of Agriculture, Passed through Minnesota Department of Education Federal Financial Assistance Listing/CFDA Number 10.553/10.555 Child Nutrition Cluster Activities Allowed or Unallowed; Allowable Costs and Cost Principles Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria – A good system of internal control includes an adequate system for ensuring all expenditures are properly recorded and allowable under the related federal grant in accordance with 2 CFR 200.430(i). Condition – During the course of our engagement, we noted ten instances where documentation of changes to contract wage rates or evidence of approved timesheets were not maintained. Cause – The District does not have an internal control system designed to review and maintain documentation for expenditures, including payroll transactions. Effect – A lack of internal controls over allowable costs and activities could result in improper use of federal funds and non‐compliance with the provisions of applicable grant requirements. Questioned Costs – $8,419 Context/Sampling – A non‐statistical sample of 60 transactions out of 2,215 total transactions were selected for testing, which accounted for $35,327 of $525,590 of federal program expenditures. Repeat Finding from Prior Year(s) – Yes, 2022‐004 Recommendation – The District should review internal control procedures to ensure federal expenditures are being properly reviewed for unallowable costs and activities. Supporting documentation should then be maintained once the review is documented and performed. Views of Responsible Officials – There is no disagreement with the audit finding.
FINDING 2023-001 TIME AND EFFORT RECORDS SIGNIFICANT DEFICIENCY Federal Program: Education Stabilization Fund Assistance Listing Numbers: 84.425D and 84.425U Condition: The School applied employee salary expenses to the program. While employees were applied to the grant in line with the approved budget, proper time and effort records were not maintained. Semiannual certification forms did not reflect a six-month period and were not signed at the end of the sixmonth period. Criteria: Charges for Federal awards for salaries and wages must be based on records that accurately reflect work performed (2 CFR 200.430(i)). Cause The School was not aware of the requirement outlined in the Criteria section above. Effect: The School is unable to document certification of employee time spent in the program. Recommendation: We recommend the School develop internal controls to ensure that proper semi-annual certifications are maintained. Views of Responsible Officials and Planned Corrective Actions The School’s Corrective Action Plan is included on pages 26 to 27.
FINDING 2023-001 TIME AND EFFORT RECORDS SIGNIFICANT DEFICIENCY Federal Program: Education Stabilization Fund Assistance Listing Numbers: 84.425D and 84.425U Condition: The School applied employee salary expenses to the program. While employees were applied to the grant in line with the approved budget, proper time and effort records were not maintained. Semiannual certification forms did not reflect a six-month period and were not signed at the end of the sixmonth period. Criteria: Charges for Federal awards for salaries and wages must be based on records that accurately reflect work performed (2 CFR 200.430(i)). Cause The School was not aware of the requirement outlined in the Criteria section above. Effect: The School is unable to document certification of employee time spent in the program. Recommendation: We recommend the School develop internal controls to ensure that proper semi-annual certifications are maintained. Views of Responsible Officials and Planned Corrective Actions The School’s Corrective Action Plan is included on pages 26 to 27.
FINDING 2023-005 Federal Program Information: Research and Development Cluster (ALN: Various), The National COVID-19 Resiliency Network: Mitigating the Impact of COVID-19 on Vulnerable Populations (ALN: 93.137), Community‐Based Workforce to Build COVID‐19 Vaccine Confidence (ALN: 93.011) and Education Stabilization Fund Higher Education Emergency Relief Fund (ALN: 84.425E, 84.425J) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation) B. Allowable Cost/Cost Principles - Federal grant requirements, § 200.430, provide that salaries and wages charged to federal awards must be based on records that accurately reflect the work performed; be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated; be incorporated into the official records of the institution; reasonably reflect the total activity for which the employee is compensated; and support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award. Condition: During our testing of expenditures, we noted the following exceptions: • For 7 of 100 selected employees, level of effort certifications were not available to support the payroll costs charged to the federal program. Cause: Lack of administrative oversight with respect to allowable cost/cost principles compliance requirements. Effect or Potential Effect: The School does not have policies and procedures in place to ensure that compliance is maintained with respect to supporting payroll costs charged to the federal programs. Questioned Costs: Indeterminable. Context: We tested a sample of 100 expenditures across four major programs and noted 4 exceptions as noted in the condition. This is a condition identified per review of the School’s compliance with specified requirements using a statistically valid sample. Identification as a Repeat Finding: No similar finding was identified during the prior year. Recommendation: We recommend that the School adhere to its policies and procedures over the applicable compliance requirements of allowable costs/cost principles requirements to ensure that the School is appropriately monitoring level of effort reporting in a timely manner. Views of Responsible Officials and Planned Corrective Actions: We experienced a system glitch resulting in records that remained in validation tables and did not move to the process reporting tables which prevented proper reporting of work hours performed. The system did not generate the required certification reports to allow the selected employee to certify their effort. We are reviewing our processes to implement an automated comparison reports of individual employees paid from federal grants and the system generated effort certification report to ensure that the system generates the required effort report to allow the employee to properly certify their effort. We will also ensure that all employees approve/certify actual time worked allotted to federal funds within our time and attendance system to provide another level of certification. This report will be produced quarterly to ensure that system errors are corrected before the required semiannual effort reporting requirement.
FINDING 2023-005 Federal Program Information: Research and Development Cluster (ALN: Various), The National COVID-19 Resiliency Network: Mitigating the Impact of COVID-19 on Vulnerable Populations (ALN: 93.137), Community‐Based Workforce to Build COVID‐19 Vaccine Confidence (ALN: 93.011) and Education Stabilization Fund Higher Education Emergency Relief Fund (ALN: 84.425E, 84.425J) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation) B. Allowable Cost/Cost Principles - Federal grant requirements, § 200.430, provide that salaries and wages charged to federal awards must be based on records that accurately reflect the work performed; be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated; be incorporated into the official records of the institution; reasonably reflect the total activity for which the employee is compensated; and support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award. Condition: During our testing of expenditures, we noted the following exceptions: • For 7 of 100 selected employees, level of effort certifications were not available to support the payroll costs charged to the federal program. Cause: Lack of administrative oversight with respect to allowable cost/cost principles compliance requirements. Effect or Potential Effect: The School does not have policies and procedures in place to ensure that compliance is maintained with respect to supporting payroll costs charged to the federal programs. Questioned Costs: Indeterminable. Context: We tested a sample of 100 expenditures across four major programs and noted 4 exceptions as noted in the condition. This is a condition identified per review of the School’s compliance with specified requirements using a statistically valid sample. Identification as a Repeat Finding: No similar finding was identified during the prior year. Recommendation: We recommend that the School adhere to its policies and procedures over the applicable compliance requirements of allowable costs/cost principles requirements to ensure that the School is appropriately monitoring level of effort reporting in a timely manner. Views of Responsible Officials and Planned Corrective Actions: We experienced a system glitch resulting in records that remained in validation tables and did not move to the process reporting tables which prevented proper reporting of work hours performed. The system did not generate the required certification reports to allow the selected employee to certify their effort. We are reviewing our processes to implement an automated comparison reports of individual employees paid from federal grants and the system generated effort certification report to ensure that the system generates the required effort report to allow the employee to properly certify their effort. We will also ensure that all employees approve/certify actual time worked allotted to federal funds within our time and attendance system to provide another level of certification. This report will be produced quarterly to ensure that system errors are corrected before the required semiannual effort reporting requirement.
FINDING 2023-005 Federal Program Information: Research and Development Cluster (ALN: Various), The National COVID-19 Resiliency Network: Mitigating the Impact of COVID-19 on Vulnerable Populations (ALN: 93.137), Community‐Based Workforce to Build COVID‐19 Vaccine Confidence (ALN: 93.011) and Education Stabilization Fund Higher Education Emergency Relief Fund (ALN: 84.425E, 84.425J) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation) B. Allowable Cost/Cost Principles - Federal grant requirements, § 200.430, provide that salaries and wages charged to federal awards must be based on records that accurately reflect the work performed; be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated; be incorporated into the official records of the institution; reasonably reflect the total activity for which the employee is compensated; and support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award. Condition: During our testing of expenditures, we noted the following exceptions: • For 7 of 100 selected employees, level of effort certifications were not available to support the payroll costs charged to the federal program. Cause: Lack of administrative oversight with respect to allowable cost/cost principles compliance requirements. Effect or Potential Effect: The School does not have policies and procedures in place to ensure that compliance is maintained with respect to supporting payroll costs charged to the federal programs. Questioned Costs: Indeterminable. Context: We tested a sample of 100 expenditures across four major programs and noted 4 exceptions as noted in the condition. This is a condition identified per review of the School’s compliance with specified requirements using a statistically valid sample. Identification as a Repeat Finding: No similar finding was identified during the prior year. Recommendation: We recommend that the School adhere to its policies and procedures over the applicable compliance requirements of allowable costs/cost principles requirements to ensure that the School is appropriately monitoring level of effort reporting in a timely manner. Views of Responsible Officials and Planned Corrective Actions: We experienced a system glitch resulting in records that remained in validation tables and did not move to the process reporting tables which prevented proper reporting of work hours performed. The system did not generate the required certification reports to allow the selected employee to certify their effort. We are reviewing our processes to implement an automated comparison reports of individual employees paid from federal grants and the system generated effort certification report to ensure that the system generates the required effort report to allow the employee to properly certify their effort. We will also ensure that all employees approve/certify actual time worked allotted to federal funds within our time and attendance system to provide another level of certification. This report will be produced quarterly to ensure that system errors are corrected before the required semiannual effort reporting requirement.
FINDING 2023-005 Federal Program Information: Research and Development Cluster (ALN: Various), The National COVID-19 Resiliency Network: Mitigating the Impact of COVID-19 on Vulnerable Populations (ALN: 93.137), Community‐Based Workforce to Build COVID‐19 Vaccine Confidence (ALN: 93.011) and Education Stabilization Fund Higher Education Emergency Relief Fund (ALN: 84.425E, 84.425J) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation) B. Allowable Cost/Cost Principles - Federal grant requirements, § 200.430, provide that salaries and wages charged to federal awards must be based on records that accurately reflect the work performed; be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated; be incorporated into the official records of the institution; reasonably reflect the total activity for which the employee is compensated; and support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award. Condition: During our testing of expenditures, we noted the following exceptions: • For 7 of 100 selected employees, level of effort certifications were not available to support the payroll costs charged to the federal program. Cause: Lack of administrative oversight with respect to allowable cost/cost principles compliance requirements. Effect or Potential Effect: The School does not have policies and procedures in place to ensure that compliance is maintained with respect to supporting payroll costs charged to the federal programs. Questioned Costs: Indeterminable. Context: We tested a sample of 100 expenditures across four major programs and noted 4 exceptions as noted in the condition. This is a condition identified per review of the School’s compliance with specified requirements using a statistically valid sample. Identification as a Repeat Finding: No similar finding was identified during the prior year. Recommendation: We recommend that the School adhere to its policies and procedures over the applicable compliance requirements of allowable costs/cost principles requirements to ensure that the School is appropriately monitoring level of effort reporting in a timely manner. Views of Responsible Officials and Planned Corrective Actions: We experienced a system glitch resulting in records that remained in validation tables and did not move to the process reporting tables which prevented proper reporting of work hours performed. The system did not generate the required certification reports to allow the selected employee to certify their effort. We are reviewing our processes to implement an automated comparison reports of individual employees paid from federal grants and the system generated effort certification report to ensure that the system generates the required effort report to allow the employee to properly certify their effort. We will also ensure that all employees approve/certify actual time worked allotted to federal funds within our time and attendance system to provide another level of certification. This report will be produced quarterly to ensure that system errors are corrected before the required semiannual effort reporting requirement.
