2023-002 Distribution of Compensation – Compliance and Internal Controls over Allowable Costs and Activities and Matching (Material Weakness) Federal Program Information: Funding Agency: U.S. Department of Agriculture FALN: 10.561 Federal Award Identification Numbers: All under this program. See Schedule of Expenditures of Federal Awards. Pass Through Entity: State of Georgia Department of Human Services Award Year: 2021-2022, 2022-2023 Federal Program Information: Funding Agency: U.S. Department of Housing and Urban Development FALN: 14.231 Federal Award Identification Numbers: All under this program. See Schedule of Expenditures of Federal Awards. Pass Through Entity: Gwinnett County, Dekalb County, Cobb County, Fulton County Award Year: 2021-2022, 2022-2023 Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR Section 200.430(i) compensation records must support the distribution of the employee’s compensation among specific activities or costs objectives if the employee works on more than one Federal award and compensation of employees used in meeting cost sharing or matching requirements on Federal awards must be supported in the same manner. Condition: There are no compensation records to support the distribution of employees’ compensation who work on multiple Federal awards. Effect: The lack of documentation and controls around how employees’ compensation is distributed between multiple Federal awards could result in the Association charging the same compensation to multiple awards. Cause: The Association was not aware of the requirements to maintain this documentation. Known Questioned Costs: $7,660 for FALN 10.561, $5,179 for FALN 14.231 Likely Questioned Costs: $63,347 for FALN 10.561, $26,971 for FALN 14.231 Perspective: This finding represents a systemic problem as it affects both the allowable activities and costs requirement as well as the matching requirement. Repeat Finding: Yes, this is a repeat of 2022-002. Recommendation: We recommend the Association establish policies and procedures to ensure that compensation is properly documented and distributed between Federal awards.
2023-002 Distribution of Compensation – Compliance and Internal Controls over Allowable Costs and Activities and Matching (Material Weakness) Federal Program Information: Funding Agency: U.S. Department of Agriculture FALN: 10.561 Federal Award Identification Numbers: All under this program. See Schedule of Expenditures of Federal Awards. Pass Through Entity: State of Georgia Department of Human Services Award Year: 2021-2022, 2022-2023 Federal Program Information: Funding Agency: U.S. Department of Housing and Urban Development FALN: 14.231 Federal Award Identification Numbers: All under this program. See Schedule of Expenditures of Federal Awards. Pass Through Entity: Gwinnett County, Dekalb County, Cobb County, Fulton County Award Year: 2021-2022, 2022-2023 Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR Section 200.430(i) compensation records must support the distribution of the employee’s compensation among specific activities or costs objectives if the employee works on more than one Federal award and compensation of employees used in meeting cost sharing or matching requirements on Federal awards must be supported in the same manner. Condition: There are no compensation records to support the distribution of employees’ compensation who work on multiple Federal awards. Effect: The lack of documentation and controls around how employees’ compensation is distributed between multiple Federal awards could result in the Association charging the same compensation to multiple awards. Cause: The Association was not aware of the requirements to maintain this documentation. Known Questioned Costs: $7,660 for FALN 10.561, $5,179 for FALN 14.231 Likely Questioned Costs: $63,347 for FALN 10.561, $26,971 for FALN 14.231 Perspective: This finding represents a systemic problem as it affects both the allowable activities and costs requirement as well as the matching requirement. Repeat Finding: Yes, this is a repeat of 2022-002. Recommendation: We recommend the Association establish policies and procedures to ensure that compensation is properly documented and distributed between Federal awards.
2023-002 Distribution of Compensation – Compliance and Internal Controls over Allowable Costs and Activities and Matching (Material Weakness) Federal Program Information: Funding Agency: U.S. Department of Agriculture FALN: 10.561 Federal Award Identification Numbers: All under this program. See Schedule of Expenditures of Federal Awards. Pass Through Entity: State of Georgia Department of Human Services Award Year: 2021-2022, 2022-2023 Federal Program Information: Funding Agency: U.S. Department of Housing and Urban Development FALN: 14.231 Federal Award Identification Numbers: All under this program. See Schedule of Expenditures of Federal Awards. Pass Through Entity: Gwinnett County, Dekalb County, Cobb County, Fulton County Award Year: 2021-2022, 2022-2023 Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR Section 200.430(i) compensation records must support the distribution of the employee’s compensation among specific activities or costs objectives if the employee works on more than one Federal award and compensation of employees used in meeting cost sharing or matching requirements on Federal awards must be supported in the same manner. Condition: There are no compensation records to support the distribution of employees’ compensation who work on multiple Federal awards. Effect: The lack of documentation and controls around how employees’ compensation is distributed between multiple Federal awards could result in the Association charging the same compensation to multiple awards. Cause: The Association was not aware of the requirements to maintain this documentation. Known Questioned Costs: $7,660 for FALN 10.561, $5,179 for FALN 14.231 Likely Questioned Costs: $63,347 for FALN 10.561, $26,971 for FALN 14.231 Perspective: This finding represents a systemic problem as it affects both the allowable activities and costs requirement as well as the matching requirement. Repeat Finding: Yes, this is a repeat of 2022-002. Recommendation: We recommend the Association establish policies and procedures to ensure that compensation is properly documented and distributed between Federal awards.
2023-002 Distribution of Compensation – Compliance and Internal Controls over Allowable Costs and Activities and Matching (Material Weakness) Federal Program Information: Funding Agency: U.S. Department of Agriculture FALN: 10.561 Federal Award Identification Numbers: All under this program. See Schedule of Expenditures of Federal Awards. Pass Through Entity: State of Georgia Department of Human Services Award Year: 2021-2022, 2022-2023 Federal Program Information: Funding Agency: U.S. Department of Housing and Urban Development FALN: 14.231 Federal Award Identification Numbers: All under this program. See Schedule of Expenditures of Federal Awards. Pass Through Entity: Gwinnett County, Dekalb County, Cobb County, Fulton County Award Year: 2021-2022, 2022-2023 Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR Section 200.430(i) compensation records must support the distribution of the employee’s compensation among specific activities or costs objectives if the employee works on more than one Federal award and compensation of employees used in meeting cost sharing or matching requirements on Federal awards must be supported in the same manner. Condition: There are no compensation records to support the distribution of employees’ compensation who work on multiple Federal awards. Effect: The lack of documentation and controls around how employees’ compensation is distributed between multiple Federal awards could result in the Association charging the same compensation to multiple awards. Cause: The Association was not aware of the requirements to maintain this documentation. Known Questioned Costs: $7,660 for FALN 10.561, $5,179 for FALN 14.231 Likely Questioned Costs: $63,347 for FALN 10.561, $26,971 for FALN 14.231 Perspective: This finding represents a systemic problem as it affects both the allowable activities and costs requirement as well as the matching requirement. Repeat Finding: Yes, this is a repeat of 2022-002. Recommendation: We recommend the Association establish policies and procedures to ensure that compensation is properly documented and distributed between Federal awards.
2023-002 Distribution of Compensation – Compliance and Internal Controls over Allowable Costs and Activities and Matching (Material Weakness) Federal Program Information: Funding Agency: U.S. Department of Agriculture FALN: 10.561 Federal Award Identification Numbers: All under this program. See Schedule of Expenditures of Federal Awards. Pass Through Entity: State of Georgia Department of Human Services Award Year: 2021-2022, 2022-2023 Federal Program Information: Funding Agency: U.S. Department of Housing and Urban Development FALN: 14.231 Federal Award Identification Numbers: All under this program. See Schedule of Expenditures of Federal Awards. Pass Through Entity: Gwinnett County, Dekalb County, Cobb County, Fulton County Award Year: 2021-2022, 2022-2023 Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR Section 200.430(i) compensation records must support the distribution of the employee’s compensation among specific activities or costs objectives if the employee works on more than one Federal award and compensation of employees used in meeting cost sharing or matching requirements on Federal awards must be supported in the same manner. Condition: There are no compensation records to support the distribution of employees’ compensation who work on multiple Federal awards. Effect: The lack of documentation and controls around how employees’ compensation is distributed between multiple Federal awards could result in the Association charging the same compensation to multiple awards. Cause: The Association was not aware of the requirements to maintain this documentation. Known Questioned Costs: $7,660 for FALN 10.561, $5,179 for FALN 14.231 Likely Questioned Costs: $63,347 for FALN 10.561, $26,971 for FALN 14.231 Perspective: This finding represents a systemic problem as it affects both the allowable activities and costs requirement as well as the matching requirement. Repeat Finding: Yes, this is a repeat of 2022-002. Recommendation: We recommend the Association establish policies and procedures to ensure that compensation is properly documented and distributed between Federal awards.
Department of Health and Human Services Temporary Assistance for Needy Families (TANF), Federal Assistance Listing # 93.558 Pass Through Virginia Department of Social Services, Pass Through Entity Identifying Number BEN-21-054 Type of Finding: Material Weakness in Internal Control over Compliance with Federal Awards and Material Noncompliance Criteria: The Organization should have effective internal controls in place over tracking of employee time to federal grants and contracts, for the Activities allowed/Allowable costs compliance requirement, per 2 CFR 200.430(i). Condition: During the FY 2023 audit, it was noted that while employee timesheets were maintained, the timesheets did not document time allocable to federal programs for Q1 and the first month of Q2 (October 2022). Rather, timesheets related to the federal program reflected a percentage allocation equal to or less than the approved budget. Context: Out of the 25 samples that were tested, 9 did not have proper coding in the timesheet. The sample was not intended to be, and was not, a statistically valid sample. Cause/Effect: Internal control processes over payroll did not detect that employee timesheets did not appropriately capture time specifically chargeable to federal programs. Questioned Costs: $82,253, which was comprised of payroll charges to BEN TANF program for the time allocable to federal programs for Q1 and the first month of Q2 (October 2022). Identification of Repeat Finding: Repeat Finding 2022-001 Recommendation: We recommend that Cornerstones implements a system to properly track time charged to federal programs. In addition, we recommend that management implements internal controls to review and ensure that employee timesheets possess contemporaneous documentation of time spent on individual federal programs. Timesheets should be reviewed and approved in writing by employees’ supervisors. Views of Responsible Officials and Correction Action: Management’s response is reported in “Management’s Views and Corrective Action Plan” included at the end of this report.
