports when required. The Department acknowledges that documented procedures are necessary to ensure compliance with applicable federal regulations and to strengthen subrecipient oversight. Department of Health and Human Services Agency agrees with finding. Department of Correctional Services Management agrees with the finding.
U.S. DEPARTMENT OF AGRICULTURE PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION CHILD NUTRITION CLUSTER - AL NUMBERS 10.553 AND 10.555 PASS-THROUGH NUMBER 0406 AUDIT PERIOD - YEAR ENDED JUNE 30, 2025 Allowable Costs/Cost Principles Criteria or specific requirement: In accordance with 2 CFR 200.430(g)(1)(iii), charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must reasonably reflect the total activity for which the employee is compensated by the recipient or subrecipient, not exceeding 100% of compensated activities. Condition: An Administrative Review for Siloam Springs School District was completed by the Arkansas Division of Elementary and Secondary Education, Child Nutrition Unit (DESE, CNU) in December 2025. The review noted that time certifications were not prepared for Child Nutrition employees for the year ended June 30, 2025. Cause: Lack of internal controls and management oversight. Effect: Bi-annual time certifications were not prepared to properly document personnel expenses. Questioned costs: No questioned costs noted. Context: Results of an Administrative Review by the DESE, CNU. Identification as a repeat finding: No Recommendation: The District should follow the guidelines outlined by the USDA regarding documentation of personnel expenses. Views of responsible officials: The Siloam Springs School District was instructed to submit a time certification for all employees paid from the nonprofit food service account to Arkansas Department of Education, Division of Elementary and Secondary Education, Nutrition Services by January 16, 2026. The District received a letter from the Arkansas Department of Education, Nutrition Servies dated January 9, 2026 informing the District’s corrective action submitted was accepted and therefore, the review was officially closed.
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 Listing Number: 84.010A Federal Award Numbers and Years (or Other Identifying Numbers): S010A220014, S010A230014, S010A240014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.430 states in part: 1. Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity (See paragraph (h)(1)(ii) above for treatment of incidental work for IHEs.); and vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the activities allowed or unallowed and allowable costs/cost principle compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: We noted that for 13 of the 40 payroll samples selected, the School Corporation did not have employees fill out semi-annual certifications to support the percentage of their payroll charged to the Title I grants. Identification as a repeat finding: No. Recommendation: We recommend management ensure semi-annual certifications are completed for all employees charged to the grant awards at 100%. We recommend management establish a documented review by management of semi-annual certifications to ensure time charged to grant awards is allowable and allocable based on work performed in accordance with grant requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2025-003 Federal Program Information: Research and Development Cluster (ALN: 93.U10) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation) B. Allowable Cost/Cost Principles - Federal grant requirements, § 200.430, provide that salaries and wages charged to federal awards must be based on records that accurately reflect the work performed; be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated; be incorporated into the official records of the institution; reasonably reflect the total activity for which the employee is compensated; and 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. Condition: During our testing of expenditures, we noted the following exceptions: • For 1 of 40 selected Research and Development Cluster expenditures, a level of effort certification to support the payroll costs charged to the federal program was not performed timely. Cause: Insufficient administrative oversight and internal controls with respect to allowable cost/cost principles compliance requirements. Effect or Potential Effect: The School is not properly following it policies and procedures to ensure that compliance is maintained with respect to supporting payroll costs charged to the federal programs which could result in unallowable costs charged to the federal agency. Questioned Costs: None. Context: We tested a sample of 40 expenditures across the major programs and noted 1 exception as noted in the condition. Identification as a Repeat Finding: This is a repeat finding from prior year. This was reported as finding 2024-003 in the 2024 report. Recommendation: We recommend that the School adhere to its procedures and internal controls over the applicable compliance requirements of allowable costs/cost principles requirements to ensure that the School is appropriately monitoring level of effort reporting in a timely manner. Views of Responsible Officials and Planned Corrective Actions: We concur. Due to a change that occurred after the reporting period appropriately reallocating one employee’s effort to the federal funding source, the certification was not displayed on the effort report. The employee has certified that this effort was charged appropriately to this award. We are reviewing our policies and procedures to ensure redistribution of labor is performed within a timely manner. We have moved to an annual effort reporting process aligned to the federal regulations and are implementing the Cayuse Effort Reporting module that will more effectively track and report effort. The system will be implemented during our next effort reporting cycle.
2025-001: Internal Controls over Compliance for Allowable Costs Federal Grantor: U.S. Department of Health and Human Services Pass-Through Grantor: Missouri Department of Health and Senior Services Federal Assistance Listing Number: 93.044/93.045/93.053 Program Title: Aging Cluster Pass-through Entity Identifying Number: ERS10525004 Award Year: 2025 Questioned Costs: None Criteria: 2 CFR 200.303 states, “The recipient and subrecipient must: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR 200.430(g)(1) states that, “Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated….” Condition: During our audit, we noted instances where the organization did not have procedures in place to maintain adequate documentation of charged to federal awards: • During our testing of payroll expenses, we selected a sample of 25 payroll transactions across four different pay periods consisting of seven different employees. Five of the seven employees selected were hourly employees. For these five hourly individuals, documentation supporting the authorized rate of pay for each of the four pay periods selected could not be provided. The Board of Directors minutes from July 2024 indicated that the Board approved an across-the-board pay increase of 5%, however, the pay rates of the individuals tested were more than 5% higher than the ending pay rates from fiscal year 2024. In all cases, the actual hourly rate of pay was 11.1% higher than the expected rate of pay after the 5% increase. • During our testing of cash disbursements, we selected a sample of 40 expense transactions, which included monthly expense reimbursement reports from six different subrecipient contractors. We requested copies of the fiscal year 2025 contracts with these service providers to ensure that per unit reimbursement rate used to determine the contractor’s payment for the month was correct. However, the organization could not provide copies of the signed fiscal year 2025 contracts. We were able to view the procurement files and the organization’s on-site monitoring files for each service provider. Cause: The organization has had significant turnover in the Chief Executive Officer and Chief Financial Officer positions in the past 24 months, in addition to undergoing multiple office relocations during that time. The organization could not determine how the prior Chief Financial Officer calculated the fiscal year 2025 pay rates which were entered into QuickBooks and could not locate the signed copies of the fiscal year 2025 contracts with service providers. Effect: The maintenance of proper documentation of authorized employee pay rates and contractor reimbursement rates helps to ensure that expenses charged to federal awards are allowable. Recommendation: We recommend that the Agency implement procedures to ensure that authorized pay rates are properly documented and maintained through forms maintained in personnel files or other means. We also recommend that copies of signed contracts with contractors be documented and maintained in a location where they are accessible to all authorized staff.
Criteria: Per 2 CFR 200.403, costs charged to federal awards must be necessary, reasonable, and adequately documented. Additionally, 2 CFR 200.430 requires payroll costs charged to federal awards to be accurately supported and properly allocated to the benefiting program. Condition: During testing of expenditures charged to the federal award, we identified contractual payroll amounts that were charged to the grant for instruction and curriculum development activities. However, these activities were already charged to the grant through the separate training fee (HRSA-approved fee-for-service). This essentially resulted in these payroll expenditures being double charged to the grant. Cause: Management indicated that the duplication resulted from confusion regarding the proper treatment and recording of contractual payroll costs under the grant requirements, which led to the amounts being charged to the program more than once. Effect: As a result, contractual payroll costs charged to the federal award were overstated. Questioned Costs: Questioned costs totaling $ 6,405 were identified as duplicated contractual payroll amounts charged to the grant. Recommendation: We recommend that management implement additional review procedures over payroll allocations charged to federal awards and ensure staff responsible for grant accounting receive additional guidance regarding grant requirements to prevent similar errors in the future. Management Response: Management agrees with the finding. Management has already corrected by reducing the most recent drawdown from HRSA by the amount in question. Management will also implement additional review procedures to prevent similar errors in the future.
Assistance Listing, Federal Agency, and Program Name 21.027 COVID 19 Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year SLFRP1027 Pass through Entity Michigan Strategic Fund; 20 Fathoms; Lean Rocket Lab; Talent First Inc.; Lansing Economic Area Partnership; Michigan Economic Development Corporation Finding Type Significant deficiency Repeat Finding Yes 2024 001 Criteria As outlined in 2 CFR 200.430(i), salaries and wages must be based on records that accurately reflect the work performed, including complying with established accounting policies and practices of the University. Per the University policy, effort reports are to be certified by an individual or a person with suitable means of verification (the principal investigator, department chair, or dean) of the work performed approximately 30 days after each reporting period. Condition Of the 6 employees included in the payroll expenditures sample selected for testing, the University did not complete a full, executed review of the effort certifications within the time period outlined for one employee. Questioned Costs None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported N/A Identification of How Questioned Costs Were Computed None Context In the samples mentioned above, the University completed review of the effort certification to support salaries were allowable, one of the total of 6 employees tested were not reviewed timely. Cause and Effect The University implemented a new automated process during the year to initiate the employee groups that are required to complete an effort certification; however, an employee group was excluded during the set up of the process resulting a certification that was completed outside of the University policy. Recommendation We recommend the University review employee groups maintained in the enterprise resource planning (Workday) to ensure that all employees required to perform effort certifications are included. Views of Responsible Officials and Planned Corrective Actions A new control has been added to the effort certification process that occurs prior to the distribution of effort reports for certification. The Effort Certification Administrator reconciles a compiled listing of all federal grant effort by employee name from the general ledger to ensure that an effort report is subsequently generated for each qualifying employee who worked on a federal grant during the appropriate period.