2023-003 Allowable Costs US Department of Education Passed Through NYS Education Dept Education Stabilization Fund COVID 19 ARP Summer Learning Criteria: According to 2 CFR section 200.430.(i) the District must maintain the records it generally maintains for salaries and wages expended. Condition: The District expended funds from ARP Summer Learning grant to pay for salaries and wages. In our sample of payroll disbursements, we found an instance where we were unable to verify a timesheet and the supporting approval of a disbursement. Context: The audit identified disbursements that were not supported by documentation and approval. Effect: If payroll disbursements are not supported by documentation and approval, they may not be properly safeguarded, and the District may not comply with the federal allowable costs rules. Cause: Unknown. Recommendation: We recommend that the District develop a system to make sure that proper approved timesheets are obtained in a timely manner and maintained. Management’s response: See attached.
Finding Number 2023-006 Assistance Listing Number 84.425 - Education Stabilization Fund Allowable Costs/Cost Principles - Documentation of Employee Time and Effort Material Weakness in Internal Control over Compliance Material Noncompliance Criteria: Per Federal regulations CFR Title 2, Part 200 Section 200.430 (i)(1), charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Condition: The School District did not maintain time and effort distribution records for two employees whose salaries, wages and benefits were charged to the federal award program. Cause: Accounting department turnover lead to incomplete record keeping and lack of knowledge on the federal requirement requiring accounting records to support salary, wage and benefit allocations. Effect: As a result of this condition, salaries, wages and benefits may be charged to the federal award program that are not supported by time and effort distributions. Questioned Costs: Known questioned costs are $77,244, and likely questioned costs are $130,610. Context: This finding relates to two employees whose salary, wages and benefits are charged 100% to this federal award program, however, the School District simply did not obtain an after-the-fact determination of their time and effort in accordance with the federal requirements. Recommendation: Salaries, wages and benefits allocations must be supported by time and effort documentation. This can be accomplished by obtaining semi-annual certifications, personal activity reports or weekly timecards from employees. We recommend management review employee allocations to ensure an after-the-fact determination of actual time spent is obtained from all employees charged to federal award programs.
Finding Number 2023-006 Assistance Listing Number 84.425 - Education Stabilization Fund Allowable Costs/Cost Principles - Documentation of Employee Time and Effort Material Weakness in Internal Control over Compliance Material Noncompliance Criteria: Per Federal regulations CFR Title 2, Part 200 Section 200.430 (i)(1), charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Condition: The School District did not maintain time and effort distribution records for two employees whose salaries, wages and benefits were charged to the federal award program. Cause: Accounting department turnover lead to incomplete record keeping and lack of knowledge on the federal requirement requiring accounting records to support salary, wage and benefit allocations. Effect: As a result of this condition, salaries, wages and benefits may be charged to the federal award program that are not supported by time and effort distributions. Questioned Costs: Known questioned costs are $77,244, and likely questioned costs are $130,610. Context: This finding relates to two employees whose salary, wages and benefits are charged 100% to this federal award program, however, the School District simply did not obtain an after-the-fact determination of their time and effort in accordance with the federal requirements. Recommendation: Salaries, wages and benefits allocations must be supported by time and effort documentation. This can be accomplished by obtaining semi-annual certifications, personal activity reports or weekly timecards from employees. We recommend management review employee allocations to ensure an after-the-fact determination of actual time spent is obtained from all employees charged to federal award programs.
Finding Number 2023-006 Assistance Listing Number 84.425 - Education Stabilization Fund Allowable Costs/Cost Principles - Documentation of Employee Time and Effort Material Weakness in Internal Control over Compliance Material Noncompliance Criteria: Per Federal regulations CFR Title 2, Part 200 Section 200.430 (i)(1), charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Condition: The School District did not maintain time and effort distribution records for two employees whose salaries, wages and benefits were charged to the federal award program. Cause: Accounting department turnover lead to incomplete record keeping and lack of knowledge on the federal requirement requiring accounting records to support salary, wage and benefit allocations. Effect: As a result of this condition, salaries, wages and benefits may be charged to the federal award program that are not supported by time and effort distributions. Questioned Costs: Known questioned costs are $77,244, and likely questioned costs are $130,610. Context: This finding relates to two employees whose salary, wages and benefits are charged 100% to this federal award program, however, the School District simply did not obtain an after-the-fact determination of their time and effort in accordance with the federal requirements. Recommendation: Salaries, wages and benefits allocations must be supported by time and effort documentation. This can be accomplished by obtaining semi-annual certifications, personal activity reports or weekly timecards from employees. We recommend management review employee allocations to ensure an after-the-fact determination of actual time spent is obtained from all employees charged to federal award programs.
2023-002 – Activities Allowed or Unallowed and Allowable Costs/Cost Principles – Material Weakness in Internal Controls over Compliance and Material Noncompliance Department of Education Federal Assistance Listing Number: 84.031 Federal Program Name: Higher Education Institutional Aid Federal Award Number: P031S210057, P031S170020, P031C210038 Award Year: 2022-23, 2021-22 Criteria – Compensation costs are allowable to the extent they satisfy requirements of 2 CFR section 200.430, and the total compensation for individual employees is determined and supported as provided in 2 CFR section 200.430(i), including charges to Federal awards for salaries and wages be based on records that accurately reflect the work performed. Condition/context – A sample of 17 employees out of a population of 32 employees whose compensation was charged to the awards was selected. Of the 17 samples selected we found 10 employees who either had no records to support the actual allocation of time that was charged to each award or the amount allocated to the award did not agree to the time and effort reporting. The personnel action form that is completed upon hire indicated the allocation of time worked in some instances, however in accordance with 2 CFR section 200.430 (i)(1)(viii) estimates determined before the services are performed do not qualify as support for charges to Federal awards. Our sample was not, and was not intended to be, statistically valid. Questioned costs – Undeterminable Cause/effect – The University does not have the proper controls in place to ensure time and effort reporting is completed or completed accurately. The lack of records supporting the actual allocation of time charged increases the risk of unallowable compensation costs being charged to the federal award. Repeat finding – Yes, 2022-002 Recommendation – We recommend the University implement an internal control policy that requires employees whose compensation is charged to a federal award complete time and effort reporting to accurately reflect the work performed on each federal award and ensure supporting documentation is maintained for those who do charge time and agrees to amount allocated to the award. Views of responsible officials and planned corrective actions – Heritage University will implement a new internal control policy that requires employees whose compensation is charged to federal awards to complete time and effort to accurately reflect the work performed on each federal award. Heritage University is using the time and effort forms to allocate the correct hours to each federal award during the payroll process period. Each pay period an employee must fill out the time and effort to show actual hours worked. The form is signed by the employee and supervisor before turning it in to the payroll department. An email will be sent out to all employees outlining the new process required by employees whose hours are charged to a federal award.
2023-002 – Activities Allowed or Unallowed and Allowable Costs/Cost Principles – Material Weakness in Internal Controls over Compliance and Material Noncompliance Department of Education Federal Assistance Listing Number: 84.031 Federal Program Name: Higher Education Institutional Aid Federal Award Number: P031S210057, P031S170020, P031C210038 Award Year: 2022-23, 2021-22 Criteria – Compensation costs are allowable to the extent they satisfy requirements of 2 CFR section 200.430, and the total compensation for individual employees is determined and supported as provided in 2 CFR section 200.430(i), including charges to Federal awards for salaries and wages be based on records that accurately reflect the work performed. Condition/context – A sample of 17 employees out of a population of 32 employees whose compensation was charged to the awards was selected. Of the 17 samples selected we found 10 employees who either had no records to support the actual allocation of time that was charged to each award or the amount allocated to the award did not agree to the time and effort reporting. The personnel action form that is completed upon hire indicated the allocation of time worked in some instances, however in accordance with 2 CFR section 200.430 (i)(1)(viii) estimates determined before the services are performed do not qualify as support for charges to Federal awards. Our sample was not, and was not intended to be, statistically valid. Questioned costs – Undeterminable Cause/effect – The University does not have the proper controls in place to ensure time and effort reporting is completed or completed accurately. The lack of records supporting the actual allocation of time charged increases the risk of unallowable compensation costs being charged to the federal award. Repeat finding – Yes, 2022-002 Recommendation – We recommend the University implement an internal control policy that requires employees whose compensation is charged to a federal award complete time and effort reporting to accurately reflect the work performed on each federal award and ensure supporting documentation is maintained for those who do charge time and agrees to amount allocated to the award. Views of responsible officials and planned corrective actions – Heritage University will implement a new internal control policy that requires employees whose compensation is charged to federal awards to complete time and effort to accurately reflect the work performed on each federal award. Heritage University is using the time and effort forms to allocate the correct hours to each federal award during the payroll process period. Each pay period an employee must fill out the time and effort to show actual hours worked. The form is signed by the employee and supervisor before turning it in to the payroll department. An email will be sent out to all employees outlining the new process required by employees whose hours are charged to a federal award.
