2023-012– Support for Payroll Allocations Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Controls over Compliance (Allowable Costs/Cost Principles). Program. Community Block Grants/Entitlement Grants; U.S. Department of Housing and Urban Development; Assistance Listing Number 14.218; All awards. Criteria. Per 2 CFR § 200.430(g)(1)(vi), Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity." Condition. During testing it was noted that the actual amounts charged to the grant were initially charged using the allocation rates from the previous pay period, and subsequently adjusted to the proper amount through a manual journal entry. When factoring in the amounts of the journal entries, the amount charged to the grant still differed from the support provided for 3 items of the 29 tested. Cause. The City does not have the proper internal controls in place to ensure that all allocations of personnel cost are allocated according to the support retained. Effect. The City is exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as the amount of likely questioned cost did not exceed the required threshold. Recommendation. We recommend that the City implement necessary internal controls to ensure that all allocations of personnel cost are allocated according to the support retained. View of Responsible Officials. The City will implement the necessary internal controls to ensure the policy for compliance is followed and documented.
2023-012– Support for Payroll Allocations Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Controls over Compliance (Allowable Costs/Cost Principles). Program. Community Block Grants/Entitlement Grants; U.S. Department of Housing and Urban Development; Assistance Listing Number 14.218; All awards. Criteria. Per 2 CFR § 200.430(g)(1)(vi), Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity." Condition. During testing it was noted that the actual amounts charged to the grant were initially charged using the allocation rates from the previous pay period, and subsequently adjusted to the proper amount through a manual journal entry. When factoring in the amounts of the journal entries, the amount charged to the grant still differed from the support provided for 3 items of the 29 tested. Cause. The City does not have the proper internal controls in place to ensure that all allocations of personnel cost are allocated according to the support retained. Effect. The City is exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as the amount of likely questioned cost did not exceed the required threshold. Recommendation. We recommend that the City implement necessary internal controls to ensure that all allocations of personnel cost are allocated according to the support retained. View of Responsible Officials. The City will implement the necessary internal controls to ensure the policy for compliance is followed and documented.
2023-012– Support for Payroll Allocations Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Controls over Compliance (Allowable Costs/Cost Principles). Program. Community Block Grants/Entitlement Grants; U.S. Department of Housing and Urban Development; Assistance Listing Number 14.218; All awards. Criteria. Per 2 CFR § 200.430(g)(1)(vi), Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity." Condition. During testing it was noted that the actual amounts charged to the grant were initially charged using the allocation rates from the previous pay period, and subsequently adjusted to the proper amount through a manual journal entry. When factoring in the amounts of the journal entries, the amount charged to the grant still differed from the support provided for 3 items of the 29 tested. Cause. The City does not have the proper internal controls in place to ensure that all allocations of personnel cost are allocated according to the support retained. Effect. The City is exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as the amount of likely questioned cost did not exceed the required threshold. Recommendation. We recommend that the City implement necessary internal controls to ensure that all allocations of personnel cost are allocated according to the support retained. View of Responsible Officials. The City will implement the necessary internal controls to ensure the policy for compliance is followed and documented.
2023-012– Support for Payroll Allocations Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Controls over Compliance (Allowable Costs/Cost Principles). Program. Community Block Grants/Entitlement Grants; U.S. Department of Housing and Urban Development; Assistance Listing Number 14.218; All awards. Criteria. Per 2 CFR § 200.430(g)(1)(vi), Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity." Condition. During testing it was noted that the actual amounts charged to the grant were initially charged using the allocation rates from the previous pay period, and subsequently adjusted to the proper amount through a manual journal entry. When factoring in the amounts of the journal entries, the amount charged to the grant still differed from the support provided for 3 items of the 29 tested. Cause. The City does not have the proper internal controls in place to ensure that all allocations of personnel cost are allocated according to the support retained. Effect. The City is exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as the amount of likely questioned cost did not exceed the required threshold. Recommendation. We recommend that the City implement necessary internal controls to ensure that all allocations of personnel cost are allocated according to the support retained. View of Responsible Officials. The City will implement the necessary internal controls to ensure the policy for compliance is followed and documented.