U.S. Department of Education Passed-Through Entity: New York State Education Department Finding Reference: 2025-001 Title I Grants to Local Educational Agencies (Assistance Listing # 84.010) Compliance Requirement: Allowable Costs/Cost Principles Criteria Under 2 CFR §200.430(i), charges to federal awards for salaries and wages must be supported by appropriate documentation that accurately reflects the work performed. Documentation must be signed by the employee or a responsible supervisory official having firsthand knowledge of the work performed by the employee. Condition During testing of payroll expenditures charged to the Title I program, we noted one instance where the time and effort certification was not signed by the employee. The certification covered services charged to the Title I program during the fiscal year. Cause The unsigned certification appears to be a result of oversight in the review and approval process for time and effort documentation. Effect Without a signed certification, the School District cannot demonstrate full compliance with federal documentation requirements for payroll costs charged to the Title I program. This increases the risk that salary costs charged to the program may not be properly supported. Recommendation We recommend the School District strengthen its review procedures to ensure all time and effort certifications are signed and properly retained prior to submission for payroll processing or federal reporting. View of Responsible Officials The School District will institute additional procedures to ensure that time and effort certifications are signed and properly retained.
Federal Agency: U.S. Department of Education Federal Program Name: Special Education Cluster Assistance Listing Number: 84.027, 84.173 Federal Award Identification Number: H027A240103 Pass-Through Agency: New Hampshire Department of Education Pass-Through Number(s): 20230519, 20241089, 20250423 Award Period: July 1, 2024 – June 30, 2025 Compliance Requirement: Allowable Costs / Cost Principles Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: The Code of Federal Regulations (CFR) Title 2 Part 200.430 indicates charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Such records must also reasonably reflect the total activity for which the employee is compensated by the non-Federal entity. Condition and Context: For three (3) of twenty-two (22) payroll transactions tested, time and effort certifications were not completed in a timely manner. Questioned costs: None Cause: Procedures were not in place to ensure that time and effort certifications were completed in a timely manner for all applicable transactions. Effect: Noncompliance with federal requirements occurred. Repeat Finding: No. Recommendation: We recommend procedures be strengthened to ensure that time and effort certifications are completed in a timely manner. Views of responsible officials: Management agrees with the finding.
FINDING 2025-004 – Payroll Allocations Federal Program: Continuum of Care Program Federal Identifying Number: Direct funding grants - IL0395L5T102214, IL0395L5T102315, IL0184L5T102316, IL0184L5T102417, IL1790H5T102200, IL1791H5T102200, IL1792H5T102200; Passed- through grants -IL1759D5T102201, IL1878D5T102300, IL1759D5T102202, and 8567-D Federal Assistance Listing Number: 14.267 Passed Through: All Chicago Making Homeless History and Aids Foundation of Chicago Federal Agency: U.S. Department of Housing and Urban Development Criteria/Specific Requirement: A. The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) require Inner Voice, Inc. to ensure federal expenditures to be consistent with the standards set forth in the Uniform Guidance at 2 CFR part 200, subpart E. B. The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.430(g)(1)(i) Standards for Documentation of Personnel Expenses states the following, “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. C. The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.303 Internal Controls states the following, “The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Condition: Our audit procedures over expenditures revealed the following: 1) For one (1) of forty (40) expenditure transactions tested, The Inner Voice, Inc. did not adequately track or review time and effort documentation for accuracy. For this selection, the time study applied to allocate salary and actual hours reported and paid did not agree. Questioned Costs: None. Context: The Inner Voice, Inc. expended a total of $5,207,762 of federal awards in fiscal year 2025. The Inner Voice, Inc. expended a total of $3,992,341 of federal awards in fiscal year 2025 under the Continuum of Care program. Effect: The Inner Voice, Inc. is not in compliance with Title 2 of the Code of Federal Regulations (CFR) Part 200.426 as it relates to activities allowed or unallowed and allowable costs/cost principles requirements. Additionally, the effect of noncompliance can result in questioned costs. Cause: The Inner Voice, Inc.’s implementation of internal controls is inconsistent in the 1) review of time study against payment and 2) review and approval of payroll salaries transactions. Recommendation: We recommend that The Inner Voice, Inc. establish and maintain effective internal control over federal awards to ensure expenditures are supported as required by 2 CFR 200.430(g)(1)(i). This includes: a. Conducting a formal time and effort study to support payroll allocations; b. Enhancing policies and procedures surrounding time and effort documentation and review and approval of payroll expenditures. Management’s Response: See Corrective Action Plan.
Material Weakness in Internal Controls Over Compliance and Noncompliance: Payroll Federal program: Award Number: Federal Agency: Compliance Requirement: Questioned Costs: FAL 84.010A Title I Grants to Local Educational Agencies (Title I, Part A of the ESEA) None U.S. Department of Education Allowable Costs N/A Criteria: In accordance with 2 CFR, §200.430(i)(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. Condition: For 1 out of 24 payroll transactions tested, Title I funds were being utilized for wages that did not meet the allowable cost criteria defined by the grant. Cause: The School’s control environment failed to detect and correct payroll errors in a timely manner, allowing wages for ineligible activities to be charged against the Title I program. Effect: There is an increased risk that employee compensation will be charged to grants for unallowable activities. Recommendation: To help ensure that charges to payroll expenses are accurately allocated to the grants for which they are reimburseable, the School should implement internal control policies and procedures that require regular review of employees whose work activity deviates from initial budget estimates.
Material Weakness in Internal Controls Over Compliance and Noncompliance: Payroll Federal program: Award Number: Federal Agency: Compliance Requirement: Questioned Costs: FAL 84.010A Title I Grants to Local Educational Agencies (Title I, Part A of the ESEA) None U.S. Department of Education Allowable Costs N/A Criteria: In accordance with 2 CFR, §200.430(i)(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. Condition: For 1 out of 40 payroll transactions tested, Title I funds were being utilized for wages that did not meet the allowable cost criteria defined by the grant. Cause: The School’s control environment failed to detect and correct payroll errors in a timely manner, allowing wages for ineligible activities to be charged against the Title I program. Effect: There is an increased risk that employee compensation will be charged to grants for unallowable activities. Recommendation: To help ensure that charges to payroll expenses are accurately allocated to the grants for which they are reimbursable, the School should implement internal control policies and procedures that require regular review of employees whose work activity deviates from initial budget estimates.
Finding 2025 - 4: Internal Controls Related to Review and Approval of Timecards Finding Code: 30000 Assistance Listing Number: 84.010 Federal Agency: U.S. Department of Education Pass-Through Entity: California State Department of Education Federal Program: Title I, Basic Grants: Low-Income and Neglected Type of Finding: Significant deficiencies in internal control over compliance related to employee timecards monitoring process. 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. These records must: - Be supported by a system of internal control providing reasonable assurance that charges are accurate, allowable, and properly allocated. - Be incorporated into the official records of the entity. - Reasonably reflect total activity for which the employee is compensated. - Be reviewed and approved by a responsible supervisory official. Management is responsible for establishing and maintaining effective internal controls to ensure payroll costs charged to Federal awards are accurate, properly supported, and periodically monitored. Condition and Context: During our testing of payroll expenditures charged to the Title I grant, we identified deficiencies in the timekeeping and monitoring process. Specifically, for 4 of the 40 employee timecards tested, management was unable to locate the original timecards reflecting documented supervisory approval. As a result, evidence of required review and approval was not available for those payroll expenditures. Cause: Inconsistent implementation of review controls by management and insufficient oversight to ensure compliance with Uniform Guidance payroll documentation requirements. Effect or Potential Effect: Payroll costs charged to the Federal award may not accurately reflect actual time worked on the program. While no material questioned costs were identified as a result of our testing, the control deficiencies increase the risk of future noncompliance. Repeat finding: Not a repeat finding. Recommendation: We recommend management develop and implement written policies and procedures for timekeeping and payroll allocation consistent with 2 CFR §200.430 and strengthen controls over the timecard review and approval controls. Views of Responsible Officials and Planned Corrective Action (unaudited): Management concurs with Finding 2025 - 4 and acknowledges that controls over the review and approval of timecards for federally funded staff were not consistently applied. In response, we will reinforce timekeeping expectations, clarify roles, and ensure that policies and procedures are aligned with 2 CFR § 200.430. We will conduct targeted training for supervisors to reinforce expectations. Central office monitoring will now include quarterly internal audit reviews and follow-up, creating a continuous feedback loop that supports compliance. These enhancements reflect management’s commitment to ensuring that payroll charges to federal programs are accurate, well supported, and reliably documented going forward.