2023-002 – Activities Allowed or Unallowed and Allowable Costs/Cost Principles – Material Weakness in Internal Controls over Compliance and Material Noncompliance Department of Education Federal Assistance Listing Number: 84.031 Federal Program Name: Higher Education Institutional Aid Federal Award Number: P031S210057, P031S170020, P031C210038 Award Year: 2022-23, 2021-22 Criteria – Compensation costs are allowable to the extent they satisfy requirements of 2 CFR section 200.430, and the total compensation for individual employees is determined and supported as provided in 2 CFR section 200.430(i), including charges to Federal awards for salaries and wages be based on records that accurately reflect the work performed. Condition/context – A sample of 17 employees out of a population of 32 employees whose compensation was charged to the awards was selected. Of the 17 samples selected we found 10 employees who either had no records to support the actual allocation of time that was charged to each award or the amount allocated to the award did not agree to the time and effort reporting. The personnel action form that is completed upon hire indicated the allocation of time worked in some instances, however in accordance with 2 CFR section 200.430 (i)(1)(viii) estimates determined before the services are performed do not qualify as support for charges to Federal awards. Our sample was not, and was not intended to be, statistically valid. Questioned costs – Undeterminable Cause/effect – The University does not have the proper controls in place to ensure time and effort reporting is completed or completed accurately. The lack of records supporting the actual allocation of time charged increases the risk of unallowable compensation costs being charged to the federal award. Repeat finding – Yes, 2022-002 Recommendation – We recommend the University implement an internal control policy that requires employees whose compensation is charged to a federal award complete time and effort reporting to accurately reflect the work performed on each federal award and ensure supporting documentation is maintained for those who do charge time and agrees to amount allocated to the award. Views of responsible officials and planned corrective actions – Heritage University will implement a new internal control policy that requires employees whose compensation is charged to federal awards to complete time and effort to accurately reflect the work performed on each federal award. Heritage University is using the time and effort forms to allocate the correct hours to each federal award during the payroll process period. Each pay period an employee must fill out the time and effort to show actual hours worked. The form is signed by the employee and supervisor before turning it in to the payroll department. An email will be sent out to all employees outlining the new process required by employees whose hours are charged to a federal award.
2023-001 State and Local Fiscal Recovery Funds – Compliance & Internal Control Criteria: In accordance with 2CFR 200.430(i), payroll systems must be based on records that accurately reflect the work performed and supported by a system of internal controls that provides reasonable assurances that charges 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. Budget estimates alone to do not qualify as support for charges to Federal awards. Condition: The Trust allocates employee payroll to Federal awards using a budgeted allocation percentage that may not be reflective of the actual time worked by the employee on Federal and non-Federal activities. Budgeted estimates are not adjusted to actual time worked on Federal programs during the year. Cause: The Trust currently does not have a system to track the number of hours personnel work on various Federal or non-Federal programs. Effect: Payroll expenditures may not be reflective of actual time worked on Federal grants. Federal expenditures may be overstated or understated. Known Questioned Costs: unknown Likely Questioned Costs: unknown Recommendations: We recommend the Trust implement a time tracking system that requires employees to provide detail on the number of hours worked on Federal and non-Federal programs on their timesheets. The time tracking data should be utilized to charge payroll to Federal awards.
2023-001 State and Local Fiscal Recovery Funds – Compliance & Internal Control Criteria: In accordance with 2CFR 200.430(i), payroll systems must be based on records that accurately reflect the work performed and supported by a system of internal controls that provides reasonable assurances that charges 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. Budget estimates alone to do not qualify as support for charges to Federal awards. Condition: The Trust allocates employee payroll to Federal awards using a budgeted allocation percentage that may not be reflective of the actual time worked by the employee on Federal and non-Federal activities. Budgeted estimates are not adjusted to actual time worked on Federal programs during the year. Cause: The Trust currently does not have a system to track the number of hours personnel work on various Federal or non-Federal programs. Effect: Payroll expenditures may not be reflective of actual time worked on Federal grants. Federal expenditures may be overstated or understated. Known Questioned Costs: unknown Likely Questioned Costs: unknown Recommendations: We recommend the Trust implement a time tracking system that requires employees to provide detail on the number of hours worked on Federal and non-Federal programs on their timesheets. The time tracking data should be utilized to charge payroll to Federal awards.
FINDINGS AND QUESTIONED COSTS-MAJOR FEDERAL AWARD PROGRAM AUDIT Finding 2023-001: Compliance finding - Payroll U.S. Dept. of Health and Human Services Comm. Of MA, Department of Public Health Immunization Coop Agreements (ALN# 93.268) Condition: Payroll expenses charged to certain programs are not supported by actual time spent, but instead are allocated based upon the program budgets. Employees for those programs do not track which programs are being worked on throughout the day. Time is tracked in general and then applied to each program, based on the budget worksheet. Criteria or specific requirement: § 200.430 Compensation-personal services - budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity actually performed. Cause: Employees are not charged with tracking their time by individual program and allocation of their wages is done by budget estimates. Effect: Payroll expenses charged to programs based upon program budgets and potentially do not accurately reflect the time spent by Organization staff on each program - misstatement of payroll expenses. Recommendation: Use of a Semi-Annual Personnel Activity Certification Form for each employee funded by a federal program. Management Response: Management has engaged a third party vendor for a new time and attendance software that will allow all hours worked and related programs to be tracked accurately. A contract has been signed and the software is actively being implemented.
2023-002 Federal agency: U.S. Department of Justice Federal program title: Crime Victim Assistance Assistance Listing Number: 16.575 Pass-Through Agency: Minnesota Office of Justice Programs Type of Finding: - Material Weakness in Internal Control Over Compliance - Other Matters Criteria or specific requirement: CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, §200.430 specifies that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Condition: Documentation of time and effort was not maintained for 1 out of 20 employees tested under the program to support the amounts charged to grants. In addition, none of the timesheets selected for testing had formal documentation of review or approval. Questioned Costs: $11,538 Context: We tested 66 timesheets for 20 different individuals who charged time to the grant during the period tested. Time and effort documentation was not maintained for 4 out of 66 timesheets selected for testing under the program, which related to one individual. None of the timesheets selected for testing had formal documentation of review or approval. Cause: Proper internal control processes and procedures were not in place to document personnel time charged to the grant. Effect: Program could be over or under billed if time and effort is not calculated correctly from employee certifications or supported by approved timesheets. Recommendation: We recommend that WON implement a process to complete time and effort certifications and reconcile those certifications to ensure the costs reported to the grantor are accurate. We recommend that all additional amounts paid contain documentation that they are properly authorized. We recommend that all employees have timesheets to support the hours worked and charged to the grant. These timesheets should be formally approved by a supervisor. Views of responsible officials: WON will ensure that all timesheets are completed and properly approved going forward to ensure that time and effort is documented.
Criteria: Employees that work solely on a single cost objective are not required to maintain records reflecting the distribution of the employee's salary and wages, including among the Federal programs included in the consolidation, if applicable. However, for employees that work on multiple cost objectives, an LEA must maintain time and effort distribution records in accordance with 2 CFR section 200.430(i)(1)(vii) that support the portion of time and effort dedicated to the Federal program or cost objective and each other program or cost objective supported by consolidated Federal funds or other revenue sources. Condition: The District paid an employee with Title I funds based on a percentage of the employee's tital wages. No time and effort distribution records were documented for the employee for the grant expenditures to be charged accordingly. Questioned Costs: N/A. Context: The District paid approximately $16,400 for salaries without the appropriate documentation. Total salaries paid with tehse grant funds was $804,716. Effect: The District was not in compliance with the federal requirement. Cause: The District was unaware of this requirement. Recommendation: We recommend that for employees that work on multiple cost objectives, the District maintain time and effort distribution records to support the amount of payroll expenditures charged to the grant. Management's Response: The District will begin completing the necessary time and effort distribution records.
Criteria: Employees that work solely on a single cost objective are not required to maintain records reflecting the distribution of the employee's salary and wages, including among the Federal programs included in the consolidation, if applicable. However, for employees that work on multiple cost objectives, an LEA must maintain time and effort distribution records in accordance with 2 CFR section 200.430(i)(1)(vii) that support the portion of time and effort dedicated to the Federal program or cost objective and each other program or cost objective supported by consolidated Federal funds or other revenue sources. Condition: The District paid an employee with Title I funds based on a percentage of the employee's tital wages. No time and effort distribution records were documented for the employee for the grant expenditures to be charged accordingly. Questioned Costs: N/A. Context: The District paid approximately $16,400 for salaries without the appropriate documentation. Total salaries paid with tehse grant funds was $804,716. Effect: The District was not in compliance with the federal requirement. Cause: The District was unaware of this requirement. Recommendation: We recommend that for employees that work on multiple cost objectives, the District maintain time and effort distribution records to support the amount of payroll expenditures charged to the grant. Management's Response: The District will begin completing the necessary time and effort distribution records.
Criteria: Employees that work solely on a single cost objective are not required to maintain records reflecting the distribution of the employee's salary and wages, including among the Federal programs included in the consolidation, if applicable. However, for employees that work on multiple cost objectives, an LEA must maintain time and effort distribution records in accordance with 2 CFR section 200.430(i)(1)(vii) that support the portion of time and effort dedicated to the Federal program or cost objective and each other program or cost objective supported by consolidated Federal funds or other revenue sources. Condition: The District paid an employee with Title I funds based on a percentage of the employee's tital wages. No time and effort distribution records were documented for the employee for the grant expenditures to be charged accordingly. Questioned Costs: N/A. Context: The District paid approximately $16,400 for salaries without the appropriate documentation. Total salaries paid with tehse grant funds was $804,716. Effect: The District was not in compliance with the federal requirement. Cause: The District was unaware of this requirement. Recommendation: We recommend that for employees that work on multiple cost objectives, the District maintain time and effort distribution records to support the amount of payroll expenditures charged to the grant. Management's Response: The District will begin completing the necessary time and effort distribution records.