2023-012– Support for Payroll Allocations Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Controls over Compliance (Allowable Costs/Cost Principles). Program. Community Block Grants/Entitlement Grants; U.S. Department of Housing and Urban Development; Assistance Listing Number 14.218; All awards. Criteria. Per 2 CFR § 200.430(g)(1)(vi), Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity." Condition. During testing it was noted that the actual amounts charged to the grant were initially charged using the allocation rates from the previous pay period, and subsequently adjusted to the proper amount through a manual journal entry. When factoring in the amounts of the journal entries, the amount charged to the grant still differed from the support provided for 3 items of the 29 tested. Cause. The City does not have the proper internal controls in place to ensure that all allocations of personnel cost are allocated according to the support retained. Effect. The City is exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as the amount of likely questioned cost did not exceed the required threshold. Recommendation. We recommend that the City implement necessary internal controls to ensure that all allocations of personnel cost are allocated according to the support retained. View of Responsible Officials. The City will implement the necessary internal controls to ensure the policy for compliance is followed and documented.
2023-012– Support for Payroll Allocations Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Controls over Compliance (Allowable Costs/Cost Principles). Program. Community Block Grants/Entitlement Grants; U.S. Department of Housing and Urban Development; Assistance Listing Number 14.218; All awards. Criteria. Per 2 CFR § 200.430(g)(1)(vi), Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity." Condition. During testing it was noted that the actual amounts charged to the grant were initially charged using the allocation rates from the previous pay period, and subsequently adjusted to the proper amount through a manual journal entry. When factoring in the amounts of the journal entries, the amount charged to the grant still differed from the support provided for 3 items of the 29 tested. Cause. The City does not have the proper internal controls in place to ensure that all allocations of personnel cost are allocated according to the support retained. Effect. The City is exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as the amount of likely questioned cost did not exceed the required threshold. Recommendation. We recommend that the City implement necessary internal controls to ensure that all allocations of personnel cost are allocated according to the support retained. View of Responsible Officials. The City will implement the necessary internal controls to ensure the policy for compliance is followed and documented.
2023-012– Support for Payroll Allocations Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Controls over Compliance (Allowable Costs/Cost Principles). Program. Community Block Grants/Entitlement Grants; U.S. Department of Housing and Urban Development; Assistance Listing Number 14.218; All awards. Criteria. Per 2 CFR § 200.430(g)(1)(vi), Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity." Condition. During testing it was noted that the actual amounts charged to the grant were initially charged using the allocation rates from the previous pay period, and subsequently adjusted to the proper amount through a manual journal entry. When factoring in the amounts of the journal entries, the amount charged to the grant still differed from the support provided for 3 items of the 29 tested. Cause. The City does not have the proper internal controls in place to ensure that all allocations of personnel cost are allocated according to the support retained. Effect. The City is exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as the amount of likely questioned cost did not exceed the required threshold. Recommendation. We recommend that the City implement necessary internal controls to ensure that all allocations of personnel cost are allocated according to the support retained. View of Responsible Officials. The City will implement the necessary internal controls to ensure the policy for compliance is followed and documented.
2023-012– Support for Payroll Allocations Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Controls over Compliance (Allowable Costs/Cost Principles). Program. Community Block Grants/Entitlement Grants; U.S. Department of Housing and Urban Development; Assistance Listing Number 14.218; All awards. Criteria. Per 2 CFR § 200.430(g)(1)(vi), Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity." Condition. During testing it was noted that the actual amounts charged to the grant were initially charged using the allocation rates from the previous pay period, and subsequently adjusted to the proper amount through a manual journal entry. When factoring in the amounts of the journal entries, the amount charged to the grant still differed from the support provided for 3 items of the 29 tested. Cause. The City does not have the proper internal controls in place to ensure that all allocations of personnel cost are allocated according to the support retained. Effect. The City is exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as the amount of likely questioned cost did not exceed the required threshold. Recommendation. We recommend that the City implement necessary internal controls to ensure that all allocations of personnel cost are allocated according to the support retained. View of Responsible Officials. The City will implement the necessary internal controls to ensure the policy for compliance is followed and documented.