Department of Health and Human Services Temporary Assistance for Needy Families (TANF), Federal Assistance Listing # 93.558 Pass Through Virginia Department of Social Services, Pass Through Entity Identifying Number BEN-21-054 Type of Finding: Material Weakness in Internal Control over Compliance with Federal Awards and Material Noncompliance Criteria: The Organization should have effective internal controls in place over tracking of employee time to federal grants and contracts, for the Activities allowed/Allowable costs compliance requirement, per 2 CFR 200.430(i). Condition: During the FY 2023 audit, it was noted that while employee timesheets were maintained, the timesheets did not document time allocable to federal programs for Q1 and the first month of Q2 (October 2022). Rather, timesheets related to the federal program reflected a percentage allocation equal to or less than the approved budget. Context: Out of the 25 samples that were tested, 9 did not have proper coding in the timesheet. The sample was not intended to be, and was not, a statistically valid sample. Cause/Effect: Internal control processes over payroll did not detect that employee timesheets did not appropriately capture time specifically chargeable to federal programs. Questioned Costs: $82,253, which was comprised of payroll charges to BEN TANF program for the time allocable to federal programs for Q1 and the first month of Q2 (October 2022). Identification of Repeat Finding: Repeat Finding 2022-001 Recommendation: We recommend that Cornerstones implements a system to properly track time charged to federal programs. In addition, we recommend that management implements internal controls to review and ensure that employee timesheets possess contemporaneous documentation of time spent on individual federal programs. Timesheets should be reviewed and approved in writing by employees’ supervisors. Views of Responsible Officials and Correction Action: Management’s response is reported in “Management’s Views and Corrective Action Plan” included at the end of this report.
2023-001 - Allowable Costs/Cost Principles Federal Program Information: Department of Education - Passed through the Maine Department of Education: ALN: - 84.425 - Education Stabilization Fund ALN: - 84.010 - Title I - Grants to Local Educational Agencies Criteria: The following CFR(s) apply to this finding: 2 CFR 200.303, 2 CFR 200.430(i) Condition: During audit procedures, it was identified that the school department does not follow a consistent, documented method to ensure employees were paid the proper amount ensuring that only allowable costs are being charged to the program. Cause: The school department does not have the necessary internal controls over compliance. Effect: The school department is at an increased risk for unallowable cost to be charged to the program. Identification of Questioned Costs: None identified. Context: The population for the test consisted of transactions of 121 payroll expenditures. 79 payroll samples were selected using the haphazard method. Of the 79 samples, we identified issues with 17 payroll charges. One employee contract accounted for 11 of those charges. The contract did not accurately describe the employee’s classification. The remaining 6 of the 17 payroll charges had insufficient documentation to support the amount paid. This is not a statistically valid sample. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the school department develop and implement internal policies and procedures to ensure that sufficient documentation to support the charge and to ensure that only allowable costs are charged to the program. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan issued by Town of Millinocket School Department.
2023-001 - Allowable Costs/Cost Principles Federal Program Information: Department of Education - Passed through the Maine Department of Education: ALN: - 84.425 - Education Stabilization Fund ALN: - 84.010 - Title I - Grants to Local Educational Agencies Criteria: The following CFR(s) apply to this finding: 2 CFR 200.303, 2 CFR 200.430(i) Condition: During audit procedures, it was identified that the school department does not follow a consistent, documented method to ensure employees were paid the proper amount ensuring that only allowable costs are being charged to the program. Cause: The school department does not have the necessary internal controls over compliance. Effect: The school department is at an increased risk for unallowable cost to be charged to the program. Identification of Questioned Costs: None identified. Context: The population for the test consisted of transactions of 121 payroll expenditures. 79 payroll samples were selected using the haphazard method. Of the 79 samples, we identified issues with 17 payroll charges. One employee contract accounted for 11 of those charges. The contract did not accurately describe the employee’s classification. The remaining 6 of the 17 payroll charges had insufficient documentation to support the amount paid. This is not a statistically valid sample. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the school department develop and implement internal policies and procedures to ensure that sufficient documentation to support the charge and to ensure that only allowable costs are charged to the program. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan issued by Town of Millinocket School Department.
2023-001 - Allowable Costs/Cost Principles Federal Program Information: Department of Education - Passed through the Maine Department of Education: ALN: - 84.425 - Education Stabilization Fund ALN: - 84.010 - Title I - Grants to Local Educational Agencies Criteria: The following CFR(s) apply to this finding: 2 CFR 200.303, 2 CFR 200.430(i) Condition: During audit procedures, it was identified that the school department does not follow a consistent, documented method to ensure employees were paid the proper amount ensuring that only allowable costs are being charged to the program. Cause: The school department does not have the necessary internal controls over compliance. Effect: The school department is at an increased risk for unallowable cost to be charged to the program. Identification of Questioned Costs: None identified. Context: The population for the test consisted of transactions of 121 payroll expenditures. 79 payroll samples were selected using the haphazard method. Of the 79 samples, we identified issues with 17 payroll charges. One employee contract accounted for 11 of those charges. The contract did not accurately describe the employee’s classification. The remaining 6 of the 17 payroll charges had insufficient documentation to support the amount paid. This is not a statistically valid sample. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the school department develop and implement internal policies and procedures to ensure that sufficient documentation to support the charge and to ensure that only allowable costs are charged to the program. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan issued by Town of Millinocket School Department.
2023-001 - Allowable Costs/Cost Principles Federal Program Information: Department of Education - Passed through the Maine Department of Education: ALN: - 84.425 - Education Stabilization Fund ALN: - 84.010 - Title I - Grants to Local Educational Agencies Criteria: The following CFR(s) apply to this finding: 2 CFR 200.303, 2 CFR 200.430(i) Condition: During audit procedures, it was identified that the school department does not follow a consistent, documented method to ensure employees were paid the proper amount ensuring that only allowable costs are being charged to the program. Cause: The school department does not have the necessary internal controls over compliance. Effect: The school department is at an increased risk for unallowable cost to be charged to the program. Identification of Questioned Costs: None identified. Context: The population for the test consisted of transactions of 121 payroll expenditures. 79 payroll samples were selected using the haphazard method. Of the 79 samples, we identified issues with 17 payroll charges. One employee contract accounted for 11 of those charges. The contract did not accurately describe the employee’s classification. The remaining 6 of the 17 payroll charges had insufficient documentation to support the amount paid. This is not a statistically valid sample. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the school department develop and implement internal policies and procedures to ensure that sufficient documentation to support the charge and to ensure that only allowable costs are charged to the program. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan issued by Town of Millinocket School Department.
2023-001 - Allowable Costs/Cost Principles Federal Program Information: Department of Education - Passed through the Maine Department of Education: ALN: - 84.425 - Education Stabilization Fund ALN: - 84.010 - Title I - Grants to Local Educational Agencies Criteria: The following CFR(s) apply to this finding: 2 CFR 200.303, 2 CFR 200.430(i) Condition: During audit procedures, it was identified that the school department does not follow a consistent, documented method to ensure employees were paid the proper amount ensuring that only allowable costs are being charged to the program. Cause: The school department does not have the necessary internal controls over compliance. Effect: The school department is at an increased risk for unallowable cost to be charged to the program. Identification of Questioned Costs: None identified. Context: The population for the test consisted of transactions of 121 payroll expenditures. 79 payroll samples were selected using the haphazard method. Of the 79 samples, we identified issues with 17 payroll charges. One employee contract accounted for 11 of those charges. The contract did not accurately describe the employee’s classification. The remaining 6 of the 17 payroll charges had insufficient documentation to support the amount paid. This is not a statistically valid sample. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the school department develop and implement internal policies and procedures to ensure that sufficient documentation to support the charge and to ensure that only allowable costs are charged to the program. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan issued by Town of Millinocket School Department.
2023-001 - Allowable Costs/Cost Principles Federal Program Information: Department of Education - Passed through the Maine Department of Education: ALN: - 84.425 - Education Stabilization Fund ALN: - 84.010 - Title I - Grants to Local Educational Agencies Criteria: The following CFR(s) apply to this finding: 2 CFR 200.303, 2 CFR 200.430(i) Condition: During audit procedures, it was identified that the school department does not follow a consistent, documented method to ensure employees were paid the proper amount ensuring that only allowable costs are being charged to the program. Cause: The school department does not have the necessary internal controls over compliance. Effect: The school department is at an increased risk for unallowable cost to be charged to the program. Identification of Questioned Costs: None identified. Context: The population for the test consisted of transactions of 121 payroll expenditures. 79 payroll samples were selected using the haphazard method. Of the 79 samples, we identified issues with 17 payroll charges. One employee contract accounted for 11 of those charges. The contract did not accurately describe the employee’s classification. The remaining 6 of the 17 payroll charges had insufficient documentation to support the amount paid. This is not a statistically valid sample. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the school department develop and implement internal policies and procedures to ensure that sufficient documentation to support the charge and to ensure that only allowable costs are charged to the program. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan issued by Town of Millinocket School Department.
2023-002 - Allowable Costs/Cost Principles Federal Program Information: Department of Education - Passed through the Maine Department of Education: ALN: - 84.010 - Title I - Grants to Local Educational Agencies Criteria: The following CFR(s) apply to this finding: 2 CFR 200.430(i) Condition: During the audit process it was identified that the School Department did not maintain sufficient documentation that reflected the work performed. Cause: The school department does not have the necessary internal controls over compliance. Effect: This School Department does not have records that reflect an accurate account of the employee’s time and effort devoted to the program, which could have allowed incorrect amounts to be charged to the grant. Identification of Questioned Costs: None identified. Context: The population for the test consisted of 53 payroll expenditures. We tested 18 out of 21 employees. The School Department completed time and effort certifications for all employees; however, the following issues were identified. 18 employees did not have the proper documentation for the distribution of their wages. The entity’s internal control noted that the direct supervisor overseeing the work completed should sign the documentation, where in these cases the superintendent signed. The documentation for 7 out of the 18 employees time and effort certifications were signed prior to the work being completed and the documentation for 2 out of the 18 employees noted an incorrect percentage charged to the grant. This is not a statistically valid sample. Repeat Finding: This is a repeat finding of 2022-001. Recommendation: It is recommended that the School Department implement internal control processes and procedures to ensure that time certifications are completed at the period end to ensure charges reflect an accurate account of the employee’s time devoted to the program. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan issued by Town of Millinocket School Department.
2023-002 - Allowable Costs/Cost Principles Federal Program Information: Department of Education - Passed through the Maine Department of Education: ALN: - 84.010 - Title I - Grants to Local Educational Agencies Criteria: The following CFR(s) apply to this finding: 2 CFR 200.430(i) Condition: During the audit process it was identified that the School Department did not maintain sufficient documentation that reflected the work performed. Cause: The school department does not have the necessary internal controls over compliance. Effect: This School Department does not have records that reflect an accurate account of the employee’s time and effort devoted to the program, which could have allowed incorrect amounts to be charged to the grant. Identification of Questioned Costs: None identified. Context: The population for the test consisted of 53 payroll expenditures. We tested 18 out of 21 employees. The School Department completed time and effort certifications for all employees; however, the following issues were identified. 18 employees did not have the proper documentation for the distribution of their wages. The entity’s internal control noted that the direct supervisor overseeing the work completed should sign the documentation, where in these cases the superintendent signed. The documentation for 7 out of the 18 employees time and effort certifications were signed prior to the work being completed and the documentation for 2 out of the 18 employees noted an incorrect percentage charged to the grant. This is not a statistically valid sample. Repeat Finding: This is a repeat finding of 2022-001. Recommendation: It is recommended that the School Department implement internal control processes and procedures to ensure that time certifications are completed at the period end to ensure charges reflect an accurate account of the employee’s time devoted to the program. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan issued by Town of Millinocket School Department.