Department of the Interior Federal Financial Assistance Listing 15.042 Indian School Equalization Allowable Costs/Activities Allowed or Unallowed Significant Deficiency in Internal Control Over Compliance and Immaterial Instance of Noncompliance Criteria – A good system of internal control includes an adequate system for ensuring all expenditures are properly recorded and allowable under the related federal grant in accordance with 2 CFR 200.430(i). Condition – In our testing of allowable costs and activities we noted one instance totaling $3.27 where payroll benefits were not paid in accordance with the employment letter. Cause – Procedures are not in place to adequately identify unallowable costs or activities. Effect – A lack of internal controls over allowable costs and activities could result in the improper use of federal funds and non-compliance with the provisions of applicable grant requirements. Questioned Costs – None reported Context/Sampling – A nonstatistical sample of 60 transactions out of 882 total transactions were selected for testing, which accounted for $26,666 of $2,203,450 of federal program expenditures. Repeat Finding from Prior Years – Yes, 2024-008 Recommendation – The School should review internal control procedures to ensure federal expenditures are being properly reviewed for unallowable costs and activities. Views of Responsible Officials – The School respectfully disagrees with the classification of this matter as a significant deficiency.
Significant Deficiency 2025-001. Allowed Costs/Cost Principle United States Department of Education, Passed Through New York State, Department of Education: Special Education Cluster Special Education Grants to States: IDEA Part B ALN: 84.027 Special Education Preschool Grants: IDEA Preschool ALN: 84.173 Criteria: Salaries and wages charged to federal awards must be supported by documentation prescribed by the Uniform Guidance at Subpart E, 2 CFR §200.430. Condition: Subpart E, 2 CFR §200.430 of the Uniform Guidance requires that charges to “Federal awards for salaries and wages must be based on records that accurately reflect the work performed.” The documentation should support the distribution of the employee’s compensation among specific activities if the employee works on more than one federal award, or a federal award and non-federal award. The preparation of personnel activity reports (PAR) or periodic certifications or the equivalent is the most effective way to comply with this requirement. During the current year, the District did not prepare this documentation, and, therefore, did not comply with Subpart E, 2 CFR §200.430. Cause: The staff that were responsible for maintaining records that accurately reflect the work performed, as described in Subpart E, 2 CFR §200.430, to support salaries charged to federal awards, did not prepare PARs or certification reports related to work being completed. Effect: Noncompliance could result in the incorrect amount for services rendered being charged to the federal award. Questioned Costs: Dollar amount undetermined as adequate documentation was not available. Context: The District maintains time records for employees charged to federal awards in accordance with approved budgets, and determined that individuals assigned to provide services meet the criteria necessary in accordance with the grant requirements. Identification of a Repeat Finding: This is a repeat finding from the previous audit, item No. 2024-001 related to the Special Education Cluster. Recommendation: The District should revise its procedures to prepare documentation to support actual salaries and wages charged to federal awards after the work was performed in accordance with the requirements of the Uniform Guidance at Subpart E, 2 CFR §200.430. Views of Responsible Officials of Auditee: The District will adopt procedures to ensure appropriate documentation will be prepared to comply with Subpart E, 2 CFR §200.430.
2025 – 005. Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: Department of Defense Federal Program Title: National Guard Military Operations and Maintenance (O&M) Projects Assistance Listings: 12.401 Federal Grant ID Numbers: Various Pass-Through Entity: Not applicable Award Period: Various Type of Finding: Significant deficiency in internal control over compliance Criteria: 2 CFR § 200.430 states that (a) Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the recipient or subrecipient consistently applied to both federal and non-federal activities; (2) Follows an appointment made in accordance with recipient’s or subrecipient’s laws, rules or written policies and meets the requirements of federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (g) of this section, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR § 200.303 requires that the recipient and subrecipient establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. Condition: Personnel expenditures were charged to the federal award without documented approval as required by the Office’s internal control procedure. Cause: The Office did not document all required approvals of payroll changes for grant employees. Effect: Personnel costs could be incorrectly charged to the federal award. Questioned Costs: Questioned costs are undetermined because this finding relates to missing approvals, rather than a specifically identifiable unallowable amount. Context: Two out of sixty employees tested were missing one or more of the required management approvals on their State Personnel Action Form applicable to the pay received in the selected period. Prior Year Single Audit Report Finding Number: Not applicable Recommendation: We recommend that the Office strengthen its efforts to consistently adhere to its procedures, including maintaining the approved State Personnel Action Form to support the personnel charges and allocations to applicable funding sources. Views of responsible officials and planned corrective actions: See management’s response on page 182.
2025 – 017. Activities Allowed or Unallowed & Allowable Costs/Costs Principles Federal Agency: Environmental Protection Agency Federal Program Title: Drinking Water State Revolving Fund Assistance Listing: 66.468 Federal Grant ID Number: Various Pass-Through Entity: Not Applicable Award Period: Various Type of Finding: Significant deficiency in internal control over compliance, other matters Criteria: 2 CFR § 200.430(g)(1)(vi) requires charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. 2 CFR § 200.303 requires that the recipient and subrecipient establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. Condition: The Department did not accurately calculate time and effort costs associated with the grant. Cause: The Department’s internal control did not ensure that time and effort was allocated appropriately. Effect: The Department could improperly allocate additional labor cost to the grant. Questioned Costs: $678 was the amount overcharged to program after evaluation of time and effort documentation. Context: We tested eleven individuals to ensure time and effort requirements were being properly met. We determined the Department did not properly allocate time and effort for ten of the eleven individuals tested. Prior Year Single Audit Finding Number: Not applicable Recommendation: We recommended the Department strengthen its controls to ensure that time and effort is tracked and allocated accurately. Views of responsible officials and planned corrective actions: See management’s response on page 192.
2025 – 020. Activities Allowed or Unallowed and Allowable Costs/Cost Principles – Payroll and Indirect Costs Federal Agency: Environmental Protection Agency Federal Program Title: Performance Partnership Grants Assistance Listing: 66.605 Federal Grant ID Number: Various Pass-Through Entity: Not Applicable Award Period: Various Type of Finding: Significant deficiency in internal control over compliance, other matters Criteria: 2 CFR §200.404 states that a cost is reasonable when the charge is consistent with the recipient’s or subrecipient’s established written personnel policies. 2 CFR § 200.430 requires that charges to federal awards for salaries and wages must be supported by accurate time and effort records that reflect the actual work performed. The records must: be supported by a system of internal controls that provides reasonable assurance payroll costs are accurate, allowable, and properly allocated; be incorporated into the recipient’s official accounting records; reasonably reflect the employee’s total compensated activity, not exceeding 100 percent of compensated time; properly allocate payroll costs when employees work on multiple cost objectives, including federal and non-federal activities; comply with the recipient’s established accounting policies and procedures. Charges should not rely solely on budget estimates unless: the estimates reasonably approximate actual work performed; significant changes in work activity are promptly identified and recorded and periodic after-the-fact reviews and adjustments are performed to ensure final charges are accurate, allowable, and properly allocated. 2 CFR § 200.303 requires that the recipient and subrecipient establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: The Department did not maintain adequate time and effort documentation to support salaries and wages charged to federal awards. Specifically, payroll charges were not consistently supported by records that accurately reflected actual work performed and/or did not properly document the allocation of time between federal and non-federal activities. Indirect costs are directly correlated to the payroll expenditures thus if the payroll expenditures are inaccurate then the indirect cost will also be inaccurate. Cause: The Department lacked sufficient internal controls and/or written procedures to ensure time and effort was allocated among payroll accurately. Effect: As a result, there is an increased risk that salaries and wages charged to federal awards were inaccurate, unallowable, or improperly allocated, which could result in questioned costs and noncompliance with federal grant requirements. Questioned Costs: $17,445 for payroll testing. The overall variance between hours worked and amounts paid represents the questioned costs for payroll. Unknown for journal entry testing. Indirect costs were allocated based on budgeted personnel amounts rather than actual time and effort recorded in the Personnel Cost Account System (PCAS) and discrepancies were identified during our testing of time and effort requirements. Context: We selected thirty-six individuals to ensure time and effort requirements were properly met. Eleven out of thirty-six employees tested were paid more from the grant funds than they actually worked during the pay period. Twenty-three out of thirty-six employees tested, were paid less from the grant funds than they worked during the pay period. We selected seven indirect cost transactions to ensure time and effort requirements were being met properly. Because the journal entries related to indirect cost were made based on the budget for the grant and not the actual time and effort contributed by the individual employees per the PCAS, we were unable to provide reasonable assurance that time and effort was calculated accurately. Prior Year Single Audit Finding Numbers: Not applicable Recommendation: We recommend the Department develop and/or strengthen written policies and procedures for time and effort reporting; Ensure time and effort recordings accurately reflect actual work performed and total compensated activity; Implement supervisory review of time and effort documentation; and perform periodic after-the-fact reviews and adjustments to payroll charges to ensure compliance with federal requirements. Views of responsible officials and planned corrective actions: See management’s response on page 194.