Finding Number: 2023-003 Program: Research and Development Cluster – Geographic Programs-Great Lakes Restoration Initiative Federal Agency Name: Environmental Protection Agency Federal Award Year: July 1, 2022 – June 30, 2023 Federal Assistance Listing Numbers: 66.469 Finding Type: Significant Deficiency Compliance Requirement: Allowable Costs/Cost Principles Criteria The Uniform Guidance Section 200.430, states that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities (iv) Encompass 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. Further, in accordance with 2 CFR 200.303(a), non-federal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The University performs certain manual calculations when a faculty or graduate assistant has multiple appointments in order to determine the appropriate percentage allocation to each federal award or non-federal activity. During our testing internal controls and compliance over allowable costs/cost principles specific to payroll we noted that the University did not have internal controls designed at a sufficient level of precision to detect errors in manual calculations when the employee has more than one supplemental pay authorization. As a result we noted that, 2 out of 62 payroll transactions tested the amount allocated and charged to the grant was incorrect. We noted that the 2 transactions were for the same employee and impacted the same award. Cause In discussing this with the University, this employee had submitted two separate payroll authorizations for his summer research salary at different times and a manual calculation error was made in the allocation to the appropriate grant. The University’s internal controls over review of supplemental pay authorizations did not include a secondary review of the calculation by someone other than the preparer before the allocation was input into the payroll system. Effect The lack of internal controls at a sufficient level of precision and in particular where there are manual calculations can result in incorrect allocations and charges to federal awards and ultimately unallowable costs. Questioned Costs None. Statistical Sampling Our sample was not and was not intended to be statistically valid. Identification of Whether the Audit Finding was a Repeat Finding This finding is a repeat finding in the immediately prior audit finding 2022-003 Recommendation We recommend that the University implement a more thorough and detailed process and related internal controls to review payroll authorization forms and manual calculations performed before the payroll allocation is recorded to the federal grant, including a review by someone other than the preparer.
Criteria: 2 CFR 200.430(h)(8)(i) requires that amounts of personnel expenses are properly documented and include appropriate controls and documentation to support the distribution of the employee's wages among specific activities if the employee works on more than one award. Condition: Of the testing population of 60 payroll transactions tested, for 10 transactions the Organization was unable to provide a timesheet or other documentation to substantiate the application of the individual's time for that period. In addition for 17 transactions, the allocation on the time sheet provided does not agree to the allocation of the individual's wages to the program in the general ledger and voucher. Cause: Due to limited staffing resources, the Organization was not able to ensure maintenance of adequate documentation. Effect: The Organization is not able to demonstrate that the personnel expenses allocated to the grant was proper and ensure avoidance of duplication of funding requests for the same amounts. Questioned Costs: Unknown Recommendation: Management should review and refine its process of tracking payroll costs by grant to ensure that the costs are supported by a system of internal controls which provides reasonable assurance that the charges are accurate, are properly allocated, and reasonably reflect the total activity for which the employee is compensated. Views of Responsible Officials: Management agrees with the finding; see corrective action plan.
2023-003 Allowable Costs/Cost Principles Federal Program Information Funding Agency: U.S. Department of Education Title: Title I Grants to Local Educational Agencies AL Number: 84.010 Criteria In accordance with 2 CFR Section 200.430(g)(1)(vi), the District must document employee time and effort spent in the Title I program, if under the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Furthermore, a system of internal controls would have an entity file all approved wages in the employee personal file. Condition The District was missing documentation to support time and effort of faculty members who had wages less than 100% being charged to the Title I program. Also, we noted during testing that 1 employee of the 11 hourly employees tested had the timecard not calculated correctly and 7 time documents out of 48 tested did not have the proper approval. Questioned Costs None Context The District had recorded partial or entire salaries of 132 employees to the program. Of this listing of employees, we tested 11. Effect Expenditures improperly or inaccurately being charged to the program. Cause Management oversight. Recommendation We recommend the District require all faculty in the Title I program complete time and effort reports. We also recommend that the District calculates timecards to be reviewed before payroll is processed. We also recommend the District implement a policy that all timecards submitted are reviewed and approved by employee’s supervisor. Repeat Finding This is a repeat finding of 2022-005. Views of Responsible Officials See corrective action plan.