Department of Health and Human Services 2023-003 Block Grants for Community Mental Health Services Criteria: Under 2 CFR 200.430(i)(1)(i) charges to Federal Awards for salaries and wages must be based on records that accurately reflect work performed and be supported with documentation that reasonable assure that the charges are accurate, allowable, and properly allocation and reasonably reflect the total activity for which the employee is compensated. Condition: The documentation to support reasonable assurance for salaries and wages consisted of documentation of when employees completed a therapy session but no clear documentation of how much time when employees were on-call or completed case notes for this grant. Cause: The documentation to support time and effort of employee’s salaries did not include all of the hour’s employees spent on the grant. The Center employees spend hours working outside the therapy session that relate to providing the best help for their clients’ needs. Effect: There is not proper documentation to support the allocation of time and effort that was charged to the grant. Auditor’s Recommendation: We recommend The Center remind its employees complete a personnel activity report that show all of the hours employees spend on the grant not rely just hours documented in the Center system used to track therapy sessions. Management response: While each grant budget and requirement is different, Management agrees with the recommendation as a more complete process for documenting the time and will work towards implementing the additional time coverage to our procedures.
FINDING 2023-001 Internal Control over Compliance and Compliance with Allowable Costs/Cost Principles Program: Federal Agency: Department of Health and Human Services Funding Year(s): 2/1/2020 – 3/31/2023 Federal Award: 90ZU0351-03-05 AL Number: 93.676 Criteria: The Code of Federal Regulations 2 CFR 200.303, Internal Control, requires the non-federal entity to establish and maintain effective internal control over Federal awards that provides reasonable assurance that the non-federal entity is managing Federal awards in compliance with Federal statutes, regulations, and other terms and conditions. Per 2 CFR Section 200.430 Compensation – Personal Services: “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 establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.” 2 CFR Section 200.430(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: (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) [Reserved] (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.” Condition: During the audit, we noted an instance for which an employee was reinstated and received retroactive payment for the months of September through November 2022 for which we were not able to substantiate the allowability of the payroll charges. Cause: The Organization did not follow its policies and procedures in place to ensure compliance with the requirements allowable personnel costs. Effect: Failure to follow the Organization’s control system related to review and document payroll benefits so that only allowable costs are charged to the program can lead to noncompliance with federal statutes, regulations could lead to disallowed costs. Context: This is a condition identified based upon our review of the Organization’s compliance with specified requirements. Questioned Costs: $9,864 Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization strictly enforce its existing policies and procedures to ensure that all payroll costs including benefits charged to the federal awards are reviewed and documented for allowability.
FINDING 2023-001 Internal Control over Compliance and Compliance with Allowable Costs/Cost Principles Program: Federal Agency: Department of Health and Human Services Funding Year(s): 2/1/2020 – 3/31/2023 Federal Award: 90ZU0351-03-05 AL Number: 93.676 Criteria: The Code of Federal Regulations 2 CFR 200.303, Internal Control, requires the non-federal entity to establish and maintain effective internal control over Federal awards that provides reasonable assurance that the non-federal entity is managing Federal awards in compliance with Federal statutes, regulations, and other terms and conditions. Per 2 CFR Section 200.430 Compensation – Personal Services: “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 establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.” 2 CFR Section 200.430(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: (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) [Reserved] (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.” Condition: During the audit, we noted an instance for which an employee was reinstated and received retroactive payment for the months of September through November 2022 for which we were not able to substantiate the allowability of the payroll charges. Cause: The Organization did not follow its policies and procedures in place to ensure compliance with the requirements allowable personnel costs. Effect: Failure to follow the Organization’s control system related to review and document payroll benefits so that only allowable costs are charged to the program can lead to noncompliance with federal statutes, regulations could lead to disallowed costs. Context: This is a condition identified based upon our review of the Organization’s compliance with specified requirements. Questioned Costs: $9,864 Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization strictly enforce its existing policies and procedures to ensure that all payroll costs including benefits charged to the federal awards are reviewed and documented for allowability.
Finding 2023-034: U. S. Department of Education ALN #84.010, Title I Grants to Local Educational Agencies (Title I) Grant #S010A220026 – 22A, S010A210026 – 21A, and S010A200026 – 20A Criteria: Federal regulation, 2 CFR 200.403(a) and (g), states that costs are allowable when necessary and reasonable for the performance of the federal award and adequately documented. Federal regulation, 2 CFR 200.430(i), states salaries and wages charged to a federal award must be based on records that accurately reflect the work performed. Paragraph 430(i)(1)(viii)(A) &(B) allows for budgeted estimates if the estimates produce reasonable approximations of the activity actually performed and significant changes are identified and entered into the records in a timely manner. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: The Office of Public Instruction’s (office) controls were not adequate to ensure compliance with federal regulations related to personal service costs. Questioned Costs: We question $1,900,796 in Title I costs, which is the amount of unsupported personal service costs. Context: Office personal service costs were allocated to the Title I program based on a budget in the state’s accounting system that was not supported by a time and effort certification. Office staff do not track time and effort to ensure amounts allocated to the Title I program are supported by actual records that reflect the work performed for the program. The office is allowed to use budget estimates but needs to track actual time to determine if those budget estimates are reasonable approximations of the activity performed. Effect: The office does not have controls to ensure that only allowable costs are allocated to Title I because there is not adequate support to demonstrate personal services costs are allocated to the federal program where work is performed. This resulted in questioned costs of over $1.9 million. Cause: Controls are not in place to require employees to track their time, so time and effort certifications are not completed periodically to ensure time is allocated to the correct programs. Office staff notes that the state’s accounting system is the official time record where employees report their time and supervisors approve and that employees have been directed to record their actual time worked by federal grant. However, five Title I employees reported using estimated percentages when recording their time. In addition, there is no documented control procedure instructing staff to record their actual time in the state’s accounting system. Recommendation: We recommend the Office of Public Instruction: A. Implement internal controls to ensure personal services costs are adequately documented and reflect actual time and effort for the Title I program. B. Allocate personal service costs based on support for actual time and effort on the Title I program, in accordance with federal regulations. Views of Responsible Officials: The office concurs with the recommendation. For additional information regarding the office’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-034: U. S. Department of Education ALN #84.010, Title I Grants to Local Educational Agencies (Title I) Grant #S010A220026 – 22A, S010A210026 – 21A, and S010A200026 – 20A Criteria: Federal regulation, 2 CFR 200.403(a) and (g), states that costs are allowable when necessary and reasonable for the performance of the federal award and adequately documented. Federal regulation, 2 CFR 200.430(i), states salaries and wages charged to a federal award must be based on records that accurately reflect the work performed. Paragraph 430(i)(1)(viii)(A) &(B) allows for budgeted estimates if the estimates produce reasonable approximations of the activity actually performed and significant changes are identified and entered into the records in a timely manner. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: The Office of Public Instruction’s (office) controls were not adequate to ensure compliance with federal regulations related to personal service costs. Questioned Costs: We question $1,900,796 in Title I costs, which is the amount of unsupported personal service costs. Context: Office personal service costs were allocated to the Title I program based on a budget in the state’s accounting system that was not supported by a time and effort certification. Office staff do not track time and effort to ensure amounts allocated to the Title I program are supported by actual records that reflect the work performed for the program. The office is allowed to use budget estimates but needs to track actual time to determine if those budget estimates are reasonable approximations of the activity performed. Effect: The office does not have controls to ensure that only allowable costs are allocated to Title I because there is not adequate support to demonstrate personal services costs are allocated to the federal program where work is performed. This resulted in questioned costs of over $1.9 million. Cause: Controls are not in place to require employees to track their time, so time and effort certifications are not completed periodically to ensure time is allocated to the correct programs. Office staff notes that the state’s accounting system is the official time record where employees report their time and supervisors approve and that employees have been directed to record their actual time worked by federal grant. However, five Title I employees reported using estimated percentages when recording their time. In addition, there is no documented control procedure instructing staff to record their actual time in the state’s accounting system. Recommendation: We recommend the Office of Public Instruction: A. Implement internal controls to ensure personal services costs are adequately documented and reflect actual time and effort for the Title I program. B. Allocate personal service costs based on support for actual time and effort on the Title I program, in accordance with federal regulations. Views of Responsible Officials: The office concurs with the recommendation. For additional information regarding the office’s planned corrective action see the Corrective Action Plan starting on page D-1.
U.S. DEPARTMENT OF EDUCATION PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION TWENTY-FIRST CENTURY COMMUNITY LEARNING CENTERS - AL NUMBER 84.287C PASS-THROUGH NUMBER 2607 AUDIT PERIOD - YEAR ENDED JUNE 30, 2023 2023-001.Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria or specific requirement: Office of Management and Budget (OMB) 2 CFR section 200.430 requires that personnel expenses (payroll) charged to federal awards must be based on records that adequately reflect the work performed. These records must be supported by a system of internal control that provides reasonable assurance through adequate documentation that the charges are accurate, allowable, and properly allocated. Additionally, the Arkansas Division of Elementary and Secondary Education (DESE) established grant guidance for the Twenty-First Century Community Learning Centers program, which states that timesheets must be signed by both the employee and the employee’s direct supervisor in the program, and the superintendent or district designee should sign timesheets for program directors. Condition: During our review of Twenty-First Century Community Learning Centers program payroll expenditures, we noted the following discrepancies: • Timesheet documentation was not provided for one employee for payments totaling $275. • Timesheets for three employees, totaling $1,030, were not signed by the employees' direct supervisor. Additionally, timesheets totaling $2,170 were not signed by the applicable employees. • Timesheets for two employees, totaling $418, appear to have been completed and signed by someone other than the employees. • The Site Coordinator was overpaid $1,920 for timesheets that conflicted with the employee’s existing contract. Additionally, timesheets totaling $7,580 were not signed by the employee’s direct supervisor. • The Program Director was overpaid $180 and $620, respectively, for hours that conflicted with the existing contract and for duplicate hours. Additionally, timesheets totaling $21,350 for the Site Director were not signed by the superintendent/district designee. Cause: Lack of internal controls and management oversight over program expenditures. Effect or potential effect: Questionable salary expenditures of $35,543 plus applicable fringe benefits of $8,050 were detected for the program. Questioned costs: Total questioned costs for the program were $43,593. Context: We examined all timesheets for the Program Director, Site Coordinator, Superintendent, and 3 additional program employees totaling $80,190 from a total population of 28 employees totaling $123,873. Our sample was statistically valid. Identification as a repeat finding: No Recommendation: The District should exercise proper oversight and implement proper internal controls over program expenditures. Additionally, the District should contact the Arkansas Division of Elementary and Secondary Education (DESE) for guidance regarding compliance with federal regulations. Views of responsible officials: The district will ensure that proper timesheets are submitted and signed by the employee and the program director. The Mountain Pine School District will exercise proper oversight and implement proper internal controls over program expenditures. The district will contact the Arkansas Division of Elementary and Secondary Education (DESE) for guidance regarding compliance with federal regulations.