Finding 2025-003, Timesheet – Timekeeping (Assistance Listing 16.575 and 93.958) Criteria: 2 CFR § 200.430 requires that the distribution of salary and wages charged to federal awards be based on records that accurately reflect the work performed, prepared after-the-fact, and includes the total activity for which employees were compensated. Condition and Context: The timesheets used by the Agency through December 2024 did not include the allocation of hours worked by program. Cause: Internal controls over the accurate distribution of hours on the timesheets were not operating effectively or designed properly. Effect: The timesheets do not support the allocation of time charged to the programs. Identification as a repeat finding: Yes. Questioned costs: None. Recommendation: We recommend that the Agency strengthen its policies and procedures for the timekeeping and distribution of the employees’ hours in accordance with the requirements of the federal programs. View of responsible officials: In January 2025, WJCS implemented an automated time and attendance system for staff to track time which integrates with the payroll and financial systems to ensure appropriate allocations to Federal awards. Prior to implementation of the new system, weekly manual timesheets were used to track staff time and attendance on federal contracts. However, these manual timesheets were not integrated into a standard agency-wide payroll processing system. The new system enhancements to payroll tracking will allow WJCS to completely and accurately allocate payroll costs to grants with fewer mechanical steps which increase the risk of miscalculations.
III. Federal Awards Findings and Questioned Costs Finding 2025-002: Significant Deficiency in Internal Control over Compliance – Allowable Costs; Criteria or specific requirements: 2 CFR §200.430 of the Uniform Guidance requires that charges to federal awards for salaries and wages be supported by a system of internal controls that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Personnel expenses must be supported by records that accurately reflect the work performed and must reasonably reflect the total activity for which the employee is compensated. These records must also be incorporated into the official records of the organization. Condition/Context: During our testing of payroll expenditures charged to the grant, we noted management performs a periodic review or “lookback” to compare budgeted payroll allocations to actual work performed to ensure that payroll costs charged to federal awards are reasonable and accurate, evidence of the review was not retained. Effect: Without supporting documentation and periodic reconciliation, there is an increased risk that payroll costs charged to federal awards may not accurately reflect work performed. Cause: The University completed a payroll conversion in the current fiscal year that resulted in challenges to locate certain documentation to support these lookbacks. Repeat finding: No. Recommendation: As management completes their payroll implementation, we recommend that management implement procedures to ensure compliance with Uniform Guidance requirements for personnel costs. These procedures should include either the ability for individuals to track time spent on individual grants when completing their timesheet or reflect staff responsible for compliance retain periodic reviews (lookbacks) comparing budgeted payroll allocations to actual work performed to ensure charges to federal awards are reasonable and properly supported. Views of responsible officials: With the implementation of the new UKG Payroll system in January 2026, the timesheet process now systematically reflects the ability for individuals to track time spent on individual grants when completing their timesheet.
2025-005 – Allowable Costs/ Cost Principles: Lack of Time and Effort Report Certification and Lack of Timesheets Cluster: Not applicable Sponsoring Agency: United States Agency for International Development (USAID) Award Name: USAID Foreign Assistance for Programs Overseas Award Number: 7200AA19CA00018 Assistance Listing Title: USAID Foreign Assistance for Programs Overseas Assistance Listing Number: ALN 98.001 Award Year: 2024-2025 Pass-through entity: Not applicable Compliance Requirement: Allowable Costs/Cost Principles Criteria or Specific Requirement A. Lack of Time and Effort Report Certification Under 2 CFR 200.430, charges to federal awards for salaries and wages must be supported by records that accurately reflect the work performed, are backed by effective internal controls, and are certified by the employee or an authorized official with knowledge of the work. University policy further requires timely certification of effort reports for all personnel paid in whole or in part from federal awards, with reports issued approximately 45 days after the close of the October 1–September 30 reporting period and required to be certified within 120 days. B. Lack of Timesheets for Hourly Employees Under 2 CFR 200.430(i), charges to federal awards for salaries and wages must be supported by records that accurately reflect the work performed. These charges must also be reasonable, allocable, and adequately documented, including the retention of signed or approved timesheets or equivalent effort documentation to support payroll costs charged to sponsored awards. Identified Condition A. Lack of Time and Effort Report Certification For allowable costs testwork across two (2) campuses, we noted the following at one (1) campus: • Of the 40 employee time and effort reports selected for testwork, we noted one (1) time and effort report for the period October 1, 2023 to September 30, 2024 was not certified in accordance with the University’s established policies and procedures. Note that the audit team was able to substantiate the allowability of the payroll charges through review of alternative supporting documentation, such as the distribution of payroll expense report. B. Lack of Timesheets for Hourly Employees For allowable costs testwork across two (2) campuses, we noted the following at one (1) campus: • Of the 14 hourly employee timesheets selected for testwork, the campus was unable to provide timesheets or other equivalent effort documentation. Therefore, we were unable to verify whether the related payroll costs were accurately charged to the program in accordance with the University’s policies and federal requirements. Cause A. Lack of Time and Effort Report Certification Certain time and effort reports require multiple levels of certification, particularly when employees allocate effort across multiple federally sponsored awards. Responsibilities distributed among departments and program investigators, combined with staff turnover and workflow or routing delays, contributed to the uncompleted certification of the time and effort report. In addition, the campus converted to a new financial system effective January 1, 2024, which does not have a similar key tracking function as the old system. This resulted in certain time and effort reports not being flagged for review and being inadvertently overlooked. B. Lack of Timesheets for Hourly Employees The employee timesheets for the program were maintained at the departmental level. Following the termination of this program, the campus was unable to obtain the relevant records because the personnel responsible for maintaining them were no longer available. The campus also attempted to retrieve the documentation through its central time-reporting system; however, the system did not permit extraction of the required historical data. Consequently, the campus was unable to provide supporting documentation for the reported hours. Effect The lack of proper time and effort certification and evidence of employee timesheets can lead to inaccurate allocation of payroll expense charged to federal awards. This also increases the potential for program noncompliance as personnel costs charged to federal awards may be unsupported or unallowable. Questioned Costs A. Lack of Time and Effort Report Certification Questioned costs for salary charges related to the one (1) time and effort report lacking certification for the sample selected (1 of 40 time and effort reports) totaled $1,179. B. Lack of Timesheets for Hourly Employees Questioned costs for the 14 employee timesheets that were not provided for the sample selected (14 of 14 employee timesheets) totaled $29,775. Recommendation A. Lack of Time and Effort Report Certification We recommend that management strengthen controls over the time and effort reporting process by enforcing timely certification in accordance with University policy, including implementing additional reminder and escalation procedures with assigned follow-up responsibilities, and active monitoring of overdue certifications to ensure timely resolution and processing. B. Lack of Timesheets for Hourly Employees We recommend that the campus implement procedures to ensure timesheet records are centrally retained and accessible regardless of staffing changes or program closures. This should include maintaining a reliable central repository and ensuring time-reporting data can be extracted when needed. Management’s Views and Corrective Action Plan A. Lack of Time and Effort Report Certification Management’s response is included in “Management’s Views and Corrective Action Plan” included at the end of this report after the summary schedule of status of prior audit findings. B. Lack of Timesheets for Hourly Employees Management’s response is included in “Management’s Views and Corrective Action Plan” included at the end of this report after the summary schedule of status of prior audit findings.
Finding 2025-001 – Allowable Costs / Principles & Activities Allowed or Unallowed Federal Agency: U.S. Department of Health and Human Services Federal Program: Block Grants for Substance Use Prevention, Treatment, and Recovery Services AL Number: 93.959 Award Number: B08TI087059 Award Year: 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria: Per 2 CFR 200.430(g)(1)(i) & (ii), “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 and be incorporated into the official records of the recipient or subrecipient.” Condition: During our testing of allowable costs and activities, we identified deficiencies in the Organization’s internal controls over salaries and wages. While the Organization maintained original hiring documentation for employees, subsequent pay increases and the associated approvals were not formally documented or retained. In addition, we observed that the Organization did not have a standardized process for reviewing employee timesheets or for overseeing the payroll submission process in its entirety. It is important to note that these issues were limited to items selected from periods prior to the issuance of the prior-year audit report. Following that report, the Organization implemented enhanced payroll controls, including documented timesheet approvals and the use of approved employee status change forms. Context: There were 40 instances of employees’ salaries and wages tested. The sample consisted of 5 employees tested for eight pay periods, For each instance tested before the issuance of the prior year audit report, the deficiency in internal controls around payroll costs, as described in the Condition section, applied. Cause: The Organization did not maintain documentation of employee pay raises or the necessary approvals for those pay raises. The Organization’s internal control process around payroll costs does not include review of employee timesheets to ensure that reported time is reasonable and accurate. Effect: Lack of internal controls surrounding payroll costs could potentially lead to improper allocation of payroll costs to the Federal grant. Repeat finding: Not applicable. Recommendation: We recommend the Organization continue to maintain and monitor the enhanced payroll controls that were implemented during the year ended June 30, 2025. Management’s Response: See Corrective Action Plan.