Significant Deficiency 2023-001. Payroll (Allowable Costs/Cost Principles) United States Department of Education, Passed-through New York State Department of Education: Education Stabilization Funds (ESF) COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief (ARP ESSER) Assistance Listing No. 84.425U Criteria: Salaries, wages and any other forms of compensation charged to Federal awards must be supported by documentation prescribed by the Uniform Guidance at Subpart I, 2 CFR §200.430. Condition: Subpart I, 2 CFR §200.430 of the Uniform Guidance requires that charges to “Federal awards for salaries, wages and other forms of compensation must be based on records that accurately reflect the work performed.” The documentation should support the distribution of the employee’s compensation among specific activities if the employee works on more than one federal award, or a Federal award and non-Federal award. The preparation of personnel activity reports (PARs), timesheets, or periodic certifications or the equivalent is the most effective way to comply with this requirement. During the current year, the District inadvertently charged resource officers payroll costs to a federal grant, however, it was determined that these payroll costs were not budgeted in the federal grant and should not have been charged to the federal grant. Cause: This was an oversight by the District as these costs were not budgeted in the federal grant form FS-10, and should not have been charged to the federal grant. These payroll costs should have been charged to the general fund, however, this was not captured as part of the review for the reimbursement of expenditures for the federal grant. As described in Subpart I, 2 CFR §200.430, the District is required to document and maintain the support for salaries, wages and other forms of compensation to ensure they are properly charged to Federal awards. Effect: Noncompliance can result in the incorrect amount for services rendered being charged to the Federal award. Questioned Costs: None Recommendation: The District should ensure that they review, monitor, and update the appropriate documentation to support the salaries, wages and other forms of compensation charged to Federal awards in accordance with the requirements of the Uniform Guidance at Subpart I, 2 CFR §200.430. In the event that modifications for costs charged to grants are necessary, the district should make the appropriate amendments. Since this particular grant will not be closed out until September 30, 2024, the District should contact the New York State Department of Education (NYSED) and file the appropriate amendment, or work with NYSED to adjust future reimbursements to adjust for the amounts overcharged to the federal grant. In addition, the District should review its procedures for reviewing reimbursement for federal grants to ensure that any payroll costs charged to federal grants are supported by the proper documentation and are properly budgeted for that grant. Views of Responsible Officials of Auditee: The District implemented a new summer program utilizing federal grant funds approved by the NYSED. The District charged resource officers payroll costs that occurred during the scheduled approved summer program, however it was determined that these payroll costs were not budgeted in the federal grant, per the FS-10. Since the grant funding period of this grant is still open, the District contacted NYSED to determine the necessary course of action to rectify this matter. It was determined that the District will prepare and submit an FS-10A amending the original FS-10, to include the resource officer’s payroll costs in the grant as it relates to the approved summer program. In addition, the District will review its internal review procedures to ensure that payroll costs charged to federal grants are supported by the proper documentation for each employee and are allowable per the approved budget of the federal grant. The FS-10A will be prepared and filed prior to the June 30, 2024 by the Assistant Superintendent for Curriculum.
Significant Deficiency 2023-001. Payroll (Allowable Costs/Cost Principles) United States Department of Education, Passed-through New York State Department of Education: Education Stabilization Funds (ESF) COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief (ARP ESSER) Assistance Listing No. 84.425U Criteria: Salaries, wages and any other forms of compensation charged to Federal awards must be supported by documentation prescribed by the Uniform Guidance at Subpart I, 2 CFR §200.430. Condition: Subpart I, 2 CFR §200.430 of the Uniform Guidance requires that charges to “Federal awards for salaries, wages and other forms of compensation must be based on records that accurately reflect the work performed.” The documentation should support the distribution of the employee’s compensation among specific activities if the employee works on more than one federal award, or a Federal award and non-Federal award. The preparation of personnel activity reports (PARs), timesheets, or periodic certifications or the equivalent is the most effective way to comply with this requirement. During the current year, the District inadvertently charged resource officers payroll costs to a federal grant, however, it was determined that these payroll costs were not budgeted in the federal grant and should not have been charged to the federal grant. Cause: This was an oversight by the District as these costs were not budgeted in the federal grant form FS-10, and should not have been charged to the federal grant. These payroll costs should have been charged to the general fund, however, this was not captured as part of the review for the reimbursement of expenditures for the federal grant. As described in Subpart I, 2 CFR §200.430, the District is required to document and maintain the support for salaries, wages and other forms of compensation to ensure they are properly charged to Federal awards. Effect: Noncompliance can result in the incorrect amount for services rendered being charged to the Federal award. Questioned Costs: None Recommendation: The District should ensure that they review, monitor, and update the appropriate documentation to support the salaries, wages and other forms of compensation charged to Federal awards in accordance with the requirements of the Uniform Guidance at Subpart I, 2 CFR §200.430. In the event that modifications for costs charged to grants are necessary, the district should make the appropriate amendments. Since this particular grant will not be closed out until September 30, 2024, the District should contact the New York State Department of Education (NYSED) and file the appropriate amendment, or work with NYSED to adjust future reimbursements to adjust for the amounts overcharged to the federal grant. In addition, the District should review its procedures for reviewing reimbursement for federal grants to ensure that any payroll costs charged to federal grants are supported by the proper documentation and are properly budgeted for that grant. Views of Responsible Officials of Auditee: The District implemented a new summer program utilizing federal grant funds approved by the NYSED. The District charged resource officers payroll costs that occurred during the scheduled approved summer program, however it was determined that these payroll costs were not budgeted in the federal grant, per the FS-10. Since the grant funding period of this grant is still open, the District contacted NYSED to determine the necessary course of action to rectify this matter. It was determined that the District will prepare and submit an FS-10A amending the original FS-10, to include the resource officer’s payroll costs in the grant as it relates to the approved summer program. In addition, the District will review its internal review procedures to ensure that payroll costs charged to federal grants are supported by the proper documentation for each employee and are allowable per the approved budget of the federal grant. The FS-10A will be prepared and filed prior to the June 30, 2024 by the Assistant Superintendent for Curriculum.
Significant Deficiency 2023-001. Payroll (Allowable Costs/Cost Principles) United States Department of Education, Passed-through New York State Department of Education: Education Stabilization Funds (ESF) COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief (ARP ESSER) Assistance Listing No. 84.425U Criteria: Salaries, wages and any other forms of compensation charged to Federal awards must be supported by documentation prescribed by the Uniform Guidance at Subpart I, 2 CFR §200.430. Condition: Subpart I, 2 CFR §200.430 of the Uniform Guidance requires that charges to “Federal awards for salaries, wages and other forms of compensation must be based on records that accurately reflect the work performed.” The documentation should support the distribution of the employee’s compensation among specific activities if the employee works on more than one federal award, or a Federal award and non-Federal award. The preparation of personnel activity reports (PARs), timesheets, or periodic certifications or the equivalent is the most effective way to comply with this requirement. During the current year, the District inadvertently charged resource officers payroll costs to a federal grant, however, it was determined that these payroll costs were not budgeted in the federal grant and should not have been charged to the federal grant. Cause: This was an oversight by the District as these costs were not budgeted in the federal grant form FS-10, and should not have been charged to the federal grant. These payroll costs should have been charged to the general fund, however, this was not captured as part of the review for the reimbursement of expenditures for the federal grant. As described in Subpart I, 2 CFR §200.430, the District is required to document and maintain the support for salaries, wages and other forms of compensation to ensure they are properly charged to Federal awards. Effect: Noncompliance can result in the incorrect amount for services rendered being charged to the Federal award. Questioned Costs: None Recommendation: The District should ensure that they review, monitor, and update the appropriate documentation to support the salaries, wages and other forms of compensation charged to Federal awards in accordance with the requirements of the Uniform Guidance at Subpart I, 2 CFR §200.430. In the event that modifications for costs charged to grants are necessary, the district should make the appropriate amendments. Since this particular grant will not be closed out until September 30, 2024, the District should contact the New York State Department of Education (NYSED) and file the appropriate amendment, or work with NYSED to adjust future reimbursements to adjust for the amounts overcharged to the federal grant. In addition, the District should review its procedures for reviewing reimbursement for federal grants to ensure that any payroll costs charged to federal grants are supported by the proper documentation and are properly budgeted for that grant. Views of Responsible Officials of Auditee: The District implemented a new summer program utilizing federal grant funds approved by the NYSED. The District charged resource officers payroll costs that occurred during the scheduled approved summer program, however it was determined that these payroll costs were not budgeted in the federal grant, per the FS-10. Since the grant funding period of this grant is still open, the District contacted NYSED to determine the necessary course of action to rectify this matter. It was determined that the District will prepare and submit an FS-10A amending the original FS-10, to include the resource officer’s payroll costs in the grant as it relates to the approved summer program. In addition, the District will review its internal review procedures to ensure that payroll costs charged to federal grants are supported by the proper documentation for each employee and are allowable per the approved budget of the federal grant. The FS-10A will be prepared and filed prior to the June 30, 2024 by the Assistant Superintendent for Curriculum.
Significant Deficiency 2023-001. Payroll (Allowable Costs/Cost Principles) United States Department of Education, Passed-through New York State Department of Education: Education Stabilization Funds (ESF) COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief (ARP ESSER) Assistance Listing No. 84.425U Criteria: Salaries, wages and any other forms of compensation charged to Federal awards must be supported by documentation prescribed by the Uniform Guidance at Subpart I, 2 CFR §200.430. Condition: Subpart I, 2 CFR §200.430 of the Uniform Guidance requires that charges to “Federal awards for salaries, wages and other forms of compensation must be based on records that accurately reflect the work performed.” The documentation should support the distribution of the employee’s compensation among specific activities if the employee works on more than one federal award, or a Federal award and non-Federal award. The preparation of personnel activity reports (PARs), timesheets, or periodic certifications or the equivalent is the most effective way to comply with this requirement. During the current year, the District inadvertently charged resource officers payroll costs to a federal grant, however, it was determined that these payroll costs were not budgeted in the federal grant and should not have been charged to the federal grant. Cause: This was an oversight by the District as these costs were not budgeted in the federal grant form FS-10, and should not have been charged to the federal grant. These payroll costs should have been charged to the general fund, however, this was not captured as part of the review for the reimbursement of expenditures for the federal grant. As described in Subpart I, 2 CFR §200.430, the District is required to document and maintain the support for salaries, wages and other forms of compensation to ensure they are properly charged to Federal awards. Effect: Noncompliance can result in the incorrect amount for services rendered being charged to the Federal award. Questioned Costs: None Recommendation: The District should ensure that they review, monitor, and update the appropriate documentation to support the salaries, wages and other forms of compensation charged to Federal awards in accordance with the requirements of the Uniform Guidance at Subpart I, 2 CFR §200.430. In the event that modifications for costs charged to grants are necessary, the district should make the appropriate amendments. Since this particular grant will not be closed out until September 30, 2024, the District should contact the New York State Department of Education (NYSED) and file the appropriate amendment, or work with NYSED to adjust future reimbursements to adjust for the amounts overcharged to the federal grant. In addition, the District should review its procedures for reviewing reimbursement for federal grants to ensure that any payroll costs charged to federal grants are supported by the proper documentation and are properly budgeted for that grant. Views of Responsible Officials of Auditee: The District implemented a new summer program utilizing federal grant funds approved by the NYSED. The District charged resource officers payroll costs that occurred during the scheduled approved summer program, however it was determined that these payroll costs were not budgeted in the federal grant, per the FS-10. Since the grant funding period of this grant is still open, the District contacted NYSED to determine the necessary course of action to rectify this matter. It was determined that the District will prepare and submit an FS-10A amending the original FS-10, to include the resource officer’s payroll costs in the grant as it relates to the approved summer program. In addition, the District will review its internal review procedures to ensure that payroll costs charged to federal grants are supported by the proper documentation for each employee and are allowable per the approved budget of the federal grant. The FS-10A will be prepared and filed prior to the June 30, 2024 by the Assistant Superintendent for Curriculum.