Federal Agency: U.S. Department of Treasury CFDA No.: 14.218 Federal Program: Community Development Block Grants/Entitlement Grants Federal Award Year: 2023 Control Category: Allowable Costs Questioned Costs: $2,316 Condition The City charged CDBG payroll expenses to the program based a timesheet allocation and did not adjust the charges to reconcile to actual time incurred per employee timesheets. Criteria 2 CFR 200.430(i), Standards for Documentation of Personnel Expenses, states, in part: “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed…” Charges 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;…” And “budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Cause The City's payroll system charges time for employees each pay period based on an allocation rather than actual hours documented on the employee’s timesheet. Effect Payroll costs charged to the program were greater than amounts supported by the documentation. Questioned Costs There were questioned costs in the amount of $2,316. Recommendation We recommend that the City charge time to the program based on actual hours worked per the employees' timesheets. Management’s Response Regarding Corrective Action Taken or Planned Management acknowledges the importance of ensuring that payroll costs charged to the program are consistent between the payroll system and the employee’s timesheet. The City continues to monitor its internal control process to ensure thorough review procedures are being followed. Timesheets are reviewed, bi-weekly, by payroll and adjusted to reflect actual hours as they relate to a specific activity. The City was able to hire a permanent accountant hiring who will provide additional oversight of these processes ensuring that hours worked are both reported correctly on the timesheets and are following the funding allocations that are approved by the grant.
2023-003 – Allowable Costs/Cost Principles – Internal Control over Payroll Expenditures Identification of the Federal Program: Assistance Listing Number: 14.231 Assistance Listing Title: Emergency Solutions Grant Program Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: N/A Federal Award Identification Number: E-20-MW-06-0026, E-21-MC-06-0026, E-22-MC-06-0026 Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants-Entitlement Grants Cluster Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: N/A Federal Award Identification Number: B-20-MW-06-0026, B-21-MC-06-0026, B-22-MC-06-0026, B-23-MC-06-0026 Program Income Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Total salaries charged to Federal awards (including extra service pay) are subject to the Standards of Documentation as described by 2 CFR §200.430(i). Per this section, salaries and wages charged to Federal awards must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records; - Reasonably reflect the total activity for which the employee is compensating across all grant related and non-grant related activities (100% effort); - Support the distribution of employee salary across multiple activities or cost objectives (for example, effort spent on multiple federal awards, spent on general/or administrative activities, vacation, sick leave, leave without pay, etc.); and - Utilize an "after-the-fact" review of the employee’s actual hours worked during the reporting period for identifying and correcting significant changes (as defined by the organization’s written policies). Condition: Emergency Solutions Grant Program The City was unable to locate and provide the timesheets for (2) out of eleven (11) samples tested with Payroll Cost allocated to the Program. Within the overall population of a hundred and five (105) lines of ESG and ESGCV payroll charges, the City also had four (4) unsupported employee benefits charged to the program has benefit charged to program. Community Development Block Grants-Entitlement Grants Cluster Payroll costs for eighteen (18) out of forty (40) samples tested were allocated to programs were not supported by approved time samples or updated cost allocation methods/plan, nor were they reconciled to actual time spent on the various programs. Cause: The City did not adhere to its established policies and procedures for verifying that employee compensation charged to federal programs was supported by contemporaneous time records or an after-the-fact distribution of actual time and effort spent on federal program activities. Additionally, a thorough review and reconciliation of payroll time entries and postings from the old financial system (HTE) to the new financial system (MUNIS) was not conducted, resulting in the failure to preserve supporting documentation, such as timesheets, during the transition process. Effect or Potential Effect: The City did not comply with the program’s requirements for allowable costs. There is an increased risk that employees’ compensation charged to the program may not have represented an actual time and effort expended on the program’s activities. Questioned Costs: None. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommend that the City enhance its internal controls over payroll processes by implementing policies and procedures that ensure employee compensation charged to federal programs is supported by contemporaneous or after-the-fact documentation of actual time and effort spent on federal program activities. Additionally, all supporting documentation should be properly saved. Views of Responsible Officials: Management concurs with the finding.
2023-003 – Allowable Costs/Cost Principles – Internal Control over Payroll Expenditures Identification of the Federal Program: Assistance Listing Number: 14.231 Assistance Listing Title: Emergency Solutions Grant Program Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: N/A Federal Award Identification Number: E-20-MW-06-0026, E-21-MC-06-0026, E-22-MC-06-0026 Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants-Entitlement Grants Cluster Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: N/A Federal Award Identification Number: B-20-MW-06-0026, B-21-MC-06-0026, B-22-MC-06-0026, B-23-MC-06-0026 Program Income Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Total salaries charged to Federal awards (including extra service pay) are subject to the Standards of Documentation as described by 2 CFR §200.430(i). Per this section, salaries and wages charged to Federal awards must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records; - Reasonably reflect the total activity for which the employee is compensating across all grant related and non-grant related activities (100% effort); - Support the distribution of employee salary across multiple activities or cost objectives (for example, effort spent on multiple federal awards, spent on general/or administrative activities, vacation, sick leave, leave without pay, etc.); and - Utilize an "after-the-fact" review of the employee’s actual hours worked during the reporting period for identifying and correcting significant changes (as defined by the organization’s written policies). Condition: Emergency Solutions Grant Program The City was unable to locate and provide the timesheets for (2) out of eleven (11) samples tested with Payroll Cost allocated to the Program. Within the overall population of a hundred and five (105) lines of ESG and ESGCV payroll charges, the City also had four (4) unsupported employee benefits charged to the program has benefit charged to program. Community Development Block Grants-Entitlement Grants Cluster Payroll costs for eighteen (18) out of forty (40) samples tested were allocated to programs were not supported by approved time samples or updated cost allocation methods/plan, nor were they reconciled to actual time spent on the various programs. Cause: The City did not adhere to its established policies and procedures for verifying that employee compensation charged to federal programs was supported by contemporaneous time records or an after-the-fact distribution of actual time and effort spent on federal program activities. Additionally, a thorough review and reconciliation of payroll time entries and postings from the old financial system (HTE) to the new financial system (MUNIS) was not conducted, resulting in the failure to preserve supporting documentation, such as timesheets, during the transition process. Effect or Potential Effect: The City did not comply with the program’s requirements for allowable costs. There is an increased risk that employees’ compensation charged to the program may not have represented an actual time and effort expended on the program’s activities. Questioned Costs: None. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommend that the City enhance its internal controls over payroll processes by implementing policies and procedures that ensure employee compensation charged to federal programs is supported by contemporaneous or after-the-fact documentation of actual time and effort spent on federal program activities. Additionally, all supporting documentation should be properly saved. Views of Responsible Officials: Management concurs with the finding.
2023-003 – Allowable Costs/Cost Principles – Internal Control over Payroll Expenditures Identification of the Federal Program: Assistance Listing Number: 14.231 Assistance Listing Title: Emergency Solutions Grant Program Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: N/A Federal Award Identification Number: E-20-MW-06-0026, E-21-MC-06-0026, E-22-MC-06-0026 Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants-Entitlement Grants Cluster Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: N/A Federal Award Identification Number: B-20-MW-06-0026, B-21-MC-06-0026, B-22-MC-06-0026, B-23-MC-06-0026 Program Income Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Total salaries charged to Federal awards (including extra service pay) are subject to the Standards of Documentation as described by 2 CFR §200.430(i). Per this section, salaries and wages charged to Federal awards must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records; - Reasonably reflect the total activity for which the employee is compensating across all grant related and non-grant related activities (100% effort); - Support the distribution of employee salary across multiple activities or cost objectives (for example, effort spent on multiple federal awards, spent on general/or administrative activities, vacation, sick leave, leave without pay, etc.); and - Utilize an "after-the-fact" review of the employee’s actual hours worked during the reporting period for identifying and correcting significant changes (as defined by the organization’s written policies). Condition: Emergency Solutions Grant Program The City was unable to locate and provide the timesheets for (2) out of eleven (11) samples tested with Payroll Cost allocated to the Program. Within the overall population of a hundred and five (105) lines of ESG and ESGCV payroll charges, the City also had four (4) unsupported employee benefits charged to the program has benefit charged to program. Community Development Block Grants-Entitlement Grants Cluster Payroll costs for eighteen (18) out of forty (40) samples tested were allocated to programs were not supported by approved time samples or updated cost allocation methods/plan, nor were they reconciled to actual time spent on the various programs. Cause: The City did not adhere to its established policies and procedures for verifying that employee compensation charged to federal programs was supported by contemporaneous time records or an after-the-fact distribution of actual time and effort spent on federal program activities. Additionally, a thorough review and reconciliation of payroll time entries and postings from the old financial system (HTE) to the new financial system (MUNIS) was not conducted, resulting in the failure to preserve supporting documentation, such as timesheets, during the transition process. Effect or Potential Effect: The City did not comply with the program’s requirements for allowable costs. There is an increased risk that employees’ compensation charged to the program may not have represented an actual time and effort expended on the program’s activities. Questioned Costs: None. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommend that the City enhance its internal controls over payroll processes by implementing policies and procedures that ensure employee compensation charged to federal programs is supported by contemporaneous or after-the-fact documentation of actual time and effort spent on federal program activities. Additionally, all supporting documentation should be properly saved. Views of Responsible Officials: Management concurs with the finding.
2023-003 – Allowable Costs/Cost Principles – Internal Control over Payroll Expenditures Identification of the Federal Program: Assistance Listing Number: 14.231 Assistance Listing Title: Emergency Solutions Grant Program Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: N/A Federal Award Identification Number: E-20-MW-06-0026, E-21-MC-06-0026, E-22-MC-06-0026 Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants-Entitlement Grants Cluster Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: N/A Federal Award Identification Number: B-20-MW-06-0026, B-21-MC-06-0026, B-22-MC-06-0026, B-23-MC-06-0026 Program Income Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Total salaries charged to Federal awards (including extra service pay) are subject to the Standards of Documentation as described by 2 CFR §200.430(i). Per this section, salaries and wages charged to Federal awards must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records; - Reasonably reflect the total activity for which the employee is compensating across all grant related and non-grant related activities (100% effort); - Support the distribution of employee salary across multiple activities or cost objectives (for example, effort spent on multiple federal awards, spent on general/or administrative activities, vacation, sick leave, leave without pay, etc.); and - Utilize an "after-the-fact" review of the employee’s actual hours worked during the reporting period for identifying and correcting significant changes (as defined by the organization’s written policies). Condition: Emergency Solutions Grant Program The City was unable to locate and provide the timesheets for (2) out of eleven (11) samples tested with Payroll Cost allocated to the Program. Within the overall population of a hundred and five (105) lines of ESG and ESGCV payroll charges, the City also had four (4) unsupported employee benefits charged to the program has benefit charged to program. Community Development Block Grants-Entitlement Grants Cluster Payroll costs for eighteen (18) out of forty (40) samples tested were allocated to programs were not supported by approved time samples or updated cost allocation methods/plan, nor were they reconciled to actual time spent on the various programs. Cause: The City did not adhere to its established policies and procedures for verifying that employee compensation charged to federal programs was supported by contemporaneous time records or an after-the-fact distribution of actual time and effort spent on federal program activities. Additionally, a thorough review and reconciliation of payroll time entries and postings from the old financial system (HTE) to the new financial system (MUNIS) was not conducted, resulting in the failure to preserve supporting documentation, such as timesheets, during the transition process. Effect or Potential Effect: The City did not comply with the program’s requirements for allowable costs. There is an increased risk that employees’ compensation charged to the program may not have represented an actual time and effort expended on the program’s activities. Questioned Costs: None. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommend that the City enhance its internal controls over payroll processes by implementing policies and procedures that ensure employee compensation charged to federal programs is supported by contemporaneous or after-the-fact documentation of actual time and effort spent on federal program activities. Additionally, all supporting documentation should be properly saved. Views of Responsible Officials: Management concurs with the finding.