Criteria: In accordance with 2 CFR 200 Subpart E, the University is required to conform to allowability of cost provisions, and 2 CFR 200.303 requires the organization to establish and maintain effective controls over federal awards. Allowable costs charged to federal programs, whether direct or indirect, must be allowable and be determined in accordance with Subpart E – Cost Principles of the Uniform Guidance. Effective internal controls should include procedures to ensure federal expenditures and amounts are for activities allowed or unallowed and allowable costs/cost principles, as well as accurately and completely reported on the SEFA. According to 2 CFR 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the recipient or subrecipient; (iii) Reasonably reflect the total activity for which the employee is compensated by the recipient or subrecipient, not exceeding 100 percent of compensated activities; (iv) Encompass federally-assisted and all other activities compensated by the recipient or subrecipient on an integrated basis but may include the use of subsidiary records as defined in the recipient's or subrecipient's written policy; (v) Comply with the established accounting policies and procedures of the recipient or subrecipient 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 allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Condition and Context: The University receives Supplemental Nutrition Assistance Program (SNAP) Cluster program funding at its Sacramento campus to perform nutrition outreach and education services to residents of the State of California. The Sacramento campus administers the SNAP Cluster nutrition education programs through its College of Continuing Education (CCE) and Population Research Center (PRC) offices. SNAP Cluster program expenditures are primarily comprised of payroll for program personnel performing various program activities and related fringe benefits and indirect costs. During our testing of 18 payroll expenditures for CCE employees (totaling $90,946) and 40 payroll expenditures for PRC employees (totaling $66,458), we noted effort reports detailing 100% of the employee's activities were not prepared for certain employees. Upon further investigation and discussion with CCE and PRC program management, we noted effort reports were not prepared for any employees whose payroll expenditures were charged to the SNAP Cluster program, except for student workers who solely worked on SNAP Cluster program activities. The payroll expenditures and related costs impacted by the inadequate effort reports, are described in the table below: Expenditure category Questioned costs Excerpt of total SNAP Cluster program expenditures by impacted expenditure category Payroll $1,151,941 $1,354,046 Fringe benefits $641,501 $641,501 Indirect costs $448,286 $660,709 Total $2,241,728 $2,656,257 Total SNAP Cluster program expenditures were $3,688,927 for the year ended June 30, 2023. We noted additional instances of noncompliance as follows: • In our testing of 58 payroll expenditures, the hourly payroll rates used to prepare the quarterly payroll remittances submitted to the State of California exceeded the actual payroll rates paid for 15 employees resulting in an overcharge of payroll, fringe benefits, and indirect costs to the SNAP program of $11,710, $9,684, and $5,348, respectively. As these 15 employees did not have effort reports as discussed above, payroll, fringe benefits, and indirect costs associated with these 15 employees has already been included in the table above. • One individually significant payroll expenditure that was associated with one employee was double counted in the quarterly State of California remittance billing resulting in an overcharge to the SNAP Cluster program of $27,004, $10,801, and $9,451, respectively. As the employee did not have an effort report as discussed above, payroll, fringe benefits, and indirect costs associated with this employee has already been included in the table above. • In our testing of 7 indirect cost charges, we identified 4 indirect cost charges that utilized higher than the allowed hourly rates within the calculation. These 4 indirect cost charges related to CCE employees in which the hourly rate listed in the program agreement was billed versus the employee’s actual hourly pay rate and fringe benefit costs. As a result, the total payroll charges used to bill the indirect cost rate of 25% utilized unallowable payroll expenditures, which resulted in the SNAP Cluster program being overcharged by $46,922. As these employees also did not have effort reports as discussed above, payroll, fringe benefits, and indirect costs associated with these CCE employees has already been included in the table above. In addition, we noted the Sacramento campus has not established adequate internal controls to ensure: (1) payroll expenditures charged to the SNAP Cluster program are properly determined and supported in accordance with the requirements of the Uniform Guidance and (2) fringe benefit and indirect costs are properly calculated by applying the approved fringe or indirect cost rate to a base that includes only allowable costs. Cause & Effect: The errors noted above were primarily due to insufficient controls over the establishment and tracking of SNAP Cluster program activities as federal funding within Sacramento’s general ledger. As a result, a portion of SNAP program expenditures and activities were not processed in accordance with applicable federal guidelines. Additional errors noted above relate to insufficient controls over the accuracy of the payroll, fringe benefits, and indirect cost charged to the SNAP Cluster program. The inadequate review procedures over payroll, fringe benefits, and indirect cost expenditures resulted in unallowable charges to the SNAP Cluster program in the amount of $2,241,728.