2023-001 Activities Allowed or Unallowed and Allowable Costs/Costs Principles Program: COVID-19 Emergency Rental Assistance Program Federal Assistance Listing No: 21.023 County Recipient: Community Action Partnership of Natrona County (CAP) Federal Agency: U.S. Department of the Treasury Grant year: 2023 Federal Award Identification: Unknown Applicable Pass-through Entity: Wyoming Department of Family Services Criteria Accounting practices of the non-Federal entity must provide for adequate documentation to support costs charged to the Federal award. Additionally, standards for documentation of personnel expenses in Uniform Guidance 2 CFR part 200.430 Compensation – personal services state that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Among various other requirements, these records must: • Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. • Support the distribution of the employee’s salary or wages among specific activities or costs 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. • In accordance with Department of Labor regulations implementing the Fair Labor Standards Act (FLSA) (29 CFR part 516), charges for the salaries and wages of nonexempt employees, in addition to the supporting documentation described in this section, must also be supported by records indicating the total number of hours worked each day. Condition CAP was missing a consistent system of internal control for tracking and approving the salaries and wages and other costs charged to the federal program. There were several timecards and transactions that were not approved by the supervisor or another individual knowledgeable of the grant. Additionally, journal entries were posted to classify salaries and wages to the grant without a supporting allocation and approval. For the transactions that were lacking support it was not possible to verify the costs were allowable. Therefore the amounts associated with these transactions are reported as questioned costs. Cause Due to turnover in grant management, processes that had previously existed were overlooked, which resulted in a lack of consistent approval of costs and an inconsistent system for the allocation of salaries and wages charged to the grant. Additionally, records that reflect the work performed were unavailable. Effect or potential effect CAP was unable to provide supporting documentation that the costs allocated to the grant were allowable. Questioned Cost $17,393 Context The internal control and compliance testing performed included testing 60 transactions out of 270 total grant transactions. Of the items tested, 32% of the transactions were missing approvals or adequate supporting documentation of the time and expense allocated to the grant. Identification as a repeat finding This is not a repeat finding. Recommendation We recommend CAP review its policies and procedures related to the internal controls over payroll and other transactions related to grants. Views of Responsible Officials CAPNC moved from an archaic, unsupported software system to Sage Intaact. This software provides the ability to modernize and deploy the levels of internal controls missing from previous fiscal personnel oversight and technical capability. Current staff have trained under Sage Intaact and Wipfli consultants to properly track A/P, A/R, payroll and grant management to ensure the integrity of data entry and compliance is observed. Board membership have access to accounting software through Board portal for further oversight. Payroll services were outsourced to ADP payroll services in order to provide real time features and accountability for time. This allows recording of time more accurate, reliable and allocable. Payroll records are reviewed and time studies are being performed for all staff to ensure allocation methodology, once selected is appropriate, consistent and in alignment with staff performance. Wipfli Consulting is providing technical assistance over a 10 month period to develop/deploy updated policies and procedures for fiscal area, in accordance with Uniform Guidance. Curriculum includes: All administrative leadership staff received, and will continue to receive annually, fiscal oversight training including but not limited to, Uniform Guidance training, grants management and compliance training. Allocations are reviewed regularly by leadership team to ensure that we have appropriate methodology and that we are consistent with grant expectations and regulations. See Corrective Action Plan
2023-002 Activities Allowed or Unallowed and Allowable Costs/Costs Principles Program: COVID-19 Community Services Block Grant Federal Assistance Listing No: 93.569 County Recipient: Community Action Partnership of Natrona County Federal Agency: Department of Health and Human Services Grant year: 2022 and 2023 Federal Award Identification: Unknown Applicable Pass-through Entity: Wyoming Department of Health Criteria Accounting practices of the non-Federal entity must provide for adequate documentation to support costs charged to the Federal award. Standards for documentation of personnel expenses in Uniform Guidance 2 CFR part 200.430 Compensation – personal services state that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Among various other requirements, these records must: • Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. • Support the distribution of the employee’s salary or wages among specific activities or costs 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. • In accordance with Department of Labor regulations implementing the Fair Labor Standards Act (FLSA) (29 CFR part 516), charges for the salaries and wages of nonexempt employees, in addition to the supporting documentation described in this section, must also be supported by records indicating the total number of hours worked each day. Grant agreements with Wyoming Department of Health include a Statement of Work. The Statement of Work includes a requirement that that the grantee conducts a time allocation analysis for any position dually-funded from other sources of funds to account for apportioned time charged against the contract. Condition CAP was missing a consistent system of internal control for tracking and approving the salaries and wages and other costs charged to the federal program. There were several timecards and transactions that were not approved by the supervisor or another individual knowledgeable of the grant. Additionally, journal entries were posted to classify salaries and wages to the grant without a supporting allocation and approval. For the transactions that were lacking support it was not possible to verify the costs were allowable. Therefore the amounts associated with these transactions are reported as questioned costs. Cause Due to turnover in grant management, processes that had previously existed were overlooked, which resulted in a lack of consistent approval of costs and an inconsistent system for the allocation of salaries and wages charged to the grant. Additionally, records that reflect the work performed were unavailable Effect or potential effect CAP was unable to provide supporting documentation that the costs allocated to the grant were allowable. Questioned Cost $32,364 Context The internal control and compliance testing performed included testing 50 transactions out of 981 total grant transactions. Of the items tested, 18% of the transactions were missing approvals or adequate supporting documentation of the time and expense allocated to the grant. Identification as a repeat finding This is not a repeat finding Recommendation We recommend CAP review its policies and procedures related to the internal controls over payroll, expenditures related to grants. Views of Responsible Officials CAPNC moved from an archaic, unsupported software system to Sage Intaact. This software provides the ability to modernize and deploy the levels of internal controls missing from previous fiscal personnel oversight and technical capability. Current staff have trained under Sage Intaact and Wipfli consultants to properly track A/P, A/R, payroll and grant management to ensure the integrity of data entry and compliance is observed. Board membership have access to accounting software through Board portal for further oversight. Payroll services were outsourced to ADP payroll services in order to provide real time features and accountability for time. This allows recording of time more accurate, reliable and allocable. Payroll records are reviewed and time studies are being performed for all staff to ensure allocation methodology, once selected is appropriate, consistent and in alignment with staff performance. Wipfli Consulting is providing technical assistance over a 10 month period to develop/deploy updated policies and procedures for fiscal area, in accordance with Uniform Guidance. Curriculum includes: All administrative leadership staff received, and will continue to receive annually, fiscal oversight training including but not limited to, Uniform Guidance training, grants management and compliance training. Allocations are reviewed regularly by leadership team to ensure that we have appropriate methodology and that we are consistent with grant expectations and regulations. See Corrective Action Plan
2023-002 Activities Allowed or Unallowed and Allowable Costs/Costs Principles Program: COVID-19 Community Services Block Grant Federal Assistance Listing No: 93.569 County Recipient: Community Action Partnership of Natrona County Federal Agency: Department of Health and Human Services Grant year: 2022 and 2023 Federal Award Identification: Unknown Applicable Pass-through Entity: Wyoming Department of Health Criteria Accounting practices of the non-Federal entity must provide for adequate documentation to support costs charged to the Federal award. Standards for documentation of personnel expenses in Uniform Guidance 2 CFR part 200.430 Compensation – personal services state that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Among various other requirements, these records must: • Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. • Support the distribution of the employee’s salary or wages among specific activities or costs 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. • In accordance with Department of Labor regulations implementing the Fair Labor Standards Act (FLSA) (29 CFR part 516), charges for the salaries and wages of nonexempt employees, in addition to the supporting documentation described in this section, must also be supported by records indicating the total number of hours worked each day. Grant agreements with Wyoming Department of Health include a Statement of Work. The Statement of Work includes a requirement that that the grantee conducts a time allocation analysis for any position dually-funded from other sources of funds to account for apportioned time charged against the contract. Condition CAP was missing a consistent system of internal control for tracking and approving the salaries and wages and other costs charged to the federal program. There were several timecards and transactions that were not approved by the supervisor or another individual knowledgeable of the grant. Additionally, journal entries were posted to classify salaries and wages to the grant without a supporting allocation and approval. For the transactions that were lacking support it was not possible to verify the costs were allowable. Therefore the amounts associated with these transactions are reported as questioned costs. Cause Due to turnover in grant management, processes that had previously existed were overlooked, which resulted in a lack of consistent approval of costs and an inconsistent system for the allocation of salaries and wages charged to the grant. Additionally, records that reflect the work performed were unavailable Effect or potential effect CAP was unable to provide supporting documentation that the costs allocated to the grant were allowable. Questioned Cost $32,364 Context The internal control and compliance testing performed included testing 50 transactions out of 981 total grant transactions. Of the items tested, 18% of the transactions were missing approvals or adequate supporting documentation of the time and expense allocated to the grant. Identification as a repeat finding This is not a repeat finding Recommendation We recommend CAP review its policies and procedures related to the internal controls over payroll, expenditures related to grants. Views of Responsible Officials CAPNC moved from an archaic, unsupported software system to Sage Intaact. This software provides the ability to modernize and deploy the levels of internal controls missing from previous fiscal personnel oversight and technical capability. Current staff have trained under Sage Intaact and Wipfli consultants to properly track A/P, A/R, payroll and grant management to ensure the integrity of data entry and compliance is observed. Board membership have access to accounting software through Board portal for further oversight. Payroll services were outsourced to ADP payroll services in order to provide real time features and accountability for time. This allows recording of time more accurate, reliable and allocable. Payroll records are reviewed and time studies are being performed for all staff to ensure allocation methodology, once selected is appropriate, consistent and in alignment with staff performance. Wipfli Consulting is providing technical assistance over a 10 month period to develop/deploy updated policies and procedures for fiscal area, in accordance with Uniform Guidance. Curriculum includes: All administrative leadership staff received, and will continue to receive annually, fiscal oversight training including but not limited to, Uniform Guidance training, grants management and compliance training. Allocations are reviewed regularly by leadership team to ensure that we have appropriate methodology and that we are consistent with grant expectations and regulations. See Corrective Action Plan
Assistance Listing Number(s): 10.553 and 10.555 Name of Federal Program or Cluster: Child Nutrition Cluster Name of Federal Agency: Department of Agriculture Name of Pass-through Entity: Wisconsin Department of Public Instruction Pass-through Entity Identifying Number(s): 2023-138142-DPI-SB-546, 2023-138005-DPI-SB-546, 2023-138005-DPI-NSL-547, and 2023-138005-DPI-SK_NSLAE-566 Award Period: July 1, 2022 through June 30, 2023 Criteria: According to 2 CFR, Part 200.300 of the Uniform Guidance, a non-federal entity must have the following policies over compliance: cash management (section 200.302(b)(6)), allowability of costs (section 200.302(b)(7)), procurement (section 200.318-.326, reporting (section 200.303), special tests (section 200.303), travel (section 200.475(b)), compensation (section 200.430(a)(1)), and fringe benefits (section 200.431). Condition: Written policies and procedures are not in accordance with the Uniform Guidance. Cause: Sufficient training has not been provided to individuals responsible for the development of written policies and procedures in accordance with the Uniform Guidance. Effect or Potential Effect: Lack of policies and procedures in accordance with the Uniform Guidance could result in noncompliance, disallowed costs, or discontinuance of federal funding. Repeat Finding: No Recommendation: Additional training should be provided to individuals responsible for the development of written policies and procedures in accordance with the Uniform Guidance. Views of Responsible Officials: One City Schools, Inc. agrees with the finding and are working on creating written policies and procedures in accordance with the Uniform Guidance.