2023-003 – Allowable Costs/Cost Principles – Internal Control over Payroll Expenditures Identification of the Federal Program: Assistance Listing Number: 14.231 Assistance Listing Title: Emergency Solutions Grant Program Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: N/A Federal Award Identification Number: E-20-MW-06-0026, E-21-MC-06-0026, E-22-MC-06-0026 Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants-Entitlement Grants Cluster Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: N/A Federal Award Identification Number: B-20-MW-06-0026, B-21-MC-06-0026, B-22-MC-06-0026, B-23-MC-06-0026 Program Income Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Total salaries charged to Federal awards (including extra service pay) are subject to the Standards of Documentation as described by 2 CFR §200.430(i). Per this section, salaries and wages charged to Federal awards must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records; - Reasonably reflect the total activity for which the employee is compensating across all grant related and non-grant related activities (100% effort); - Support the distribution of employee salary across multiple activities or cost objectives (for example, effort spent on multiple federal awards, spent on general/or administrative activities, vacation, sick leave, leave without pay, etc.); and - Utilize an "after-the-fact" review of the employee’s actual hours worked during the reporting period for identifying and correcting significant changes (as defined by the organization’s written policies). Condition: Emergency Solutions Grant Program The City was unable to locate and provide the timesheets for (2) out of eleven (11) samples tested with Payroll Cost allocated to the Program. Within the overall population of a hundred and five (105) lines of ESG and ESGCV payroll charges, the City also had four (4) unsupported employee benefits charged to the program has benefit charged to program. Community Development Block Grants-Entitlement Grants Cluster Payroll costs for eighteen (18) out of forty (40) samples tested were allocated to programs were not supported by approved time samples or updated cost allocation methods/plan, nor were they reconciled to actual time spent on the various programs. Cause: The City did not adhere to its established policies and procedures for verifying that employee compensation charged to federal programs was supported by contemporaneous time records or an after-the-fact distribution of actual time and effort spent on federal program activities. Additionally, a thorough review and reconciliation of payroll time entries and postings from the old financial system (HTE) to the new financial system (MUNIS) was not conducted, resulting in the failure to preserve supporting documentation, such as timesheets, during the transition process. Effect or Potential Effect: The City did not comply with the program’s requirements for allowable costs. There is an increased risk that employees’ compensation charged to the program may not have represented an actual time and effort expended on the program’s activities. Questioned Costs: None. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommend that the City enhance its internal controls over payroll processes by implementing policies and procedures that ensure employee compensation charged to federal programs is supported by contemporaneous or after-the-fact documentation of actual time and effort spent on federal program activities. Additionally, all supporting documentation should be properly saved. Views of Responsible Officials: Management concurs with the finding.
2023-003 – Allowable Costs/Cost Principles – Internal Control over Payroll Expenditures Identification of the Federal Program: Assistance Listing Number: 14.231 Assistance Listing Title: Emergency Solutions Grant Program Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: N/A Federal Award Identification Number: E-20-MW-06-0026, E-21-MC-06-0026, E-22-MC-06-0026 Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants-Entitlement Grants Cluster Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: N/A Federal Award Identification Number: B-20-MW-06-0026, B-21-MC-06-0026, B-22-MC-06-0026, B-23-MC-06-0026 Program Income Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Total salaries charged to Federal awards (including extra service pay) are subject to the Standards of Documentation as described by 2 CFR §200.430(i). Per this section, salaries and wages charged to Federal awards must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records; - Reasonably reflect the total activity for which the employee is compensating across all grant related and non-grant related activities (100% effort); - Support the distribution of employee salary across multiple activities or cost objectives (for example, effort spent on multiple federal awards, spent on general/or administrative activities, vacation, sick leave, leave without pay, etc.); and - Utilize an "after-the-fact" review of the employee’s actual hours worked during the reporting period for identifying and correcting significant changes (as defined by the organization’s written policies). Condition: Emergency Solutions Grant Program The City was unable to locate and provide the timesheets for (2) out of eleven (11) samples tested with Payroll Cost allocated to the Program. Within the overall population of a hundred and five (105) lines of ESG and ESGCV payroll charges, the City also had four (4) unsupported employee benefits charged to the program has benefit charged to program. Community Development Block Grants-Entitlement Grants Cluster Payroll costs for eighteen (18) out of forty (40) samples tested were allocated to programs were not supported by approved time samples or updated cost allocation methods/plan, nor were they reconciled to actual time spent on the various programs. Cause: The City did not adhere to its established policies and procedures for verifying that employee compensation charged to federal programs was supported by contemporaneous time records or an after-the-fact distribution of actual time and effort spent on federal program activities. Additionally, a thorough review and reconciliation of payroll time entries and postings from the old financial system (HTE) to the new financial system (MUNIS) was not conducted, resulting in the failure to preserve supporting documentation, such as timesheets, during the transition process. Effect or Potential Effect: The City did not comply with the program’s requirements for allowable costs. There is an increased risk that employees’ compensation charged to the program may not have represented an actual time and effort expended on the program’s activities. Questioned Costs: None. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommend that the City enhance its internal controls over payroll processes by implementing policies and procedures that ensure employee compensation charged to federal programs is supported by contemporaneous or after-the-fact documentation of actual time and effort spent on federal program activities. Additionally, all supporting documentation should be properly saved. Views of Responsible Officials: Management concurs with the finding.
2023-003 – Allowable Costs/Cost Principles – Internal Control over Payroll Expenditures Identification of the Federal Program: Assistance Listing Number: 14.231 Assistance Listing Title: Emergency Solutions Grant Program Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: N/A Federal Award Identification Number: E-20-MW-06-0026, E-21-MC-06-0026, E-22-MC-06-0026 Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants-Entitlement Grants Cluster Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: N/A Federal Award Identification Number: B-20-MW-06-0026, B-21-MC-06-0026, B-22-MC-06-0026, B-23-MC-06-0026 Program Income Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Total salaries charged to Federal awards (including extra service pay) are subject to the Standards of Documentation as described by 2 CFR §200.430(i). Per this section, salaries and wages charged to Federal awards must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records; - Reasonably reflect the total activity for which the employee is compensating across all grant related and non-grant related activities (100% effort); - Support the distribution of employee salary across multiple activities or cost objectives (for example, effort spent on multiple federal awards, spent on general/or administrative activities, vacation, sick leave, leave without pay, etc.); and - Utilize an "after-the-fact" review of the employee’s actual hours worked during the reporting period for identifying and correcting significant changes (as defined by the organization’s written policies). Condition: Emergency Solutions Grant Program The City was unable to locate and provide the timesheets for (2) out of eleven (11) samples tested with Payroll Cost allocated to the Program. Within the overall population of a hundred and five (105) lines of ESG and ESGCV payroll charges, the City also had four (4) unsupported employee benefits charged to the program has benefit charged to program. Community Development Block Grants-Entitlement Grants Cluster Payroll costs for eighteen (18) out of forty (40) samples tested were allocated to programs were not supported by approved time samples or updated cost allocation methods/plan, nor were they reconciled to actual time spent on the various programs. Cause: The City did not adhere to its established policies and procedures for verifying that employee compensation charged to federal programs was supported by contemporaneous time records or an after-the-fact distribution of actual time and effort spent on federal program activities. Additionally, a thorough review and reconciliation of payroll time entries and postings from the old financial system (HTE) to the new financial system (MUNIS) was not conducted, resulting in the failure to preserve supporting documentation, such as timesheets, during the transition process. Effect or Potential Effect: The City did not comply with the program’s requirements for allowable costs. There is an increased risk that employees’ compensation charged to the program may not have represented an actual time and effort expended on the program’s activities. Questioned Costs: None. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommend that the City enhance its internal controls over payroll processes by implementing policies and procedures that ensure employee compensation charged to federal programs is supported by contemporaneous or after-the-fact documentation of actual time and effort spent on federal program activities. Additionally, all supporting documentation should be properly saved. Views of Responsible Officials: Management concurs with the finding.
Compliance and Significant Deficiency in Internal Control over compliance with Activities Allowed or Unallowed, Allowable Cost/Cost Principles U.S. Department of Education Passed through NYS Department of Education Program Name: Education Stabilization Fund AL#: 84.425U Condition: Payroll Costs for one employee were charged to the UPK grant in excess of the employee’s wages for the year. Criteria: 2CFR Section 200.430 requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must also (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. Context: Our review of the payroll in the UPK grant found that one employee had payroll recorded to the grant that exceed their full payroll for the year. The employee was docked pay that was incorrectly charged to the General Fund creating a negative earning in the general Fund. Questioned Costs are $736. Cause: The employee was docked pay that was incorrectly charged to the General Fund creating a negative earning in the General Fund and an overstatement in the UPK Grant. Questioned Costs are $736. Effect: The District is not in compliance with the requirements of the Education Stabilization Fund program with respect to Activities Allowed or Unallowed and Allowable Costs. Recommendation: We recommend that the District’s written procedures addressing internal controls with respect to program requirements be followed to ensure the District is in compliance at all times. View of Responsible Officials: Highland Falls-Fort Montgomery Central School District’s management concurs with this finding. The District is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 12 – 13.