FINDING 2023-004 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): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters 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. An effective system of internal controls, which would include segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance should be designed and implemented to ensure expenditures charged to the food service program fund (fund 800) are for the benefit of the food service program. The School Corporation's process for payroll disbursements included a segregation of duties; however, no individual reviewer or approver was provided detailed payroll information that would have allowed them to determine the expense was being paid from the food service program. Due to the lack of internal controls, the School Corporation paid $23,682 of administrative salaries based on fixed percentages without supporting documentation to indicate how the percentages were determined or time records indicating time spent on the program by the applicable administrators. The amount paid, $23,682, is considered questioned costs. INDIANA STATE BOARD OF ACCOUNTS 19 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to the salaries identified 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. (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 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; or two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." INDIANA STATE BOARD OF ACCOUNTS 20 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 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, administrative payroll was charged to the school lunch fund without appropriate supporting documentation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $23,682 were identified as noted in the Condition and Context. Recommendation We recommended the School Corporation's management 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 2023-004 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): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters 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. An effective system of internal controls, which would include segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance should be designed and implemented to ensure expenditures charged to the food service program fund (fund 800) are for the benefit of the food service program. The School Corporation's process for payroll disbursements included a segregation of duties; however, no individual reviewer or approver was provided detailed payroll information that would have allowed them to determine the expense was being paid from the food service program. Due to the lack of internal controls, the School Corporation paid $23,682 of administrative salaries based on fixed percentages without supporting documentation to indicate how the percentages were determined or time records indicating time spent on the program by the applicable administrators. The amount paid, $23,682, is considered questioned costs. INDIANA STATE BOARD OF ACCOUNTS 19 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to the salaries identified 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. (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 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; or two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." INDIANA STATE BOARD OF ACCOUNTS 20 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 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, administrative payroll was charged to the school lunch fund without appropriate supporting documentation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $23,682 were identified as noted in the Condition and Context. Recommendation We recommended the School Corporation's management 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 2023-004 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): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters 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. An effective system of internal controls, which would include segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance should be designed and implemented to ensure expenditures charged to the food service program fund (fund 800) are for the benefit of the food service program. The School Corporation's process for payroll disbursements included a segregation of duties; however, no individual reviewer or approver was provided detailed payroll information that would have allowed them to determine the expense was being paid from the food service program. Due to the lack of internal controls, the School Corporation paid $23,682 of administrative salaries based on fixed percentages without supporting documentation to indicate how the percentages were determined or time records indicating time spent on the program by the applicable administrators. The amount paid, $23,682, is considered questioned costs. INDIANA STATE BOARD OF ACCOUNTS 19 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to the salaries identified 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. (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 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; or two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." INDIANA STATE BOARD OF ACCOUNTS 20 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 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, administrative payroll was charged to the school lunch fund without appropriate supporting documentation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $23,682 were identified as noted in the Condition and Context. Recommendation We recommended the School Corporation's management 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 2023-004 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): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters 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. An effective system of internal controls, which would include segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance should be designed and implemented to ensure expenditures charged to the food service program fund (fund 800) are for the benefit of the food service program. The School Corporation's process for payroll disbursements included a segregation of duties; however, no individual reviewer or approver was provided detailed payroll information that would have allowed them to determine the expense was being paid from the food service program. Due to the lack of internal controls, the School Corporation paid $23,682 of administrative salaries based on fixed percentages without supporting documentation to