Assistance Listing Number(s): 10.553 and 10.555 Name of Federal Program or Cluster: Child Nutrition Cluster Name of Federal Agency: Department of Agriculture Name of Pass-through Entity: Wisconsin Department of Public Instruction Pass-through Entity Identifying Number(s): 2023-138142-DPI-SB-546, 2023-138005-DPI-SB-546, 2023-138005-DPI-NSL-547, and 2023-138005-DPI-SK_NSLAE-566 Award Period: July 1, 2022 through June 30, 2023 Criteria: According to 2 CFR, Part 200.300 of the Uniform Guidance, a non-federal entity must have the following policies over compliance: cash management (section 200.302(b)(6)), allowability of costs (section 200.302(b)(7)), procurement (section 200.318-.326, reporting (section 200.303), special tests (section 200.303), travel (section 200.475(b)), compensation (section 200.430(a)(1)), and fringe benefits (section 200.431). Condition: Written policies and procedures are not in accordance with the Uniform Guidance. Cause: Sufficient training has not been provided to individuals responsible for the development of written policies and procedures in accordance with the Uniform Guidance. Effect or Potential Effect: Lack of policies and procedures in accordance with the Uniform Guidance could result in noncompliance, disallowed costs, or discontinuance of federal funding. Repeat Finding: No Recommendation: Additional training should be provided to individuals responsible for the development of written policies and procedures in accordance with the Uniform Guidance. Views of Responsible Officials: One City Schools, Inc. agrees with the finding and are working on creating written policies and procedures in accordance with the Uniform Guidance.
Assistance Listing Number(s): 10.553 and 10.555 Name of Federal Program or Cluster: Child Nutrition Cluster Name of Federal Agency: Department of Agriculture Name of Pass-through Entity: Wisconsin Department of Public Instruction Pass-through Entity Identifying Number(s): 2023-138142-DPI-SB-546, 2023-138005-DPI-SB-546, 2023-138005-DPI-NSL-547, and 2023-138005-DPI-SK_NSLAE-566 Award Period: July 1, 2022 through June 30, 2023 Criteria: According to 2 CFR, Part 200.300 of the Uniform Guidance, a non-federal entity must have the following policies over compliance: cash management (section 200.302(b)(6)), allowability of costs (section 200.302(b)(7)), procurement (section 200.318-.326, reporting (section 200.303), special tests (section 200.303), travel (section 200.475(b)), compensation (section 200.430(a)(1)), and fringe benefits (section 200.431). Condition: Written policies and procedures are not in accordance with the Uniform Guidance. Cause: Sufficient training has not been provided to individuals responsible for the development of written policies and procedures in accordance with the Uniform Guidance. Effect or Potential Effect: Lack of policies and procedures in accordance with the Uniform Guidance could result in noncompliance, disallowed costs, or discontinuance of federal funding. Repeat Finding: No Recommendation: Additional training should be provided to individuals responsible for the development of written policies and procedures in accordance with the Uniform Guidance. Views of Responsible Officials: One City Schools, Inc. agrees with the finding and are working on creating written policies and procedures in accordance with the Uniform Guidance.
Assistance Listing Number(s): 10.553 and 10.555 Name of Federal Program or Cluster: Child Nutrition Cluster Name of Federal Agency: Department of Agriculture Name of Pass-through Entity: Wisconsin Department of Public Instruction Pass-through Entity Identifying Number(s): 2023-138142-DPI-SB-546, 2023-138005-DPI-SB-546, 2023-138005-DPI-NSL-547, and 2023-138005-DPI-SK_NSLAE-566 Award Period: July 1, 2022 through June 30, 2023 Criteria: According to 2 CFR, Part 200.300 of the Uniform Guidance, a non-federal entity must have the following policies over compliance: cash management (section 200.302(b)(6)), allowability of costs (section 200.302(b)(7)), procurement (section 200.318-.326, reporting (section 200.303), special tests (section 200.303), travel (section 200.475(b)), compensation (section 200.430(a)(1)), and fringe benefits (section 200.431). Condition: Written policies and procedures are not in accordance with the Uniform Guidance. Cause: Sufficient training has not been provided to individuals responsible for the development of written policies and procedures in accordance with the Uniform Guidance. Effect or Potential Effect: Lack of policies and procedures in accordance with the Uniform Guidance could result in noncompliance, disallowed costs, or discontinuance of federal funding. Repeat Finding: No Recommendation: Additional training should be provided to individuals responsible for the development of written policies and procedures in accordance with the Uniform Guidance. Views of Responsible Officials: One City Schools, Inc. agrees with the finding and are working on creating written policies and procedures in accordance with the Uniform Guidance.
Assistance Listing Number, Federal Agency, and Program Name - 84.027, U.S. Department of Education, Special Education Cluster 84.425U, U.S. Department of Education, COVID-19 Education Stabilization Fund Federal Award Identification Number and Year - 2023 IDEA Flowthrough 22/23 (Special Education Cluster) 213713 - 2122 (Education Stabilization Fund) Pass-through Entity - Michigan Department of Education Finding Type - Material weakness Repeat Finding - No Criteria - 2 CFR 200.430(i)(1) states that charges to federal awards for salaries and wages must be based on records that accurately reflect work performed. 2 CFR 200.303(a) states that the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the entity is managing the federal award in compliance with the statutes, regulations, and terms and conditions of the award. Condition - The School District's controls did not prevent or detect and correct, in a timely manner, an employee's time being charged to the Special Education Cluster that did not have adequate documentation. Additionally, the School District's internal controls did not detect and correct, in a timely manner, updates to an employee status upon termination for employees charged to the Special Education Cluster and the Education Stabilization Fund. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A - No questioned costs reported. Context - In a sample of 40, we identified that one employee, who was terminated, was inappropriately charged to the Special Education Cluster. The detective controls of the School District identified that the employee lacked appropriate documentation for the time charged and paid, and, thus, the School District requested repayment from the employee. However, the School District's internal controls did not notify the grants department of the overpayment to address the improper charge. In conjunction with tailored procedures to address an identified risk of overpayment for federal grants, one out of seven employees improperly received a payment subsequent to their termination date, which was charged to the Education Stabilization Fund. Based on review of the final payroll audit performed by the School District, there was no overpayment of grant funds. However, we noted that the controls were not operating timely. In this instance, the employee was terminated in March 2023, a final payroll audit was conducted in August 2023, subsequent to the School District's fiscal year, and final payout was not yet disbursed as of the testing date. Cause and Effect - Controls in place did not prevent or detect and correct, in a timely manner, an instance of noncompliance. The controls in place to notify the grants department of an employee overpayment were not effective. Furthermore, the controls in place to update a change in an employee's status, from active to terminated, did not occur timely. The lack of timely controls may result in inappropriate charges to the grant, inappropriate request for reimbursement, repayment of funds to the funder, and the inability to recoup improper payments from the employee. Recommendation - We recommend that the School District review its procedures and controls to ensure terminated employees statuses are updated timely within the system. We further recommend that the grants department receive notification of the final payroll audit results to assess what action, if any, is necessary to ensure compliance with the terms and conditions of the award. Views of Responsible Officials and Corrective Action Plan - The School District concurs with the audit finding. The District has worked to strengthen internal controls to eliminate errors. The District will review its internal controls and provide additional training to staff. The School District is in the process of filling a Project Manager role on the Payroll Team who will be responsible for reviewing employee terminations and identifying potential overpayments. Until the role is filled, the Senior Director of Payroll and CFO will review employee exits quarterly to identify any potential overpayments and move funds to the general fund. New procedures for employee exit were rolled out in July in an effort to improve timely exiting of employees.
Assistance Listing Number, Federal Agency, and Program Name - 84.027, U.S. Department of Education, Special Education Cluster 84.425U, U.S. Department of Education, COVID-19 Education Stabilization Fund Federal Award Identification Number and Year - 2023 IDEA Flowthrough 22/23 (Special Education Cluster) 213713 - 2122 (Education Stabilization Fund) Pass-through Entity - Michigan Department of Education Finding Type - Material weakness Repeat Finding - No Criteria - 2 CFR 200.430(i)(1) states that charges to federal awards for salaries and wages must be based on records that accurately reflect work performed. 2 CFR 200.303(a) states that the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the entity is managing the federal award in compliance with the statutes, regulations, and terms and conditions of the award. Condition - The School District's controls did not prevent or detect and correct, in a timely manner, an employee's time being charged to the Special Education Cluster that did not have adequate documentation. Additionally, the School District's internal controls did not detect and correct, in a timely manner, updates to an employee status upon termination for employees charged to the Special Education Cluster and the Education Stabilization Fund. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A - No questioned costs reported. Context - In a sample of 40, we identified that one employee, who was terminated, was inappropriately charged to the Special Education Cluster. The detective controls of the School District identified that the employee lacked appropriate documentation for the time charged and paid, and, thus, the School District requested repayment from the employee. However, the School District's internal controls did not notify the grants department of the overpayment to address the improper charge. In conjunction with tailored procedures to address an identified risk of overpayment for federal grants, one out of seven employees improperly received a payment subsequent to their termination date, which was charged to the Education Stabilization Fund. Based on review of the final payroll audit performed by the School District, there was no overpayment of grant funds. However, we noted that the controls were not operating timely. In this instance, the employee was terminated in March 2023, a final payroll audit was conducted in August 2023, subsequent to the School District's fiscal year, and final payout was not yet disbursed as of the testing date. Cause and Effect - Controls in place did not prevent or detect and correct, in a timely manner, an instance of noncompliance. The controls in place to notify the grants department of an employee overpayment were not effective. Furthermore, the controls in place to update a change in an employee's status, from active to terminated, did not occur timely. The lack of timely controls may result in inappropriate charges to the grant, inappropriate request for reimbursement, repayment of funds to the funder, and the inability to recoup improper payments from the employee. Recommendation - We recommend that the School District review its procedures and controls to ensure terminated employees statuses are updated timely within the system. We further recommend that the grants department receive notification of the final payroll audit results to assess what action, if any, is necessary to ensure compliance with the terms and conditions of the award. Views of Responsible Officials and Corrective Action Plan - The School District concurs with the audit finding. The District has worked to strengthen internal controls to eliminate errors. The District will review its internal controls and provide additional training to staff. The School District is in the process of filling a Project Manager role on the Payroll Team who will be responsible for reviewing employee terminations and identifying potential overpayments. Until the role is filled, the Senior Director of Payroll and CFO will review employee exits quarterly to identify any potential overpayments and move funds to the general fund. New procedures for employee exit were rolled out in July in an effort to improve timely exiting of employees.