Finding number: 2023 006 Federal agency: U.S. Department of Education Pass through agency: Commonwealth Department of Elementary and Secondary Education Program: Title I, Grants to Local Education Agencies ALN #: 84.010 Award number: 305 532937 2022 0035; 305 719222 2023 0035 Award year: September 1, 2021 to June 30, 2023 Finding: Internal Control and Compliance over Payroll Costs Prior Year Finding: Yes; 2022 001 Type of Finding: Material Weakness 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; (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; and (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. Additionally, 2 CFR 200.303 indicates that non Federal entities receiving Federal awards 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 During our testing of allowable costs associated with payroll charges, we noted that the City of Boston Public Schools (BPS) documents time and attendance of employees on daily timesheets signed by the employee, and that these timesheets are approved by the Department Head/Supervisor on a Department Time Summary Report (DTSR). However, for our sample of 40 payroll transactions charged to the program, 23 transactions were not supported by a completed timesheet. Additionally, we noted that the DTSR was either not located or not approved by the Department Head/Supervisor for 5 payroll transactions. Cause This appears to be due to an insufficient system for collecting, filing and maintaining supporting documentation for payroll transactions charged to Federal programs. Effect Insufficient review of payroll documentation increases the risk of inaccurate payroll costs being allocated to a grant award. Additionally, BPS is not in compliance with 2 CFR 200.430(i)(1) regarding documentation in support of salaries and wages charge to the federal program. The number of transactions that were not supported by a time sheet represent 57% of the selected population and indicate a systemic problem. Whether Sampling was Statistically Valid The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs: Questioned costs of $65,817, for unsupported payroll charges, were charged to ALN # 84.010, Award No. 305 532937 2022 0035 and Award No. 305 719222 2023 0035. Recommendation We recommend that BPS re enforce its policies and procedures to ensure their review of payroll changes via signoff on the Department Time Summary is appropriately documented and records are retained to ensure that all payroll costs charged to the federal program are supported by documentation as required by 2 CFR 200.430(i)(1). View of Responsible Officials from the Auditee BPS has updated DTSR training and guidance for timekeepers to ensure that any similar technical issues are addressed quickly and manually adjusted if needed. Training was given in August 2024.
Finding number: 2023 011 Federal agency: U.S. Department of Education Pass through agency: Commonwealth Department of Elementary and Secondary Education Program: Special Education (IDEA) Cluster ALN #: 84.027; 84.173 Award number: 240 532934 2022 0035; 240 714716 2023 0035 Award year: August 23, 2021 to September 30, 2024 Finding: Internal Control over Payroll Costs and Period of Performance Prior Year Finding: No Type of Finding: Material Weakness Criteria Allowable Costs – Payroll 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; (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; and (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. Period of Performance A non federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass through entity made the federal award that were authorized by the federal awarding agency or pass through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). A period of performance may contain one or more budget periods. LEAs and SEAs must obligate funds during the 27 months, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. This maximum period includes a 15 month period of initial availability plus a 12 month period for carryover. Additionally, 2 CFR 200.303 indicates that non Federal entities receiving Federal awards 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 During our testing of allowable costs and period of performance associated with payroll charges, we noted that the City of Boston Public Schools (BPS) documents time and attendance of employees on daily timesheets signed by the employee, and that these timesheets are approved by the Department Head/Supervisor on a Department Time Summary Report (DTSR). However, for 39 of our sample of 40 payroll transactions charged to the program, we noted that the DTSR was either not located or not approved by the Department Head/Supervisor. Cause This appears to be due to the insufficient retention and documentation over the review and approval of payroll charges. Effect Insufficient review of payroll documentation increases the risk of inaccurate payroll costs being allocated to a grant award. Whether Sampling was Statistically Valid The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs: None Recommendation We recommend that BPS re enforce its policies and procedures to ensure their review of payroll changes via signoff on the Department Time Summary is appropriately documented and records are retained. View of Responsible Officials from the Auditee BPS has updated DTSR training and guidance for timekeepers to ensure that any similar technical issues are addressed quickly and manually adjusted if needed. Training was given in August 2024.
Finding number: 2023 011 Federal agency: U.S. Department of Education Pass through agency: Commonwealth Department of Elementary and Secondary Education Program: Special Education (IDEA) Cluster ALN #: 84.027; 84.173 Award number: 240 532934 2022 0035; 240 714716 2023 0035 Award year: August 23, 2021 to September 30, 2024 Finding: Internal Control over Payroll Costs and Period of Performance Prior Year Finding: No Type of Finding: Material Weakness Criteria Allowable Costs – Payroll 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; (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; and (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. Period of Performance A non federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass through entity made the federal award that were authorized by the federal awarding agency or pass through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). A period of performance may contain one or more budget periods. LEAs and SEAs must obligate funds during the 27 months, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. This maximum period includes a 15 month period of initial availability plus a 12 month period for carryover. Additionally, 2 CFR 200.303 indicates that non Federal entities receiving Federal awards 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 During our testing of allowable costs and period of performance associated with payroll charges, we noted that the City of Boston Public Schools (BPS) documents time and attendance of employees on daily timesheets signed by the employee, and that these timesheets are approved by the Department Head/Supervisor on a Department Time Summary Report (DTSR). However, for 39 of our sample of 40 payroll transactions charged to the program, we noted that the DTSR was either not located or not approved by the Department Head/Supervisor. Cause This appears to be due to the insufficient retention and documentation over the review and approval of payroll charges. Effect Insufficient review of payroll documentation increases the risk of inaccurate payroll costs being allocated to a grant award. Whether Sampling was Statistically Valid The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs: None Recommendation We recommend that BPS re enforce its policies and procedures to ensure their review of payroll changes via signoff on the Department Time Summary is appropriately documented and records are retained. View of Responsible Officials from the Auditee BPS has updated DTSR training and guidance for timekeepers to ensure that any similar technical issues are addressed quickly and manually adjusted if needed. Training was given in August 2024.
Finding number: 2023 013 Federal agency: U.S. Department of Education Pass through agency: Commonwealth Department of Elementary and Secondary Education Program: COVID 19 Education Stabilization Fund ALN #: 84.425D Award number: 119 532940 2022 0035 Award year: September 1, 2022 to June 30, 2024 Finding: Internal Control over Payroll Costs Prior Year Finding: No Type of Finding: Significant Deficiency 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; (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; and (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. Additionally, 2 CFR 200.303 indicates that non Federal entities receiving Federal awards 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 During our testing of allowable costs associated with payroll charges, we noted that the City of Boston Public Schools (BPS) documents time and attendance of employees on daily timesheets signed by the employee, as well as weekly time and effort reporting worksheets. The timesheets are then reviewed alongside the bi weekly Department Time Summary Reports (DTSRs) and approved by the Department Head, ensuring appropriate salary and wage distribution. However, for one of our sample of 40 payroll transactions charged to the program, we noted that although the respective DTSR was approved by the Department Head and the employee signed their timesheet, the employee selected was missing from the DTSR. Cause This appears to be due to the review of the DTSR not being precise enough to ensure all employees are included and appropriately charged to the program. Effect Insufficient review of payroll documentation increases the risk of inaccurate payroll costs being allocated to a grant award. Whether Sampling was Statistically Valid The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs: None Recommendation We recommend that BPS enhance its policies and procedures to include a more detailed review of the Department Time Summary to ensure that all payroll costs charged to the federal program are reviewed and approved. View of Responsible Officials from the Auditee We had a system error for the employee when they changed from temporary to permanent status that led to their time not correctly showing up in the DTSR document. This problem should have been flagged earlier by their department timekeeper for correction. BPS has updated DTSR training and guidance for timekeepers to ensure that any similar technical issues are addressed quickly and manually adjusted if needed.
Finding number: 2023 014 Federal agency: U.S. Department of Homeland Security Pass through agency: N/A – Direct Funding Program: Staffing for Adequate Fire and Emergency Response ALN #: 97.083 Award number: EMW 2020 FF 00996 Award year: February 27, 2022 to February 26, 2025 Finding: Internal Control over Payroll Prior Year Finding: No Type of Finding: Material Weakness 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; (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; and (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. Additionally, 2 CFR 200.303 indicates that non Federal entities receiving Federal awards 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 During our testing of allowable costs associated with payroll charges, we noted the Boston Fire Department (BFD) provides a pay rate text file to the City of Boston Central Payroll Division to process stipend payments. The pay rate file is then uploaded into the City’s payroll system (HCM), which is used to process the fire fighter’s payroll. However, we noted there is no review process over the pay rate file to ensure accuracy of the rates. Cause This appears to be due to a lack of a formal control over the stipend pay rate process. Effect Insufficient review of payroll documentation increases the risk of inaccurate payroll costs being allocated to a grant award. Whether Sampling was Statistically Valid The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs: None Recommendation We recommend BFD implement a formal process to ensure accuracy of stipend rates prior to upload into the City’s payroll system. View of Responsible Officials from the Auditee The City of Boston and The Boston Fire Department will implement additional internal controls over the review of pay rates. These additional internal controls will ensure that all pay rates are accurate and will include evidence of review and approval.
Finding 2023-001 – B. Allowable Costs Federal Agency: U.S. Department of Health and Human Services Passthrough Entity: N/A Assistance Listing Number and Federal Program: 93.829 Section 223 Demonstration Programs to Improve Community Mental Health Services Criteria: In accordance with 2 CFR part 200.302, the Association is required to maintain financial management systems to trace funds to expenditures to establish that funds have been used according to Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system must provide for records that identify adequately the source and application of funds for federally funded activities, among other conditions. The reporting of the federal expenditures should be supported by these records. Amounts may not be expended from project funds on an arbitrary basis. Additionally, in accordance with 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, among other things, should support the distribution of the employee’s salary or wages among specific activities if the employee works on a Federal award and non-Federal award. Budget estimates do not qualify as support for charges to Federal awards. Statement of Condition: During the course of our audit, supporting detail for expenses allocated and charged to the grant was not available and could not be determined. Salaries and benefits charged to the grant were based on estimates of employees’ expected workload and client needs, and not supported by records that accurately reflected the work performed on the Federal program. Additionally, the de minimis indirect cost rate was not correctly calculated and applied. The indirect cost charged to the grant was based on the indirect cost obligated by the Notice of Award rather than by calculating the indirect cost from the modified total direct cost base. Statement Cause: This is the second year the Association received this type of grant funding, coupled with significant growth experienced by the Association, the accounting system and staff were not yet prepared to effectively adhere to the requirements of the grant. Supporting documentation is not available for employees’ actual time spent and charged to the grants. Statement of Effect: Without proper accounting of expenditures and support of salaries and wages, grant expenditures can be over or understated on the drawdown requests. This could result in noncompliance with grant agreements which could lead to adverse conditions with the grantors. Questioned Costs: No questioned costs were identified. Identification of Repeat Findings: 2022-001 Recommendations: Project codes or classes should be created within the accounting system, if available. This will allow for expenses to be properly segregated by grant or other funding. When expenses are properly segregated, the indirect cost can be properly calculated using the correct direct cost base. The Association should also implement that all employees submit personnel activity reports to provide documentation of their time allocated to the grant. Views of Responsible Official(s): The Association is in agreement with the finding and is continuing to expand their knowledge on grant expenditures and compliance as it relates to the new financial management software to aid in tracking grants. See corrective action plan.