indicate how the percentages were determined or time records indicating time spent on the program by the applicable administrators. The amount paid, $23,682, is considered questioned costs. INDIANA STATE BOARD OF ACCOUNTS 19 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to the salaries identified 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. (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 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; or two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." INDIANA STATE BOARD OF ACCOUNTS 20 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 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, administrative payroll was charged to the school lunch fund without appropriate supporting documentation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $23,682 were identified as noted in the Condition and Context. Recommendation We recommended the School Corporation's management 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 2023-004 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): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters 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. An effective system of internal controls, which would include segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance should be designed and implemented to ensure expenditures charged to the food service program fund (fund 800) are for the benefit of the food service program. The School Corporation's process for payroll disbursements included a segregation of duties; however, no individual reviewer or approver was provided detailed payroll information that would have allowed them to determine the expense was being paid from the food service program. Due to the lack of internal controls, the School Corporation paid $23,682 of administrative salaries based on fixed percentages without supporting documentation to indicate how the percentages were determined or time records indicating time spent on the program by the applicable administrators. The amount paid, $23,682, is considered questioned costs. INDIANA STATE BOARD OF ACCOUNTS 19 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to the salaries identified 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. (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 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; or two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." INDIANA STATE BOARD OF ACCOUNTS 20 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 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, administrative payroll was charged to the school lunch fund without appropriate supporting documentation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $23,682 were identified as noted in the Condition and Context. Recommendation We recommended the School Corporation's management 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 2023-010 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context The Elementary and Secondary School Emergency Relief (ESSER) Fund provided funding to states and school districts to help safely reopen and sustain the safe operation of schools and to address the impact of the coronavirus pandemic on the nation's students. States were required to subgrant a portion of their ESSER allocations to Local Educational Agencies (LEA). Prior to the LEAs receiving their respective subgrants, the LEAs were required to complete an application for the ESSER funding, which was submitted to the Indiana Department of Education (IDOE), the pass-through entity for approval. The application included a district level budget identifying how the LEA intended to spend program funds. A sample of 25 claims charged to the ESSER grant program for which reimbursement was received during the audit period was selected for testing to verify that the expenditures were in conformance with the applicable cost principles. Of the 25 claims tested, the following errors were noted: INDIANA STATE BOARD OF ACCOUNTS 32 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Two claims, totaling $983, were for payments to a teacher for part-time tutoring. However, there was not a School Board approved contract or Salary Ordinance that showed the approval of this position or the rate to be paid. Two claims, totaling $318,922, were for payments for playground equipment; however, the related contract supporting the purchase was not provided. The lack of effective 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 33 SHENANDOAH 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 the School Corporation's management. 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, expenses were paid without adequate supporting documentation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management 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 2023-010 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context The Elementary and Secondary School Emergency Relief (ESSER) Fund provided funding to states and school districts to help safely reopen and sustain the safe operation of schools and to address the impact of the coronavirus pandemic on the nation's students. States were required to subgrant a portion of their ESSER allocations to Local Educational Agencies (LEA). Prior to the LEAs receiving their respective subgrants, the LEAs were required to complete an application for the ESSER funding, which was submitted to the Indiana Department of Education (IDOE), the pass-through entity for approval. The application included a district level budget identifying how the LEA intended to spend program funds. A sample of 25 claims charged to the ESSER grant program for which reimbursement was received during the audit period was selected for testing to verify that the expenditures were in conformance with the applicable cost principles. Of the 25 claims tested, the following errors were noted: INDIANA STATE BOARD OF ACCOUNTS 32 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Two claims, totaling $983, were for payments to a teacher for part-time tutoring. However, there was not a School Board approved contract or Salary Ordinance that showed the approval of this position or the rate to be paid. Two claims, totaling $318,922, were for payments for playground equipment; however, the related contract supporting the purchase was not provided. The lack of effective 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 33 SHENANDOAH 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 the School Corporation's management. 