Department of Health and Human Services FFLA #93.087, 90CU0090, 9/30/2020 – 9/29/2023; 90CU0095, 9/30/2018 – 9/29/2024 Enhance Safety of Children Affected by Substance Abuse Activities Allowed and Allowable Costs Significant Deficiency in Internal Control over Compliance Criteria: The Center is required to have procedures in place to ensure that federal awards are expended only for allowable costs in accordance with Subpart E – Cost Principles of the Uniform Guidance. Allowable costs are supported by appropriate documentation and correctly charged as to account, amount, and period. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.430(i) establishes the standards for documentation of personnel expenses including charges to Federal awards for salaries and wages. Charges must be based on records that accurately reflect the work performed with the records meeting the following standards: a) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. b) Be incorporated into the office records of the non-Federal entity. c) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities. d) 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. e) Comply with the established accounting policies and practices of the non-Federal entity. f) Support the distribution of the employee’s salary or wages among specific activities or cost objectives. g) Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes. Condition: In our sample of expenditures selected for testing, we noted the following items: a) ClickTime timecard, which tracks federal and nonfederal hours for employees, did not properly reflect the employees total federal and nonfederal hours being paid within the payroll register (3 instances). b) Calculation errors for expenses allocated to the grant (1 instance). Cause: Employees did not enter all nonfederal hours within the ClickTime system and the secondary review of the employee ClickTime timecards did not identify the missing hours. In addition, the secondary review of federal grant expenditure tracking spreadsheet did not identify the calculation errors. Effect: The Center’s controls did not detect or correct the errors identified, which results in a reasonable possibility that the Center could submit disallowed costs under the federal awards and would not be able to detect and correct noncompliance in a timely manner. Questioned Costs: None reported. The program was underallocated. Context: A total non-statistical sample of 60 nonpayroll and payroll transactions were tested which accounted for $119,973 out of $1,006,904 of federal payroll and nonpayroll direct program expenditures. Repeat Finding from Prior Year: Yes, prior year finding 2022-003 Recommendation: We recommend management review the procedures and control processes involving timecards and the federal grant expenditure tracking spreadsheet to ensure compliance with the federal grant. Views of Responsible Officials: Management is in agreement.
Department of Health and Human Services FFLA #93.829, H79SM083331, 5/1/2021 – 12/31/2023 Section 223 Demonstration Programs to Improve Community Mental Health Services Activities Allowed and Allowable Costs Material Weakness in Internal Control over Compliance Criteria: The Center is required to have procedures in place to ensure that federal awards are expended only for allowable costs in accordance with Subpart E – Cost Principles of the Uniform Guidance. Allowable costs are supported by appropriate documentation and correctly charged as to account, amount, and period. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.430(i) establishes the standards for documentation of personnel expenses including charges to Federal awards for salaries and wages. Charges must be based on records that accurately reflect the work performed with the records meeting the following standards: a) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. b) Be incorporated into the office records of the non-Federal entity. c) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities. d) 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. e) Comply with the established accounting policies and practices of the non-Federal entity. f) Support the distribution of the employee’s salary or wages among specific activities or cost objectives. g) Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes. Condition: In our sample of expenditures selected for testing, we noted the following items: a) ClickTime timecard, which tracks federal and nonfederal hours for employees, did not properly reflect the employees total federal and nonfederal hours being paid within the payroll register (2 instances). b) Calculation errors for expenses allocated to the grant (2 instances). c) Employee’s overtime hours were not properly tracked in ClickTime (2 instances). d) Employee tracked paid time off under PTO and CCBHC lines in ClickTime (1 instance) causing it to be double tracked. e) Grant was overcharged as it relates to a client’s gym membership (1 instance). Cause: Employees did not enter all nonfederal hours within the ClickTime system and the secondary review of the employee ClickTime timecards did not identify the missing hours, the incorrectly tracked hours, and double tracked time. Also, the secondary review of federal grant expenditure tracking spreadsheet did not identify the calculation errors. In addition, the grant was overcharged for nonpayroll as it relates to a gym membership claimed for a customer of the grant. Effect: The Center’s controls did not detect or correct the errors identified, which results in a reasonable possibility that the Center could submit disallowed costs under the federal awards and would not be able to detect and correct noncompliance in a timely manner. Questioned Costs: The program was overcharged by $127. Context: A total non-statistical sample of 60 payroll and nonpayroll transactions were tested which accounted for $170,945 out of $702,139 of federal payroll and nonpayroll direct program expenditures. Repeat Finding from Prior Year: Yes, prior year finding 2022-005 Recommendation: We recommend management review the procedures and control processes involving timecards and the federal grant expenditure tracking spreadsheet to ensure compliance with the federal grant. Views of Responsible Officials: Management is in agreement.
Department of Health and Human Services FFLA #93.958, 6H79SM085542, 9/30/2021 – 9/29/2023 Block Grants for Community Mental Health Services Activities Allowed and Allowable Costs Significant Deficiency in Internal Control over Compliance Criteria: The Center is required to have procedures in place to ensure that federal awards are expended only for allowable costs in accordance with Subpart E – Cost Principles of the Uniform Guidance. Allowable costs are supported by appropriate documentation and correctly charged as to account, amount, and period. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.430(i) establishes the standards for documentation of personnel expenses including charges to Federal awards for salaries and wages. Charges must be based on records that accurately reflect the work performed with the records meeting the following standards: a) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. b) Be incorporated into the office records of the non-Federal entity. c) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities. d) 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. e) Comply with the established accounting policies and practices of the non-Federal entity. f) Support the distribution of the employee’s salary or wages among specific activities or cost objectives. g) Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes. Condition: In our sample of expenditures selected for testing, we noted the following items: a) ClickTime timecard, which tracks federal and nonfederal hours for employees, did not properly reflect the employees total federal and nonfederal hours being paid within the payroll register (2 instances). b) The tracking spreadsheet did not reflect the entire months payroll and instead only included 2 weeks of payroll and benefits which resulted in a calculation error for expenses allocated to the grant (1 instance). Cause: Employees did not enter all nonfederal hours within the ClickTime system and the secondary review of the employee ClickTime timecards did not identify the missing hours. In addition, the secondary review of federal grant expenditure tracking spreadsheet did not identify the missing pay periods. Effect: The Center’s controls did not detect or correct the errors identified, which results in a reasonable possibility that the Center could submit disallowed costs under the federal awards and would not be able to detect and correct noncompliance in a timely manner. Questioned Costs: None reported. The program was underallocated. Context: A total non-statistical sample of 60 nonpayroll and payroll transactions were tested which accounted for $99,320 out of $844,289 of federal payroll and nonpayroll direct program expenditures. Repeat Finding from Prior Year: No. Recommendation: We recommend management review the procedures and control processes involving timecards and the federal grant expenditure tracking spreadsheet to ensure compliance with the federal grant. Views of Responsible Officials: Management is in agreement.
Department of Health and Human Services FFLA #93.958, 6H79SM085542, 9/30/2021 – 9/29/2023 Block Grants for Community Mental Health Services Activities Allowed and Allowable Costs Significant Deficiency in Internal Control over Compliance Criteria: The Center is required to have procedures in place to ensure that federal awards are expended only for allowable costs in accordance with Subpart E – Cost Principles of the Uniform Guidance. Allowable costs are supported by appropriate documentation and correctly charged as to account, amount, and period. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.430(i) establishes the standards for documentation of personnel expenses including charges to Federal awards for salaries and wages. Charges must be based on records that accurately reflect the work performed with the records meeting the following standards: a) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. b) Be incorporated into the office records of the non-Federal entity. c) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities. d) 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. e) Comply with the established accounting policies and practices of the non-Federal entity. f) Support the distribution of the employee’s salary or wages among specific activities or cost objectives. g) Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes. Condition: In our sample of expenditures selected for testing, we noted the following items: a) ClickTime timecard, which tracks federal and nonfederal hours for employees, did not properly reflect the employees total federal and nonfederal hours being paid within the payroll register (2 instances). b) The tracking spreadsheet did not reflect the entire months payroll and instead only included 2 weeks of payroll and benefits which resulted in a calculation error for expenses allocated to the grant (1 instance). Cause: Employees did not enter all nonfederal hours within the ClickTime system and the secondary review of the employee ClickTime timecards did not identify the missing hours. In addition, the secondary review of federal grant expenditure tracking spreadsheet did not identify the missing pay periods. Effect: The Center’s controls did not detect or correct the errors identified, which results in a reasonable possibility that the Center could submit disallowed costs under the federal awards and would not be able to detect and correct noncompliance in a timely manner. Questioned Costs: None reported. The program was underallocated. Context: A total non-statistical sample of 60 nonpayroll and payroll transactions were tested which accounted for $99,320 out of $844,289 of federal payroll and nonpayroll direct program expenditures. Repeat Finding from Prior Year: No. Recommendation: We recommend management review the procedures and control processes involving timecards and the federal grant expenditure tracking spreadsheet to ensure compliance with the federal grant. Views of Responsible Officials: Management is in agreement.
Condition The School received funding under various grants during the year that were recorded as ESSER II and ESSER III. During our tests of compliance, it came to our attention that $83,398 of payroll costs charged to the ESSER II were also charged to ESSER III. Additionally, there were 9 of out 40 instances where costs were charged to the grant for hours that were not paid to the employee (unpaid leave). There was also 1 instance out of 40, where management was unable to provide the approved payrate for an employee selected for testing. Criteria Per the Uniform Guidance, the School must maintain an adequate system of internal control over financial reporting in order to initiate, authorize, record, process and report financial data reliably in accordance with generally accepted accounting principles. 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 The School does not have adequate internal controls to document that adequacy of personnel expenses charged to its Federal programs and did not have a process to ensure costs charged to its Federal programs are not duplicated. Effect Unallowed non-payroll and payroll costs could be charged to Federal programs. Recommendation We recommend the School implement procedures to ensure only allowable costs incurred are charged to its Federal programs. Questioned Costs Unknown - $83,398 from sampled testing. Managements Response Management agrees with the finding. See Schedule of Correction Action Plans. Auditor’s Conclusion: Finding remains as stated.