2023-002 – Allowable Activities/Cost Principles U.S. Department of Education Title I Grants to Local Education Agencies (AL # 84.010) Finding Type: Material Noncompliance; Material Weakness in Internal Control over Compliance Criteria: In accordance with 2 CFR section 200.430, the local education agency is required to maintain time and effort distribution records for employees who work on federal programs. These distribution records must support the portion of time and effort dedicated to: 1) The federal program or cost objective; and 2) Other programs or cost objectives supported by federal funds or other revenue sources. Statement of Condition: The District was not in compliance with the Uniform Guidance as it was noted that management of the District was not preparing time and effort distribution records and could not produce source documentation to support the time and effort applied to payroll expense that was charged to Title I Grants to Local Education Agencies. Cause: The District’s internal controls to identify and document employees that require support for time and effort charged to Title I Grants to Local Education Agencies were not effective for the year ended June 30, 2023. Context: We selected payroll costs associated with nine employees who had wages charged to Title I Grants to Local Education Agencies. Of the nine employees selected for testing, seven employees did not have time and effort documentation or other source documentation to support the payroll expense that was charged to the federal program. Effect or Potential Effect: Salary and wage costs could be applied to Title I Grants to Local Education Agencies without appropriate supporting documentation required in accordance with 2 CFR Part 200.430 and District Policy. Questioned Costs: $14,985 of known questioned costs charged to this federal program in the year under audit. Recommendations: We recommend the District review their internal controls to strengthen processes and improve procedures. We recommend the District complete all required time and effort certifications in a timely manner. Views of Responsible Officials and Planned Corrective Actions: The District agrees with the finding and recommendation and plans to implement a system of completing necessary time and effort documentation for all employees who work on federal programs.
2023-002 – Allowable Activities/Cost Principles U.S. Department of Education Title I Grants to Local Education Agencies (AL # 84.010) Finding Type: Material Noncompliance; Material Weakness in Internal Control over Compliance Criteria: In accordance with 2 CFR section 200.430, the local education agency is required to maintain time and effort distribution records for employees who work on federal programs. These distribution records must support the portion of time and effort dedicated to: 1) The federal program or cost objective; and 2) Other programs or cost objectives supported by federal funds or other revenue sources. Statement of Condition: The District was not in compliance with the Uniform Guidance as it was noted that management of the District was not preparing time and effort distribution records and could not produce source documentation to support the time and effort applied to payroll expense that was charged to Title I Grants to Local Education Agencies. Cause: The District’s internal controls to identify and document employees that require support for time and effort charged to Title I Grants to Local Education Agencies were not effective for the year ended June 30, 2023. Context: We selected payroll costs associated with nine employees who had wages charged to Title I Grants to Local Education Agencies. Of the nine employees selected for testing, seven employees did not have time and effort documentation or other source documentation to support the payroll expense that was charged to the federal program. Effect or Potential Effect: Salary and wage costs could be applied to Title I Grants to Local Education Agencies without appropriate supporting documentation required in accordance with 2 CFR Part 200.430 and District Policy. Questioned Costs: $14,985 of known questioned costs charged to this federal program in the year under audit. Recommendations: We recommend the District review their internal controls to strengthen processes and improve procedures. We recommend the District complete all required time and effort certifications in a timely manner. Views of Responsible Officials and Planned Corrective Actions: The District agrees with the finding and recommendation and plans to implement a system of completing necessary time and effort documentation for all employees who work on federal programs.
United States Department of Treasury Federal Assistance Listing No. 21.027 American Rescue Plan Act (ARPA) Federal Assistance Listing No. 94.006 AmeriCorps State and National Material weakness over Activities Allowed or Unallowed and Allowable Costs/Cost Principle (Payroll) Repeat Finding: No Condition: For 25 out of 25 payroll selections, we did not receive support to test that payroll charges to the AmeriCorps and ARPA programs were for actual time and effort spent on the grant. Criteria: In accordance with 2 CFR 200.514: (c) Internal control. (1) The compliance supplement provides guidance on internal controls over Federal programs based upon the guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States and the Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). COSO requires entities to establish and maintain effective internal controls to achieve operational, reporting and compliance objectives. In accordance with 2 CFR 200.430: (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: (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; and (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. Cause: BCI did not have proper controls in place to ensure that payroll activities charged were based on actual work performed on the grant. Effect: BCI is not in compliance with activities allowed and allowable costs (payroll) requirement for the ARPA program. Unallowed payroll costs could be charged to the grant. Questioned Costs: Unknown. Recommendation: We recommend that BCI establish written procedures related to federally funded payroll (partial and full) to ensure the charges are based on time and effort spent working on the grant and implement these procedures immediately. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the Corrective Action Plan. Auditor’s Conclusion: Finding remains as stated.
United States Department of Treasury Federal Assistance Listing No. 21.027 American Rescue Plan Act (ARPA) Federal Assistance Listing No. 94.006 AmeriCorps State and National Material weakness over Activities Allowed or Unallowed and Allowable Costs/Cost Principle (Payroll) Repeat Finding: No Condition: For 25 out of 25 payroll selections, we did not receive support to test that payroll charges to the AmeriCorps and ARPA programs were for actual time and effort spent on the grant. Criteria: In accordance with 2 CFR 200.514: (c) Internal control. (1) The compliance supplement provides guidance on internal controls over Federal programs based upon the guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States and the Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). COSO requires entities to establish and maintain effective internal controls to achieve operational, reporting and compliance objectives. In accordance with 2 CFR 200.430: (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: (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; and (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. Cause: BCI did not have proper controls in place to ensure that payroll activities charged were based on actual work performed on the grant. Effect: BCI is not in compliance with activities allowed and allowable costs (payroll) requirement for the ARPA program. Unallowed payroll costs could be charged to the grant. Questioned Costs: Unknown. Recommendation: We recommend that BCI establish written procedures related to federally funded payroll (partial and full) to ensure the charges are based on time and effort spent working on the grant and implement these procedures immediately. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the Corrective Action Plan. Auditor’s Conclusion: Finding remains as stated.
United States Department of Treasury Federal Assistance Listing No. 21.027 American Rescue Plan Act (ARPA) Federal Assistance Listing No. 94.006 AmeriCorps State and National Material weakness over Activities Allowed or Unallowed and Allowable Costs/Cost Principle (Payroll) Repeat Finding: No Condition: For 25 out of 25 payroll selections, we did not receive support to test that payroll charges to the AmeriCorps and ARPA programs were for actual time and effort spent on the grant. Criteria: In accordance with 2 CFR 200.514: (c) Internal control. (1) The compliance supplement provides guidance on internal controls over Federal programs based upon the guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States and the Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). COSO requires entities to establish and maintain effective internal controls to achieve operational, reporting and compliance objectives. In accordance with 2 CFR 200.430: (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: (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; and (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. Cause: BCI did not have proper controls in place to ensure that payroll activities charged were based on actual work performed on the grant. Effect: BCI is not in compliance with activities allowed and allowable costs (payroll) requirement for the ARPA program. Unallowed payroll costs could be charged to the grant. Questioned Costs: Unknown. Recommendation: We recommend that BCI establish written procedures related to federally funded payroll (partial and full) to ensure the charges are based on time and effort spent working on the grant and implement these procedures immediately. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the Corrective Action Plan. Auditor’s Conclusion: Finding remains as stated.
Review of Payroll Registers – Internal Controls over Allowable Costs and Activities and Period of Performance (Material Weakness) Federal Program Information: Funding Agency: U.S. Department of Treasury FALN: 21.027 Federal Award Identification Numbers: GA-0010655 Pass Through Entity: State of Georgia Award Year: 2021-2023 Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR Section 200.430(i) compensation records must provide reasonable assurance that the charges are accurate, allowable and properly allocated. Condition: There is no documentation of payroll registers being reviewed for accuracy by management on a timely basis. Effect: Failure to review payroll registers for accuracy by management on a timely basis could result in intentional or unintentional material misstatements and an increased risk for inaccurate financial reporting. Cause: The review of the payroll registers was not properly documented due to several changes in personnel within management. Known Questioned Costs: None Perspective: This finding represents a systemic problem prior to 2023 when a new process was put into place to properly document the review. Repeat Finding: No Recommendation: We recommend that internal controls be strengthened and processes implemented to ensure payroll registers are reviewed for accuracy by management on a timely basis and that the review be documented.
Documentation of Approved Pay Rates – Internal Controls over Allowable Costs and Activities (Material Weakness) Federal Program Information: Funding Agency: U.S. Department of Treasury FALN: 21.027 Federal Award Identification Numbers: GA-0010655 Pass Through Entity: State of Georgia Award Year: 2021-2023 Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR Section 200.430(i) compensation records must provide reasonable assurance that the charges are accurate, allowable and properly allocated. Condition: There is no documentation of approved pay rate. Effect: Failure to maintain documentation of approved pay rates could result in intentional or unintentional material misstatements and an increased risk for inaccurate financial reporting. Cause: The pay rate approval was not properly documented due to several changes in personnel within management. Repeat Finding: No Recommendation: We recommend that internal controls be strengthened and processes implemented to ensure all employee pay rates are documented and approved by management. Known Questioned Costs: $3,446 Likely Questioned Costs: $24,769
2023-007 U.S. Department of Agriculture, For the period July 1, 2022 through June 30, 2023, Assistance Listing #10.553, 10.555, 10.556, 10.559, and 10.582 - Internal Controls over Child Nutrition Cluster Criteria: The School Department receives federal reimbursement for free and reduced price meals provided to children at established reimbursement rates. Monthly claims for reimbursement must be based on lunch counts taken daily at the point of service, which correctly identify the number of free, reduced price, and paid lunches served to eligible students. In addition, the School Department participates in the Fresh Fruit and Vegetable Program which provides reimbursement of fresh fruit and vegetable purchases and related operational program costs. Charges for salaries and wages to the program must be based on records that accurately reflect the work performed. Condition: The April claim reimbursement form overstated breakfast meal counts by 1,000 meals, which comprised 7% of total meals claimed. In addition, operational and administrative payroll costs charged to the Fresh Fruit and Vegetable Program were based on estimated hours worked, rather than actual time and effort records. Cause: The Business Manager approves all monthly claims in the CNPWeb system prior to submission to the State. However, the School Department does not have a policy to provide supporting claim documentation to the Business Manager to verify the accuracy of the monthly claim. In addition, the School Department does not have policies and procedures that provide reasonable assurance that payroll charges to the Fresh Fruit and Vegetable Program are accurate, allowable, and properly allocated. Effect: Errors in monthly claims may not be detected and corrected in a timely basis resulting in potential questioned costs. Unsupported payroll charges may not meet cost principal requirements resulting in potential questioned costs. Recommendation: We recommend the School Department establish policies and procedures that ensure the Business Manager has adequate supporting documentation to verify monthly nutrition claims before they are submitted to the State. We also recommend that policies and procedures be established to ensure employees allocating their time to the Fresh Fruit and Vegetable Program complete documentation as required by 2 CFR 200.430(i). Likely Questioned Costs: None.