Finding 2025-010 – B. Allowable Costs/Cost Principles Information on Federal Program(s) – Research and Development Cluster (ALN 43.009, ALN 93.859) Criteria or Specific Requirement - 2 CFR §200.430(i)(1)(i) indicates that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, 2 CFR §200 requires that costs charged to programs are adequately documented. Condition – The summary level hourly documentation retained for payroll expenditures charged to the program was not formally supported with an adequate system of internal controls. Additionally, for certain non-payroll expenditures selected for testing, the University was unable to provide documentation adequately supporting the amount charged to the federal award. Cause - Administrative oversight and insufficient internal controls. Effect or Potential Effect – Noncompliance with documentation of payroll and non-payroll expenditure standards. Questioned Costs – Below reportable threshold. Context – Context is as follows: • Payroll Expenditures: For 4 of 4 employees selected for testing, the summary level hourly documentation retained was not formally supported with an adequate system of internal controls. • Non-Payroll Expenditures: For 2 of 8 expenditures selected for testing, the University was unable to provide adequate documentation to fully substantiate the expenditure balance. We also noted that the University did not have formalized internal controls over indirect costs charged to the federal programs. Indication of Repeat Finding - This is a repeat of prior year Finding 2024-011. Recommendation – We recommend that the University enhance its internal controls over compliance to ensure that time and effort records are appropriately maintained. We also recommend that the University enhance its internal controls over compliance to ensure all non-payroll expenditures are fully supported as required. Views of Responsible Officials – The University acknowledges that the internal controls surrounding the allowable costs during fiscal year 2025 were lacking and needed to be reinforced for future fiscal years. With the hire of the new CFO and HR leader post June 30, 2025 – these enhanced controls and processes have been put in place, and all payroll and other expenses are detailed, supported, and filed appropriately.
Reference Number: 2025-003 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Department Name: Department of Health and Social Services State Division: Division of Public Health Federal Program: WIC Special Supplemental Nutrition Program for Women, Infants, and Children Assistance Listing Number: 10.557 Award Number and Year: 241DE701W1003 (10/1/2023 – 9/30/2024) 251DE701W1003 (10/1/2024 – 9/30/2025) Compliance Requirement: Allowable Costs/Cost Principles – Time and Effort Reporting Type of Finding: Significant Deficiency in Internal Control Over Compliance 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; (vi) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. 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 comply 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 Division of Public Health (Division) did not have evidence of timely supervisory review and approval of employee timesheets. Context One of forty timesheets selected for testing was not certified timely by a program supervisor. The timesheet was certified several months after the end of the pay period. Questioned Costs None noted. Cause The Division’s controls are not sufficient to ensure that time and effort reporting is performed and documented in a timely manner, in accordance with federal requirements. Effect There is an increased risk of charging unallowed payroll costs to the program. Recommendation The Division should enhance procedures, implement proper controls, and perform additional training over time and effort reporting. The Division should not seek federal reimbursement unless it can substantiate that the time and effort was dedicated to the federal program. Documentation should be readily available for audit. Views of Responsible Officials On March 12, 2026, an email to all WIC supervisors was issued notifying the dates that all T&E reports are due to the Administration Office. The policy was reiterated during the March 17,2026 Supervisors meeting held via Zoom.
Reference Number: 2025-008 Prior Year Finding: 2024-010 Federal Agency: U.S. Department of Labor State Department Name: Department of Labor State Division: Division of Unemployment Insurance Federal Program: Unemployment Insurance, COVID-19 – Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI372152255A10 (10/1/2021 – 12/31/2024) UI393142355A10 (10/1/2022 – 12/31/2025) 24A55UI000067 (10/1/2023 – 12/31/2026) 25A55UI000116 (1/1/2024 – 12/31/2027) Compliance Requirement: Allowable Cost/Cost Principles – 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; (vi) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. 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 comply 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 Division of Unemployment Insurance (Division) was unable to provide support to validate that payroll expenses charged to the federal program were reviewed. Timesheets did not have evidence of supervisory approval. Context For 2 of 60 timesheets selected for testing, the Division was unable to provide documentation that the timesheets were reviewed and approved by a supervisor. Questioned Costs Undetermined. 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 There is an increased risk of charging unallowed payroll costs to the program. Recommendation The Division should reevaluate its current process, implement proper controls, and perform additional training for time and effort reporting. The Division should not seek federal reimbursement unless it can substantiate that the time and effort was dedicated to the federal program. Documentation should be readily available for audit. Views of Responsible Officials We agree that the division was unable to provide documentation supporting the timesheet approval as asserted. However, we respectfully disagree that the lack of timesheet approval translates into charging the program with unallowed costs. It’s important that the auditors understand that the division’s responsibility to ensure that payroll charges to the program are appropriate begins with ensuring that each employee tasked with performing program functions are hired into the correct division internal program unit (“IPU”). And then further within that IPU, instruct employees to use a specific activity code that is assigned to various federal programs. In the samples reviewed, employees properly used the correct activity code to record time for the work performed. Auditor Rejoinder In its response, the Division acknowledges that it was unable to provide documentation to auditors that timesheets were reviewed and approved. Auditors recognize that an allowable activity code was used by the employees, but without review and approval, the actual time recorded and the validity of the activity code could not be verified. However, auditors recognize that the payroll costs would be allowable if they were reviewed by a supervisor and it was determined that appropriate activity codes were used for those employees in the given time periods. Therefore, auditors did not identify questioned costs for this finding due to a lack of documentation but reiterate that there is a possibility that questioned costs may exist if the employee time charged to the program was inappropriate.
Reference Number: 2025-016 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Department Name: Department of Health and Social Services State Division: Division of Public Health Federal Program: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), COVID-19 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Assistance Listing Number: 93.323 Award Number and Year: NU50CK000497 (8/1/2019 – 7/31/2027) NU51CK000334 (8/1/2024 – 7/31/2029) Compliance Requirement: Allowable Costs/Cost Principles – 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; (vi) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. 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 comply 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 Division of Public Health (Division) inaccurately charged payroll costs to the program. Context For one of forty time sheets selected for testing, the employee’s time and effort certification indicated that 50% of the employee’s time was spent on the program, but 100% of the employee’s time was charged. Questioned Costs $1,742, the amount charged to the program in error. Cause Controls were not operating effectively to ensure that time and effort reporting was performed accurately. Effect Unallowed payroll costs were charged to the program. Recommendation The Division should reevaluate its current process, implement proper controls, and perform additional training over time and effort reporting. The Division should not seek federal reimbursement unless it can substantiate that the time and effort was dedicated to the federal program. Documentation should be readily available for audit. Views of Responsible Officials ELC Financial Lead will work with DPH Support Services to track all recoded time against grant. As recodes are identified, time certifications for affected staff will need to be revised and filed appropriately.
Reference Number: 2025-017 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Department Name: Department of Health and Social Services State Division: Division of Social Services Federal Program: Temporary Assistance for Needy Families Assistance Listing Number: 93.558 Award Number and Year: 2501DETANF (10/1/2024 – 9/30/2025) 2401DETANF (10/1/2023 – 9/30/2024) 2301DETANF (10/1/2022 – 9/30/2023) Compliance Requirement: Allowable Costs/Cost Principles – Time and Effort Reporting Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance 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; (vi) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. 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 comply 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 Division of Social Services (Division) did not have evidence of that employee time charged to the program was properly documented. Context Forty timesheets were selected for testing, and the following exceptions were noted: • 17 of 40 timesheets selected for testing could not be provided to auditors for testing. • 14 of 40 timesheets selected for testing were not certified timely by a program supervisor. The timesheets were certified several months after the end of the pay period. • 1 of 40 timesheets selected for testing was not certified by a program supervisor. Questioned Costs Undetermined. Cause The Division’s controls are not sufficient to ensure that time and effort reporting is performed and documented in accordance with federal requirements. Effect Employee time charged to the program could not be verified and there is an increased risk of charging unallowed payroll costs to the program. Recommendation The Division should enhance procedures, implement proper controls, and perform additional training over time and effort reporting. The Division should not seek federal reimbursement unless it can substantiate that the time and effort was dedicated to the federal program. Documentation should be readily available for audit. Views of Responsible Officials The following action will be taken to improve the current process. • The Fiscal unit is implementing procedures to serve as the central repository for all Time and Effort records, replacing the current practice of storing these forms at the program manager level. • Implement internal controls for Time and Effort Reporting. • Confirm that T&E information submitted is accurate and reconciled. • Provide training for Time & Effort certification.