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, expenses were paid without adequate supporting documentation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management 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 2023-010 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context The Elementary and Secondary School Emergency Relief (ESSER) Fund provided funding to states and school districts to help safely reopen and sustain the safe operation of schools and to address the impact of the coronavirus pandemic on the nation's students. States were required to subgrant a portion of their ESSER allocations to Local Educational Agencies (LEA). Prior to the LEAs receiving their respective subgrants, the LEAs were required to complete an application for the ESSER funding, which was submitted to the Indiana Department of Education (IDOE), the pass-through entity for approval. The application included a district level budget identifying how the LEA intended to spend program funds. A sample of 25 claims charged to the ESSER grant program for which reimbursement was received during the audit period was selected for testing to verify that the expenditures were in conformance with the applicable cost principles. Of the 25 claims tested, the following errors were noted: INDIANA STATE BOARD OF ACCOUNTS 32 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Two claims, totaling $983, were for payments to a teacher for part-time tutoring. However, there was not a School Board approved contract or Salary Ordinance that showed the approval of this position or the rate to be paid. Two claims, totaling $318,922, were for payments for playground equipment; however, the related contract supporting the purchase was not provided. The lack of effective 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 33 SHENANDOAH 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 the School Corporation's management. 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, expenses were paid without adequate supporting documentation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management 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 2023-010 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context The Elementary and Secondary School Emergency Relief (ESSER) Fund provided funding to states and school districts to help safely reopen and sustain the safe operation of schools and to address the impact of the coronavirus pandemic on the nation's students. States were required to subgrant a portion of their ESSER allocations to Local Educational Agencies (LEA). Prior to the LEAs receiving their respective subgrants, the LEAs were required to complete an application for the ESSER funding, which was submitted to the Indiana Department of Education (IDOE), the pass-through entity for approval. The application included a district level budget identifying how the LEA intended to spend program funds. A sample of 25 claims charged to the ESSER grant program for which reimbursement was received during the audit period was selected for testing to verify that the expenditures were in conformance with the applicable cost principles. Of the 25 claims tested, the following errors were noted: INDIANA STATE BOARD OF ACCOUNTS 32 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Two claims, totaling $983, were for payments to a teacher for part-time tutoring. However, there was not a School Board approved contract or Salary Ordinance that showed the approval of this position or the rate to be paid. Two claims, totaling $318,922, were for payments for playground equipment; however, the related contract supporting the purchase was not provided. The lack of effective 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 33 SHENANDOAH 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 the School Corporation's management. 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, expenses were paid without adequate supporting documentation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management 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.
2023-003 (2022-003) – Payroll Time Approval – Significant Deficiency in Internal Controls over Compliance ALN: 84.126 Federal Award Title: Rehabilitation Services Vocational Rehabilitation Grants to States Federal Agency: United States Department of Education Pass-Through Entity: Texas Health and Human Services Commission Award Number(s): HHS000186000005, HHS000202900008 Federal Award Year: 2023 Condition: During our review of payroll related transactions, 2 of the 25 payroll samples tested did not have review and approval of the Executive Director or Employee on the timecard. Criteria: 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the non-federal entity must: (a) Establish and maintain effective internal controls over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.430 – Compensation – personal services, paragraph (i) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Effect: The Organization may unintentionally under/over compensate what is applicable for the work performed by that employee. This could lead to questioned costs and repayment of funds to the grantor agency. Cause: The Organization does not have proper controls in place to verify that documentation was maintained to indicate the employees’ time paid under the Federal grant. Questioned Costs: No questioned costs identified.
2023-003 (2022-003) – Payroll Time Approval – Significant Deficiency in Internal Controls over Compliance ALN: 84.126 Federal Award Title: Rehabilitation Services Vocational Rehabilitation Grants to States Federal Agency: United States Department of Education Pass-Through Entity: Texas Health and Human Services Commission Award Number(s): HHS000186000005, HHS000202900008 Federal Award Year: 2023 Condition: During our review of payroll related transactions, 2 of the 25 payroll samples tested did not have review and approval of the Executive Director or Employee on the timecard. Criteria: 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the non-federal entity must: (a) Establish and maintain effective internal controls over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.430 – Compensation – personal services, paragraph (i) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Effect: The Organization may unintentionally under/over compensate what is applicable for the work performed by that employee. This could lead to questioned costs and repayment of funds to the grantor agency. Cause: The Organization does not have proper controls in place to verify that documentation was maintained to indicate the employees’ time paid under the Federal grant. Questioned Costs: No questioned costs identified.