2023-007 U.S. Department of Agriculture, For the period July 1, 2022 through June 30, 2023, Assistance Listing #10.553, 10.555, 10.556, 10.559, and 10.582 - Internal Controls over Child Nutrition Cluster Criteria: The School Department receives federal reimbursement for free and reduced price meals provided to children at established reimbursement rates. Monthly claims for reimbursement must be based on lunch counts taken daily at the point of service, which correctly identify the number of free, reduced price, and paid lunches served to eligible students. In addition, the School Department participates in the Fresh Fruit and Vegetable Program which provides reimbursement of fresh fruit and vegetable purchases and related operational program costs. Charges for salaries and wages to the program must be based on records that accurately reflect the work performed. Condition: The April claim reimbursement form overstated breakfast meal counts by 1,000 meals, which comprised 7% of total meals claimed. In addition, operational and administrative payroll costs charged to the Fresh Fruit and Vegetable Program were based on estimated hours worked, rather than actual time and effort records. Cause: The Business Manager approves all monthly claims in the CNPWeb system prior to submission to the State. However, the School Department does not have a policy to provide supporting claim documentation to the Business Manager to verify the accuracy of the monthly claim. In addition, the School Department does not have policies and procedures that provide reasonable assurance that payroll charges to the Fresh Fruit and Vegetable Program are accurate, allowable, and properly allocated. Effect: Errors in monthly claims may not be detected and corrected in a timely basis resulting in potential questioned costs. Unsupported payroll charges may not meet cost principal requirements resulting in potential questioned costs. Recommendation: We recommend the School Department establish policies and procedures that ensure the Business Manager has adequate supporting documentation to verify monthly nutrition claims before they are submitted to the State. We also recommend that policies and procedures be established to ensure employees allocating their time to the Fresh Fruit and Vegetable Program complete documentation as required by 2 CFR 200.430(i). Likely Questioned Costs: None.
2023-007 U.S. Department of Agriculture, For the period July 1, 2022 through June 30, 2023, Assistance Listing #10.553, 10.555, 10.556, 10.559, and 10.582 - Internal Controls over Child Nutrition Cluster Criteria: The School Department receives federal reimbursement for free and reduced price meals provided to children at established reimbursement rates. Monthly claims for reimbursement must be based on lunch counts taken daily at the point of service, which correctly identify the number of free, reduced price, and paid lunches served to eligible students. In addition, the School Department participates in the Fresh Fruit and Vegetable Program which provides reimbursement of fresh fruit and vegetable purchases and related operational program costs. Charges for salaries and wages to the program must be based on records that accurately reflect the work performed. Condition: The April claim reimbursement form overstated breakfast meal counts by 1,000 meals, which comprised 7% of total meals claimed. In addition, operational and administrative payroll costs charged to the Fresh Fruit and Vegetable Program were based on estimated hours worked, rather than actual time and effort records. Cause: The Business Manager approves all monthly claims in the CNPWeb system prior to submission to the State. However, the School Department does not have a policy to provide supporting claim documentation to the Business Manager to verify the accuracy of the monthly claim. In addition, the School Department does not have policies and procedures that provide reasonable assurance that payroll charges to the Fresh Fruit and Vegetable Program are accurate, allowable, and properly allocated. Effect: Errors in monthly claims may not be detected and corrected in a timely basis resulting in potential questioned costs. Unsupported payroll charges may not meet cost principal requirements resulting in potential questioned costs. Recommendation: We recommend the School Department establish policies and procedures that ensure the Business Manager has adequate supporting documentation to verify monthly nutrition claims before they are submitted to the State. We also recommend that policies and procedures be established to ensure employees allocating their time to the Fresh Fruit and Vegetable Program complete documentation as required by 2 CFR 200.430(i). Likely Questioned Costs: None.
2023-007 U.S. Department of Agriculture, For the period July 1, 2022 through June 30, 2023, Assistance Listing #10.553, 10.555, 10.556, 10.559, and 10.582 - Internal Controls over Child Nutrition Cluster Criteria: The School Department receives federal reimbursement for free and reduced price meals provided to children at established reimbursement rates. Monthly claims for reimbursement must be based on lunch counts taken daily at the point of service, which correctly identify the number of free, reduced price, and paid lunches served to eligible students. In addition, the School Department participates in the Fresh Fruit and Vegetable Program which provides reimbursement of fresh fruit and vegetable purchases and related operational program costs. Charges for salaries and wages to the program must be based on records that accurately reflect the work performed. Condition: The April claim reimbursement form overstated breakfast meal counts by 1,000 meals, which comprised 7% of total meals claimed. In addition, operational and administrative payroll costs charged to the Fresh Fruit and Vegetable Program were based on estimated hours worked, rather than actual time and effort records. Cause: The Business Manager approves all monthly claims in the CNPWeb system prior to submission to the State. However, the School Department does not have a policy to provide supporting claim documentation to the Business Manager to verify the accuracy of the monthly claim. In addition, the School Department does not have policies and procedures that provide reasonable assurance that payroll charges to the Fresh Fruit and Vegetable Program are accurate, allowable, and properly allocated. Effect: Errors in monthly claims may not be detected and corrected in a timely basis resulting in potential questioned costs. Unsupported payroll charges may not meet cost principal requirements resulting in potential questioned costs. Recommendation: We recommend the School Department establish policies and procedures that ensure the Business Manager has adequate supporting documentation to verify monthly nutrition claims before they are submitted to the State. We also recommend that policies and procedures be established to ensure employees allocating their time to the Fresh Fruit and Vegetable Program complete documentation as required by 2 CFR 200.430(i). Likely Questioned Costs: None.
2023-007 U.S. Department of Agriculture, For the period July 1, 2022 through June 30, 2023, Assistance Listing #10.553, 10.555, 10.556, 10.559, and 10.582 - Internal Controls over Child Nutrition Cluster Criteria: The School Department receives federal reimbursement for free and reduced price meals provided to children at established reimbursement rates. Monthly claims for reimbursement must be based on lunch counts taken daily at the point of service, which correctly identify the number of free, reduced price, and paid lunches served to eligible students. In addition, the School Department participates in the Fresh Fruit and Vegetable Program which provides reimbursement of fresh fruit and vegetable purchases and related operational program costs. Charges for salaries and wages to the program must be based on records that accurately reflect the work performed. Condition: The April claim reimbursement form overstated breakfast meal counts by 1,000 meals, which comprised 7% of total meals claimed. In addition, operational and administrative payroll costs charged to the Fresh Fruit and Vegetable Program were based on estimated hours worked, rather than actual time and effort records. Cause: The Business Manager approves all monthly claims in the CNPWeb system prior to submission to the State. However, the School Department does not have a policy to provide supporting claim documentation to the Business Manager to verify the accuracy of the monthly claim. In addition, the School Department does not have policies and procedures that provide reasonable assurance that payroll charges to the Fresh Fruit and Vegetable Program are accurate, allowable, and properly allocated. Effect: Errors in monthly claims may not be detected and corrected in a timely basis resulting in potential questioned costs. Unsupported payroll charges may not meet cost principal requirements resulting in potential questioned costs. Recommendation: We recommend the School Department establish policies and procedures that ensure the Business Manager has adequate supporting documentation to verify monthly nutrition claims before they are submitted to the State. We also recommend that policies and procedures be established to ensure employees allocating their time to the Fresh Fruit and Vegetable Program complete documentation as required by 2 CFR 200.430(i). Likely Questioned Costs: None.
Finding 2023-004 Internal Control Over Allowable Activities/Allowable Costs – Payroll Expenditures Identification of the Federal Programs: Assistance Listing Number: 20.507 Assistance Listing Title: Federal Transit Cluster Federal Agency: U.S. Department of Transportation Pass-Through Entity: N/A Federal Award Identification Number: CA-2017-149-00; CA-90-Z085-00; CA-90-Y974-00; CA -2019- 033-00; CA -90-Y900-00; CA-2020-177-00; CA-2021-169-01; CA-2022-041-00; CA-2021-075-00 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): In accordance with 2 CFR §200.303 Internal Controls, the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Under §200.302 Financial Management, (b) (3) Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. Under §200.430(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: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity. Condition: During the audit, we reviewed payroll period ended September 24, 2022, December 17, 2022, February 25, 2023, and April 22, 2023. Except for the payroll period ended April 22, 2023, we could not verify if the Bus Operators’ and all other Federal Transit employee’s timecards were approved by their supervisors. The timecard reports were uploaded from the time entry system to the payroll module by the supervisors; however, there were no records on who reviewed the timecard reports or who completed the upload of the timecard reports to the payroll module. Cause: Although the City has been working on implementing the necessary approvals, these efforts had not taken full effect for the most part of the fiscal year 2023 until April 2023. Effect or Potential Effect: Without review or approval of time cards, inaccurate payroll expenditures could be charged to the federal programs. Questioned Costs: None noted. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: 2022-007. Recommendation: We recommend that the City ensure the full implementation and consistent application of the established timecard approval policies for all Federal Transit employees and strengthen its monitoring mechanisms to verify that supervisors review and approve timecards for every payroll period, ensuring compliance with the policies throughout the entire fiscal year. Views of Responsible Officials: The City has implemented the recommendation first contained in 2022-007. There is a process in place where supervisor review and approval of timesheets is completed and documented. That process continues and will be in place for the entirety of the fiscal year ending June 30, 2024.
Finding 2023-004 Internal Control Over Allowable Activities/Allowable Costs – Payroll Expenditures Identification of the Federal Programs: Assistance Listing Number: 20.507 Assistance Listing Title: Federal Transit Cluster Federal Agency: U.S. Department of Transportation Pass-Through Entity: N/A Federal Award Identification Number: CA-2017-149-00; CA-90-Z085-00; CA-90-Y974-00; CA -2019- 033-00; CA -90-Y900-00; CA-2020-177-00; CA-2021-169-01; CA-2022-041-00; CA-2021-075-00 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): In accordance with 2 CFR §200.303 Internal Controls, the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Under §200.302 Financial Management, (b) (3) Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. Under §200.430(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: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity. Condition: During the audit, we reviewed payroll period ended September 24, 2022, December 17, 2022, February 25, 2023, and April 22, 2023. Except for the payroll period ended April 22, 2023, we could not verify if the Bus Operators’ and all other Federal Transit employee’s timecards were approved by their supervisors. The timecard reports were uploaded from the time entry system to the payroll module by the supervisors; however, there were no records on who reviewed the timecard reports or who completed the upload of the timecard reports to the payroll module. Cause: Although the City has been working on implementing the necessary approvals, these efforts had not taken full effect for the most part of the fiscal year 2023 until April 2023. Effect or Potential Effect: Without review or approval of time cards, inaccurate payroll expenditures could be charged to the federal programs. Questioned Costs: None noted. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: 2022-007. Recommendation: We recommend that the City ensure the full implementation and consistent application of the established timecard approval policies for all Federal Transit employees and strengthen its monitoring mechanisms to verify that supervisors review and approve timecards for every payroll period, ensuring compliance with the policies throughout the entire fiscal year. Views of Responsible Officials: The City has implemented the recommendation first contained in 2022-007. There is a process in place where supervisor review and approval of timesheets is completed and documented. That process continues and will be in place for the entirety of the fiscal year ending June 30, 2024.