Condition The School received funding under various grants during the year that were recorded as ESSER II and ESSER III. During our tests of compliance, it came to our attention that $83,398 of payroll costs charged to the ESSER II were also charged to ESSER III. Additionally, there were 9 of out 40 instances where costs were charged to the grant for hours that were not paid to the employee (unpaid leave). There was also 1 instance out of 40, where management was unable to provide the approved payrate for an employee selected for testing. Criteria Per the Uniform Guidance, the School must maintain an adequate system of internal control over financial reporting in order to initiate, authorize, record, process and report financial data reliably in accordance with generally accepted accounting principles. 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 The School does not have adequate internal controls to document that adequacy of personnel expenses charged to its Federal programs and did not have a process to ensure costs charged to its Federal programs are not duplicated. Effect Unallowed non-payroll and payroll costs could be charged to Federal programs. Recommendation We recommend the School implement procedures to ensure only allowable costs incurred are charged to its Federal programs. Questioned Costs Unknown - $83,398 from sampled testing. Managements Response Management agrees with the finding. See Schedule of Correction Action Plans. Auditor’s Conclusion: Finding remains as stated.
FINDING 2023-002 Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-001. Condition and Context The School Corporation did not have effective internal controls in place to ensure that wages paid to employees were in conformance with the allowable cost principles and only for the benefit or operation of the food service program. A portion of the wages for the CFO/Treasurer, the Director of Operations, the Director of Finance, and two school secretaries were paid from the School Lunch fund. The wages paid from the School Lunch fund were based on fixed percentages and did not provide adequate information to determine if the percentage charged was appropriate. Total wages charged to the program for the above noted employees was $31,617. This amount was considered questioned costs. The ineffective internal controls and noncompliance was limited to the items noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 15 NORTHWESTERN SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, costs charged to the food service program could not be substantiated. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs Known questioned costs of $31,617 were identified as described above in Condition and Context. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure costs paid from the food service program are adequately documented. INDIANA STATE BOARD OF ACCOUNTS 16 NORTHWESTERN SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-001. Condition and Context The School Corporation did not have effective internal controls in place to ensure that wages paid to employees were in conformance with the allowable cost principles and only for the benefit or operation of the food service program. A portion of the wages for the CFO/Treasurer, the Director of Operations, the Director of Finance, and two school secretaries were paid from the School Lunch fund. The wages paid from the School Lunch fund were based on fixed percentages and did not provide adequate information to determine if the percentage charged was appropriate. Total wages charged to the program for the above noted employees was $31,617. This amount was considered questioned costs. The ineffective internal controls and noncompliance was limited to the items noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 15 NORTHWESTERN SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, costs charged to the food service program could not be substantiated. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs Known questioned costs of $31,617 were identified as described above in Condition and Context. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure costs paid from the food service program are adequately documented. INDIANA STATE BOARD OF ACCOUNTS 16 NORTHWESTERN SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-001. Condition and Context The School Corporation did not have effective internal controls in place to ensure that wages paid to employees were in conformance with the allowable cost principles and only for the benefit or operation of the food service program. A portion of the wages for the CFO/Treasurer, the Director of Operations, the Director of Finance, and two school secretaries were paid from the School Lunch fund. The wages paid from the School Lunch fund were based on fixed percentages and did not provide adequate information to determine if the percentage charged was appropriate. Total wages charged to the program for the above noted employees was $31,617. This amount was considered questioned costs. The ineffective internal controls and noncompliance was limited to the items noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 15 NORTHWESTERN SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, costs charged to the food service program could not be substantiated. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs Known questioned costs of $31,617 were identified as described above in Condition and Context. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure costs paid from the food service program are adequately documented. INDIANA STATE BOARD OF ACCOUNTS 16 NORTHWESTERN SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-001. Condition and Context The School Corporation did not have effective internal controls in place to ensure that wages paid to employees were in conformance with the allowable cost principles and only for the benefit or operation of the food service program. A portion of the wages for the CFO/Treasurer, the Director of Operations, the Director of Finance, and two school secretaries were paid from the School Lunch fund. The wages paid from the School Lunch fund were based on fixed percentages and did not provide adequate information to determine if the percentage charged was appropriate. Total wages charged to the program for the above noted employees was $31,617. This amount was considered questioned costs. The ineffective internal controls and noncompliance was limited to the items noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 15 NORTHWESTERN SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, costs charged to the food service program could not be substantiated. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs Known questioned costs of $31,617 were identified as described above in Condition and Context. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure costs paid from the food service program are adequately documented. INDIANA STATE BOARD OF ACCOUNTS 16 NORTHWESTERN SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-001. Condition and Context The School Corporation did not have effective internal controls in place to ensure that wages paid to employees were in conformance with the allowable cost principles and only for the benefit or operation of the food service program. A portion of the wages for the CFO/Treasurer, the Director of Operations, the Director of Finance, and two school secretaries were paid from the School Lunch fund. The wages paid from the School Lunch fund were based on fixed percentages and did not provide adequate information to determine if the percentage charged was appropriate. Total wages charged to the program for the above noted employees was $31,617. This amount was considered questioned costs. The ineffective internal controls and noncompliance was limited to the items noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 15 NORTHWESTERN SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, costs charged to the food service program could not be substantiated. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs Known questioned costs of $31,617 were identified as described above in Condition and Context. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure costs paid from the food service program are adequately documented. INDIANA STATE BOARD OF ACCOUNTS 16 NORTHWESTERN SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Central Indiana Educational Service Center Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation was the subrecipient of an Explore, Engage, Experience (3E) Grant from the Central Indiana Educational Service Center (CIESC). Per the award letter received from the CIESC, the School Corporation was allocated $200,000 to hire a district coordinator for 3E initiatives. As only one reimbursement covering the period of August 1, 2022 to September 30, 2022, was requested from the CIESC for the 3E grant, all expenditures associated with the grant were selected for testing to verify the expenditures were in conformance with the applicable cost principles. Expenditures totaling $41,193, were for the salary of the grant lead and a secondary salary. No time and effort documentation was maintained to support the salary amounts charged to the program. As a result, these expenditures were determined not to be in conformance with the applicable cost principles and were considered questioned costs. The lack of internal controls and noncompliance were isolated to the 3E Grant expenditures noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, costs were not adequately supported by personnel records. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs Known questioned costs of $41,193 were identified, as detailed in the Condition and Context. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure costs adequately documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Central Indiana Educational Service Center Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation was the subrecipient of an Explore, Engage, Experience (3E) Grant from the Central Indiana Educational Service Center (CIESC). Per the award letter received from the CIESC, the School Corporation was allocated $200,000 to hire a district coordinator for 3E initiatives. As only one reimbursement covering the period of August 1, 2022 to September 30, 2022, was requested from the CIESC for the 3E grant, all expenditures associated with the grant were selected for testing to verify the expenditures were in conformance with the applicable cost principles. Expenditures totaling $41,193, were for the salary of the grant lead and a secondary salary. No time and effort documentation was maintained to support the salary amounts charged to the program. As a result, these expenditures were determined not to be in conformance with the applicable cost principles and were considered questioned costs. The lack of internal controls and noncompliance were isolated to the 3E Grant expenditures noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, costs were not adequately supported by personnel records. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs Known questioned costs of $41,193 were identified, as detailed in the Condition and Context. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure costs adequately documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Central Indiana Educational Service Center Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation was the subrecipient of an Explore, Engage, Experience (3E) Grant from the Central Indiana Educational Service Center (CIESC). Per the award letter received from the CIESC, the School Corporation was allocated $200,000 to hire a district coordinator for 3E initiatives. As only one reimbursement covering the period of August 1, 2022 to September 30, 2022, was requested from the CIESC for the 3E grant, all expenditures associated with the grant were selected for testing to verify the expenditures were in conformance with the applicable cost principles. Expenditures totaling $41,193, were for the salary of the grant lead and a secondary salary. No time and effort documentation was maintained to support the salary amounts charged to the program. As a result, these expenditures were determined not to be in conformance with the applicable cost principles and were considered questioned costs. The lack of internal controls and noncompliance were isolated to the 3E Grant expenditures noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, costs were not adequately supported by personnel records. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs Known questioned costs of $41,193 were identified, as detailed in the Condition and Context. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure costs adequately documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-007. Condition and Context A cash reimbursement is provided to the School Corporation based on meals served under the School Breakfast Program, National School Lunch Program, and Summer Food Service Program for Children. The cash reimbursement is to be used for the benefit of the food service program. INDIANA STATE BOARD OF ACCOUNTS 16 MADISON-GRANT UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not have internal controls in place over payroll disbursements charged to the food service program. Payroll disbursements were paid without evidence that the detailed report of payroll disbursements was reviewed and approved by another person not involved in the original payroll process. Additionally, a sample of 29 payroll charges were selected for testing. For 3 of the payroll charges selected, timesheets could not be provided for the employees paid within that charge. As such, we could not substantiate the amount paid, $7,298, to these employees out of the grant funds. This amount was considered questioned costs. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE's definition of IBS); . . . INDIANA STATE BOARD OF ACCOUNTS 17 MADISON-GRANT UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal control, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, payroll charges could not be substantiated. Questioned Costs Known questioned costs of $7,298 were identified as noted in the Condition and Context. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls, and develop policies and procedures to ensure costs are adequately documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-007. Condition and Context A cash reimbursement is provided to the School Corporation based on meals served under the School Breakfast Program, National School Lunch Program, and Summer Food Service Program for Children. The cash reimbursement is to be used for the benefit of the food service program. INDIANA STATE BOARD OF ACCOUNTS 16 MADISON-GRANT UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not have internal controls in place over payroll disbursements charged to the food service program. Payroll disbursements were paid without evidence that the detailed report of payroll disbursements was reviewed and approved by another person not involved in the original payroll process. Additionally, a sample of 29 payroll charges were selected for testing. For 3 of the payroll charges selected, timesheets could not be provided for the employees paid within that charge. As such, we could not substantiate the amount paid, $7,298, to these employees out of the grant funds. This amount was considered questioned costs. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE's definition of IBS); . . . INDIANA STATE BOARD OF ACCOUNTS 17 MADISON-GRANT UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal control, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, payroll charges could not be substantiated. Questioned Costs Known questioned costs of $7,298 were identified as noted in the Condition and Context. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls, and develop policies and procedures to ensure costs are adequately documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.