Reference Number: 2025-020 Prior Year Finding: 2024-019 Federal Agency: U.S. Department of Health and Human Services State Department Name: Department of Health and Social Services State Division: Division of Social Services Federal Program: CCDF Cluster Assistance Listing Number: 93.575. 93.596 Award Number and Year: SAI5406 (10/1/2022 – 9/30/2025) SAI5788 (10/1/2023 – 9/30/2026) SAI6656 (10/1/2024 – 9/30/2028) SAI6306 (10/1/2024 – 9/30/2027) Compliance Requirement: Allowable Costs/Cost Principles – Time and Effort Reporting Type of Finding: Significant Deficiency in Internal Control Over Compliance 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; (vi) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Control: Per 45 CFR Part 98, Child Care and Development Fund recipients must establish and maintain robust internal controls to ensure integrity and accountability of program funds. Recipients must implement procedures designed to investigate and recover fraudulent payments, to impose sanctions on clients or providers in response to fraud, document and verify eligibility, and promote compliance with all applicable laws and regulations. These internal control mechanisms serve to prevent misuse, mismanagement, or fraudulent activity, thereby fostering accountability and transparency in the stewardship of federal funds allocated through the CCDF program. Condition The Division of Social Services (Division) did not have evidence of timely supervisory review and approval of employee timesheets. Context Three of sixty timesheets selected for testing were not certified timely by a program supervisor. The timesheets were certified several months after the end of the pay period. Questioned Costs None noted. Cause The Division’s controls are not sufficient to ensure that time and effort reporting is performed and documented in a timely manner, in accordance with federal requirements. Effect There is an increased risk of charging unallowed payroll costs to the program. Recommendation The Division should enhance procedures, implement proper controls, and perform additional training over time and effort reporting. The Division should not seek federal reimbursement unless it can substantiate that the time and effort was dedicated to the federal program. Documentation should be readily available for audit. Views of Responsible Officials The following action will be taken to improve the current process. • The Fiscal unit is implementing procedures to serve as the central repository for all Time and Effort records, replacing the current practice of storing these forms at the program manager level. • Implement internal controls for Time and Effort Reporting. • Confirm that T&E information submitted is accurate and reconciled. • Provide training for Time & Effort certification.
Reference Number: 2025-025 Prior Year Finding: 2024-024 Federal Agency: U.S. Department of Health and Human Services State Department Name: Department of Health and Social Services State Division: Division of Substance Abuse and Mental Health Federal Program: Opioid-STR Assistance Listing Number: 93.788 Award Number and Year: H79TI085764 (9/30/2022 – 9/29/2024) 6H79TI085764 (9/30/2023 – 9/29/2025) 5H79TI083305 (9/30/2024 – 9/29/2027) Compliance Requirement: Allowable Costs/Cost Principles – Time and Effort Reporting Type of Finding: Material Weakness in Internal Control Over Compliance 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; (vi) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. 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 comply 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 Timesheets provided by the Division of Substance Abuse and Mental Health (Division) were not reviewed and approved timely by a supervisor. Context 16 of 28 timesheets selected for testing were not certified timely by a program supervisor. The timesheets were certified several months after the end of the pay period. Questioned Costs Undetermined. Cause The Division’s controls are not sufficient to ensure that time and effort reporting is performed and documented in a timely manner, in accordance with federal requirements. Effect There is an increased risk of charging unallowed payroll costs to the program. Recommendation The Division should enhance procedures, implement proper controls, and perform additional training over time and effort reporting. The Division should not seek federal reimbursement unless it can substantiate that the time and effort was dedicated to the federal program. Documentation should be readily available for audit. Views of Responsible Officials The Division evaluated the developed process and implemented controls for completion of the process within 60 days with added monitoring roles for accuracy and timeliness. The Division will be performing training for assigned staff, monitoring completion and will continue to improve the process for efficiency and compliance.
Allowable Costs/Cost Principles – Evidence of Services Provided by Part-Time and Extension Credit Lecturers Program Name: Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing 21.027) Federal Award Agency: Department of the Treasury Award Year: Federal Fiscal Year 2025 Federal Award Number: N/A Background The Office of Policy and Management (OPM) was designated as the primary state agency responsible for overseeing the Coronavirus State and Local Fiscal Recovery Funds and reporting to the federal government. OPM allocated funds to the CT State Community College and other state agencies to assist with carrying out the program’s objectives. CT State Community College contracts with part-time and extension credit lecturers who teach a term or class at a flat rate. The college pays them in equal installments based on the terms of individual contracts. Criteria Title 2 U.S. Code of Federal Regulations (CFR) Part 200.303 requires the non-federal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 CFR Part 200.430(g) provides that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Such records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and comply with the established accounting policies and procedures of the recipient. Sections 3-117(b) and 3-119(a) of the Connecticut General Statutes require state entities to certify services are received and documented before paying contractors and state employees. Condition CT State Community College made $70,175,519 in salary and fringe benefit payments for 2,796 part-time and extension credit lecturers without verifying the lecturers provided the contractual services or documenting supervisory approval. Context During the fiscal year ended June 30, 2025, CT State Community College charged $70,624,749 in payroll and fringe benefit costs to Coronavirus State and Local Fiscal Recovery Funds, of which $70,175,519 was attributed to contracted faculty members. Questioned Costs $0 Effect CT State Community College could pay part-time and extension lecturers for services they did not provide. Cause CT State Community College lacks policies and procedures to ensure compensation for part-time and extension credit lecturers is contingent on fulfillment of contractual obligations. Prior Audit Finding We previously reported this as finding 2024-400. Recommendation CT State Community College should strengthen internal controls to ensure that part-time and extension credit lecturer payroll and fringe benefits costs are based on actual time worked and are properly approved. Views of Responsible Officials Response provided by CT State Community College: “Management agrees with this finding and work towards a viable long-term solution for workload review at the campus level is underway. As noted in previous audits, controls were implemented in Banner as part of the Payroll Exception review process that was initiated by the Audit Advisory Committee. These reports are currently unavailable due to limitations that will be resolved soon. Once resolved, the reports will be shared with the appropriate academic reviewer for confirmation of services received.” Views of Responsible Officials Response provided by the Office of Policy and Management: “The Office of Policy and Management has no additional response beyond that offered by the CT State Community College.”
Finding Reference: 2025-002 Federal Agency: U.S. Department of Homeland Security Pass-Through Entity: California Governor's Office of Emergency Services Federal Program Title: Disaster Grants - Public Assistance (Presidentially Declared Disasters) Assistance Listing Number: 97.036 Federal Grant Number: FEMA 4482DR-CA-01387 FEMA 4482DR-CA-01680 FEMA 4482DR-CA-02974 FEMA 4482DR-CA-03269 FEMA-4482-DR-CA-PW-00265(2) FEMA-4482-DR-CA-PW06047(3932) FEMA DR-4683 FEMA DR-4699 Category of Finding: Activities Allowed or Unallowed Allowable Costs/Cost Principles Classification of Finding: Significant Deficiency in Internal Control over Compliance Instance of Noncompliance Criteria The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), 2 CFR §200.403 and §200.430, require that costs charged to federal awards be allowable, reasonable, allocable, and adequately supported. Payroll costs charged to federal programs must be based on accurate payroll records and may not be duplicated or claimed more than once for reimbursement. In addition, management is responsible for establishing and maintaining effective internal control over compliance to ensure federal awards are administered in accordance with applicable laws, regulations, and grant provisions. Condition During our audit, we selected a statistically valid sample of 40 payroll transactions and identified 5 duplicate payroll transactions that were included in amounts submitted for reimbursement under the program. Specifically, certain payroll costs were charged more than once to the federal program, resulting in unallowable costs being claimed for reimbursement. These duplicate charges were not identified or corrected by management prior to submission of reimbursement requests. The City subsequently performed a detailed review of the payroll charges included in the reimbursement submissions, identified duplicate payroll charges of $113,551, and reduced the reported expenditure in the Schedule of Expenditure of Federal Awards for the year ended June 30, 2025. Cause The condition was caused by ineffective internal controls over submission of reimbursement requests, including inadequate review procedures to ensure payroll costs were not duplicated prior to submission, lack of reconciliation between payroll records and reimbursement requests, and insufficient supervisory review over payroll charges included in the reimbursement requests. Identification of Repeat Finding This is not a repeat finding in the immediate prior audit period. Effect As a result of these control deficiencies, unallowable payroll costs were claimed for federal reimbursement. This noncompliance could result in the City being required to repay the federal awarding agency and increase the risk of additional unallowable costs being claimed in future periods if not corrected. Questioned Costs Known questioned costs totaling $113,551 were identified related to duplicate payroll charges included in the reimbursement submission for grant number FEMA-4482-DR-CA-PW06047(3932). Recommendations We recommend that the City strengthen internal controls over payroll cost allocation and reimbursement processes to ensure payroll costs are not duplicated; implement reconciliations between payroll records and reimbursement requests prior to submission; and provide additional training to personnel responsible for grant accounting on federal cost allowability requirements. View of Responsible Officials and Planned Corrective Action See separately prepared Corrective Action Plan.
Reference # and title: 2025-002 Internal Control and Compliance over Special Education, Title I, and Title II Payrolls Federal program and specific federal award identification: AL Number Award Year United States Department of Education; passed through Louisiana Department of Education Special Education Cluster (IDEA): Special Education Grants to States #84.027A 2025 Special Education Preschool Grants #84.173A 2025 Title I Grants to Local Educational Agencies #84.010A 2025 Title II Supporting Effective Instruction State Grants #84.367A 2025 Criteria or specific requirement: For an employee who works in part on the consolidated administrative cost objective and in part on a Federal program whose administrative funds have not been consolidated or on activities funded from other revenue sources, the School Board must maintain time and effort distribution records in accordance with 2 CFR section 200.430(i)(1)(vii) that support the portion of time and effort dedicated to (a) the consolidated cost objective, and (b) each program or other cost objective supported by non- consolidated Federal funds or other revenue sources. Employee pay should be reviewed to ensure that payment amount is correct. Employee attendance should be documented on a consistent basis. Condition found: In testing 29 payroll transactions for the Special Education program, the following exceptions were noted: 20 exceptions noted in which attendance records were not signed by the supervisor; 2 exceptions where one employee was not paid in accordance with the salary schedule, which resulted in an underpayment; 13 exceptions where time certifications were not completed in a timely manner. In testing 29 payroll transactions for the Title I program, it was noted that although the employee had a time certification, that 20 payroll transactions did not reflect a supervisor’s review of the employees’ attendance records. In testing 29 payroll transactions for the Title II program, the following exceptions were noted: 17 exceptions noted in which attendance records were not signed by a supervisor; 12 exceptions where time certifications were not completed in a timely manner; 17 exceptions where employees clock in but do not clock out; 6 exceptions where substitute teachers do not sign in for work. Possible asserted effect (cause effect): Cause: Attendance documentation and semi-annual certifications were not maintained throughout the year by the School Board. Effect: The School Board did not comply with all requirements related to allowable costs and cost principles for the Special Education, Title I, and Title II programs. Recommendations to prevent future occurrences: The School Board should strengthen policies and procedures to ensure that semi-annual time certifications are signed by all employees in a timely manner before school lets out and that employee attendance is adequately approved throughout the year. The School Board should also strengthen procedures to ensure employees’ pay is complete and accurate. Origination date and prior year reference (if applicable): For the Special Education and Title II payrolls, this finding originated in the fiscal year ended June 30, 2025. For the Title I payroll, this finding originated in the fiscal year ended June 30, 2024. View of responsible official: The School Board is evaluating current policies and procedures over semi-annual certifications and employee attendance, and also ensuring new employees are properly trained regarding these policies and procedures. In addition, the School Board is implementing electronic employee attendance software throughout the District to ensure accuracy and completeness of attendance records.
Compliance Requirement: Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education Assistance Listing Number and Title: 10.553 – School Breakfast Program 10.555 – National School Lunch Program Federal Award Number: 255GA324N1199 (Year: 2025) Questioned Costs: $7,474 Repeat of Prior Year Finding: FA 2024-001, FA 2023-004 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over the employee compensation process as it relates to the Child Nutrition Cluster. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential childcare institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $60,051,234.81 were expended and reported on the DeKalb County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2025. Criteria: As a recipient of federal awards, the School District is required to establish, document, 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 recipient or subrecipient… (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 recipient or subrecipient consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a recipient’s or subrecipient’s laws, rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (g)…, [as follows:] (g) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the recipient or subrecipient…” Condition: A sample of 60 employees was randomly selected for testing using a non-statistical sampling approach. These employees were reviewed to determine if internal controls were properly functioning, and applicable compliance requirements were met. The following deficiencies were noted: • One employee was paid on the incorrect pay scale and thus was overpaid by $4,903. • Two employees were paid on the incorrect pay scale and thus were underpaid by $1,287. • Additional pay totaling $967 for 2 employees was incorrectly charged to the federal program. • Documentation of retrospective pay totaling $317 could not be located for 1 employee. Questioned Costs: Upon testing a sample of $1,643,657 in personnel services expenditures, known questioned costs of $7,474 were identified for payroll charges not supported by adequate documentation. Using the total personnel services expenditure population of $20,618,901 (excluding benefits payments), we project the likely questioned costs to be approximately $93,759. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553 and 10.555. Cause: A lack of oversight by personnel in the Office of Federal Grants and Program Compliance led to noncompliance with the requirements of the Uniform Guidance in relation to charging of personnel costs to a federal program. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to pay employees with CNC funds the appropriate amount and/or maintain documentation supporting those payments could result in the expenditure of funds for unallowable purposes. This may also expose the School District to unnecessary financial strains and shortages within the CNC funds as ED or GaDOE may require the School District to return funds associated with improperly documented expenditures. Recommendation: The School District should evaluate their internal control process related to the approval and retention of documentation to support employee compensation payments. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that CNC employees are paid appropriately. Furthermore, management should develop and implement a monitoring process to ensure that these procedures are functioning properly. Views of Responsible Officials: The District acknowledges the audit team’s findings regarding undocumented additional pay and the isolated instances of overpayment identified during the testing of School Food Nutrition program. While the District remains committed to absolute fiscal accuracy, we believe the following context is essential for a complete understanding of the program’s scale and the nature of the identified error. • Scale of Operations: The District’s School Food Nutrition program is a massive operation, serving over 90,000 students across 124 separate kitchens. This decentralized environment requires the management of approximately 900 personnel and a total salary expenditure of $20,618,901. • Statistical Significance vs. Actual Error: The audit identified actual errors totaling $7,474. While the District understands that federal auditing standards (Uniform Guidance) require this amount to be extrapolated across the entire $20.6M population-resulting in a projected error exceeding the $25,000 mandatory reporting threshold-it is important to note that the actual identified discrepancy represents only 0.036% of the program’s personnel budget. • Accuracy Rate: Even when utilizing the extrapolated figure of $25,000, the District maintains a 99.64% accuracy rate in payroll processing for this program. We believe this demonstrates a robust internal control environment, particularly given the complexities of managing 124 distinct points of service. • Disproportionate Reporting Thresholds: The District notes that the $25,000 reporting threshold is a fixed statutory limit that does not scale with the size of the Local Educational Agency (LEA). Consequently, a District of our size is held to a significantly more compressed margin of error (less than one-eighth of one percent) than a smaller district with fewer employees and sites. Auditor’s Concluding Remarks: While the questioned costs identified by auditors appear to be relatively small in the context of the School District’s overall School Nutrition expenditures, the amounts exceed the reporting threshold established by the Uniform Guidance. This threshold is designed to ensure consistent reporting of noncompliance across entities of all sizes. Given the information reflected above, we reaffirm our finding and will review the status of the finding during our next audit.
2025-001 Lack of Time and Effort Documentation (Material Weakness) Federal Agency: U.S. Department of Education Pass-through Agency: New Hampshire Department of Education Cluster/Program: COVID19 - Education Stabilization Fund Assistance Listing Number: 84.425U Passed-through Identification: 20220801 Compliance Requirement: Activities Allowed or Unallowable and Allowable Costs/Cost Principals Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: In accordance with 2 CFR 200.430, compensation for personal services charged to federal awards 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 charges are accurate, allowable, and properly allocated, and must reasonably reflect the total activity for which the employee is compensated. Acceptable support includes personnel activity reports or equivalent documentation that demonstrates work performed and its connection to the federal program. Such documentation is necessary to establish that payroll costs are allowable, allocable, and properly charged to the award. Condition: As part of our testing, stipends charged to the ESSER III program were selected for review. Each individual tested was compensated based on a predetermined daily rate for a specified number of days worked. While employment contracts outlined the agreed-upon number of days and corresponding rates of pay, the School District did not maintain documentation (e.g., time and effort certifications or equivalent records) to substantiate that employees actually worked the days for which they were compensated. Cause: This issue appears to result from the School District’s reliance on contractual agreements and predetermined stipend structures as sufficient support for payroll charges, without implementing procedures to document and verify actual days worked. In addition, internal controls were not designed or operating effectively to require time and effort documentation or supervisory review to confirm that services provided were allowable and aligned with ESSER III program requirements. Effect: Due to the lack of documentation supporting the days worked, the School District is unable to demonstrate that the stipend payments charged to the ESSER III program were allowable, allocable, and properly supported. This represents noncompliance with federal requirements and increases the risk that unallowable or unsupported costs could be charged to the program. As a result, the tested costs totaling $30,800 have been identified as questioned costs. Questioned Costs: $30,800 Identification as Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the School District strengthen its internal controls over payroll and stipends charged to federal programs by establishing and enforcing procedures requiring documentation that accurately reflects both the time worked and the activities performed. Such procedures should include employee certifications (e.g., periodic or semi-annual, as appropriate) and documented supervisory review to verify that (1) the days worked align with amounts paid and (2) the activities performed are allowable and consistent with program objectives. Management should also ensure that all supporting documentation is retained in accordance with federal record retention requirements and is readily available for audit. Views of Responsible Officials: Management’s views and corrective action plan are included at the end of this report.
Finding Number: 2025‐001 Repeat Finding: No Program Names/Assistance Listing Titles: Assistance Listing Numbers: Federal Award Numbers: Questioned Costs: Title I Grants to Local Educational Agencies 84.010 S010A240003 N/A Forest Service Schools and Roads Cluster 10.665 N/A N/A Federal Agencies: U.S. Department of Education, U.S. Department of Agriculture Pass‐Through Agencies: Arizona Department of Education, Navajo County Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Allowable Costs/Cost Principles Criteria Management is responsible for establishing and maintaining internal controls over payroll. In addition under 2 CFR 200.430, management is responsible for maintaining documentation to support all salary and wage payments to employees. Condition The District lacked proper internal controls over payroll including maintaining adequate supporting documentation. Cause The District did not establish adequate controls over the processing of payroll expenses. Effect The District could not adequately support payments for employee payroll expenses. Context During our review of payroll, we noted the following: For three of 50 payroll records reviewed, employee pay could not be recalculated. For four of 50 payroll records reviewed, the employee's contract salary could not be agreed to the annual distribution report, resulting in a net overpayment of $2,101. For two of 50 payroll records reviewed, time and effort documentation was not maintained. For four of 50 payroll records reviewed, the timesheet was not signed by the supervisor, employee, or both to indicate approval. For five of 50 payroll records reviewed, the District was unable to provide supporting documentation for election of prorated compensation. For 11 of 50 payroll records reviewed, the Governing Board approval of the employee contract was not provided. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District should enhance its internal control procedures over payroll to ensure that all employee payroll expenses are correct and supported. Views of Responsible Officials See Corrective Action Plan.
Program: WIC Special Supplemental Nutrition Program for Women, Infants, and Children Federal Financial Assistance Listing Number: 10.557 Federal Grantor: U.S. Department of Agriculture Passed-Through: California Department of Public Health Award No. and Year: 22-10270 A03 and 2022 Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR Section 200.303(a), Internal Controls, 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. 2 CFR Section 200.430, Compensation – Personal Services, states that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: During our testing of the HCA’s provisions for activities allowed or unallowed and allowable costs/cost principles requirements, we noted that for one (1) of sixty (60) payroll samples tested, the employee was able to review and approve their own timecard. Cause: It was determined that the control deficiency resulted from a system configuration error that permitted the employee to approve their own timecard under the supervisor/manager review role. Effect: Failure to consistently apply internal controls over payroll charges increases the risk that unallowable or unsupported payroll costs could be charged to the Federal program and not be detected in a timely manner. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sampling of sixty (60) timecards was selected for testing out of a population of 1,144. The condition noted above was identified during our procedures related to activities allowed or unallowed and allowable costs/cost principles. Repeat Finding from Prior Years: No. Recommendation: Management should ensure appropriate segregation of duties within the payroll system by restricting approval authority to independent supervisors or managers and implementing controls to prevent self-approval. In addition, management should periodically review user access roles and system configurations to confirm that approval controls are operating as designed and that payroll charges to Federal programs are allowable, properly allocated, and adequately supported. Views of Responsible Officials: See separately issued Corrective Action Plan.
Program: HIV Emergency Relief Project Grants (Ryan White) Federal Financial Assistance Listing Number: 93.914 Federal Grantor: U.S. Department of Health and Human Services Award No. and Year: 6H89HA00019-32-04; 2024 Compliance Requirements: Activities Allowable or Unallowed and Allowable Costs/Cost Principles Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR Section 200.303(a), Internal Controls, 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. 2 CFR Section 200.430, Compensation – Personal Services, states that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: During our testing, for one (1) out of sixty (60) payroll expenditures, we noted the timecard did not contain documented evidence of supervisory approval. Cause: The County’s internal control procedures were not consistently followed to ensure that the review and approval of timecards was documented. Effect: Lack of documented review for personnel hours could lead to an increased risk that unallowable or inaccurate activities and costs to be charged to the Federal program. Question Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sampling of sixty (60) timecards were selected for testing out of a population of 5,994. The condition noted above was identified during our procedures related to activities allowed or unallowed and allowable costs/cost principles. Repeat Findings from Prior Years: No. Recommendation: We recommend that the County strengthen its policies and procedures to ensure that timecards consistently include documented evidence of supervisor approval prior to payroll processing. The County should also establish compensating controls for circumstances where timely supervisory approvals is not possible, and ensure such controls are consistently documented. Views of Responsible Officials: See separately issued Corrective Action Plan.
2025-005 Federal Agency: U.S. Department of Agriculture Pass Thru Entity: Oklahoma State Department of Education Program: Child and Adult Care Food Program Assistance Listing: 10.558 Grant Period: Year ending June 30, 2025 Compliance Requirement: B. Allowable Costs/Cost Principles Type of Finding: Material Weakness & Non-Compliance Condition: Documentation was not kept for personnel services paid with funds. In addition, supporting documentation was not maintained for allocation of expenditures between food service programs. Criteria: 2 CFR 200.405 require allocable costs in general to be allocated to projects based on proportional benefits. 2 CFR 200.430(g) requires that charges to federal awards for salaries and wages must be base on records that accurately reflect the work performed (Time and Effort). Cause: Failure to understand requirements for federally funded programs. Context: Personnel costs paid with federal funds where personnel work on multiple federal programs must be supported by monthly time and effort records for amounts paid. Allocation of expenditure must also have documentation completed and maintained supporting the split between the federal programs. Effect: Noncompliance with Uniform Guidance Repeat Finding from Prior Year: No Recommendation: We recommend that the District maintain time and effort for employees paid with the federal funds. We also recommend that District document the method used for allocation of costs between programs and maintain the documentation. Views of Responsible Officials and Planned Corrective Action: The District will implement time and effort documentation for employees paid with federal funds. The District has already implemented allocation process on the Child Nutrition invoices in FY26.
Federal Agency: US Department of Education Federal Program Name: Higher Education Institutional Aid Assistance Listing Number: 84.031X Federal Award Identification Number and Year: P031X230004 - 2025, P031X200017 - 2025 Award Period: July 1, 2024 to June 30, 2025 Type of Finding: Compliance, Other Matter Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.430(g)(1)(vi), Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records should support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one federal award; a federal award and nonfederal award; an indirect cost activity and a direct cost activity; two or more indirect activities allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Per 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The College did not have proper documentation of Time and Effort reporting. Questioned costs: None. Context: During our testing of 40 payroll transactions, we identified four employees’ time and effort reports that were not documented properly to track hours worked on federal grants. Cause: The College did not have proper procedures in place to track time and effort for all personnel on federal grants. Effect: The College could potentially expend incorrect amounts to federal grants. Repeat Finding: No Recommendation: We recommend the College review policies and procedures to ensure all personnel on federal grants have documented time and effort reports as stated in federal regulations. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Information on the federal program: Research and Development Cluster, Multiple Federal Grantors, Multiple Award Periods Criteria or specific requirement: Allowable Costs/Cost Principles Federal regulations state that “charges to federal awards for salaries and wages, must be based on records that accurately reflect the work performed.” The regulations also state that “the records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and property allocated” and “budget estimates alone do not qualify as support for charges to federal awards” (2 CFR 200.430(i)). Condition: During our test work over the Research and Development cluster, we noted the Institute did not have time and activity records with sufficient detail per federal regulations to support its salary and fringe benefit expenses. Cause: Lack of understanding of the requirements of the time and activity reports. Effect of Potential Effect: Based on testing completed, the Institute did not have sufficient procedures to record and verify employees time and activity throughout fiscal year 2025. Questioned Costs: Total questioned costs are $556,632. This includes all salaries and benefits charged to the cluster which lacked documentation to support the charge and allocation to the grant. Assistance Listing Number & Questioned Costs 10.001 - $10,000 10.216 - $5,333 10.303 - $45,801 10.307 - $7,167 10.310 - $457,524 10.326 - $30,807 Context: We selected a sample of 25 salary and benefit charges to the Research and Development cluster. Within our sample we noted that that none of the selections had proper documentation to support the charge and allocation to the grant (e.g. , daily time and activity records, effort verification reports, etc.). These 25 selections had a value of $24,352. Per discussions with management and further review, the amounts charged to the grant were based on the approved budget for the position and the internal allocation performed each payroll period. Salaries and benefits charged to the grant in the audit period totaled $556,632 and represented 59% of the total grant expenditures for the period. The sample was not intended to be, and was not, a statistically valid sample. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend management utilize a time and activity tracking method that will meet the requirements of federal regulations. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the stated finding and has implemented a corrective action plan.