Opioid STR Grant ALN 93.788 Criteria The Office of Management and Budget issuance of the Code of Federal Regulations (CFR) specifically states uniform administrative requirements, cost principles, and audit requirements for federal awards. CFR 200.430(i)(viii) states, “Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) the system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) significant changes in the corresponding work activity are identified and entered into the records in a timely manner; and (C) the non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition During the course of the audit, we noted that employee time charged to multiple programs was based on an estimated percentage of time established at the beginning of the fiscal year. The methodology is allowable when an after-the-fact review of the estimate is completed to ensure the federal award is charged the proper amount. The Organization reviews and adjusts allocations annually but makes changes on a prospective basis. Cause The Organization’s internal controls do not include a process for adjustments to estimated percentages for charging employee time. Effect The potential effects of not reconciling contemporaneous time and effort reporting to allocated payroll expenses could include an over or understatement of salary expenses allocated to the federal grant. Questioned Costs None Perspective Information The finding noted related to four (4) pay periods tested where it was noted that no allocation based on actual time spent on the grants was performed. It was noted that all employees tested were allocated 100% to the grant. Identification as a repeat finding There was a similar finding in the prior year. Recommendation We recommend the Organization develop a process to review the percentages used to charge employee time to the Federal grants during the fiscal year and update accounting records accordingly. View of Responsible Official Currently, the Organization’s CEO and the bookkeeper will review each grant’s funding details prior to the grant’s fiscal year to determine how each employee’s salary percentages should be allocated according to the grant contract. Throughout the fiscal year, the CEO and bookkeeper will meet regularly to review and incorporate any new hires to determine how their salary is expected to be allocated. Additionally, the outsourced accountant will review the allocations periodically throughout the year to ensure that it is being done properly. Over the next year, as considered efficient, the Organization will implement a daily timesheet record, which requires each program service employee to classify their daily time between federal grant programs. At the end of each week, staff members will submit their timesheet to their supervisor. The supervisor will review each week’s daily timesheet to confirm the staff are recognizing their activities properly. At the end of each month, the Organization’s outsourced accountant, will review these timesheets and determine the proper allocation needed to record each employee’s payroll activities in the accounting software by appropriate federal program. This process will allow for the allocation of actuals to each federal program by the end of the month.
Opioid STR Grant ALN 93.788 Criteria The Office of Management and Budget issuance of the Code of Federal Regulations (CFR) specifically states uniform administrative requirements, cost principles, and audit requirements for federal awards. CFR 200.430(i)(viii) states, “Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) the system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) significant changes in the corresponding work activity are identified and entered into the records in a timely manner; and (C) the non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition During the course of the audit, we noted that employee time charged to multiple programs was based on an estimated percentage of time established at the beginning of the fiscal year. The methodology is allowable when an after-the-fact review of the estimate is completed to ensure the federal award is charged the proper amount. The Organization reviews and adjusts allocations annually but makes changes on a prospective basis. Cause The Organization’s internal controls do not include a process for adjustments to estimated percentages for charging employee time. Effect The potential effects of not reconciling contemporaneous time and effort reporting to allocated payroll expenses could include an over or understatement of salary expenses allocated to the federal grant. Questioned Costs None Perspective Information The finding noted related to four (4) pay periods tested where it was noted that no allocation based on actual time spent on the grants was performed. It was noted that all employees tested were allocated 100% to the grant. Identification as a repeat finding There was a similar finding in the prior year. Recommendation We recommend the Organization develop a process to review the percentages used to charge employee time to the Federal grants during the fiscal year and update accounting records accordingly. View of Responsible Official Currently, the Organization’s CEO and the bookkeeper will review each grant’s funding details prior to the grant’s fiscal year to determine how each employee’s salary percentages should be allocated according to the grant contract. Throughout the fiscal year, the CEO and bookkeeper will meet regularly to review and incorporate any new hires to determine how their salary is expected to be allocated. Additionally, the outsourced accountant will review the allocations periodically throughout the year to ensure that it is being done properly. Over the next year, as considered efficient, the Organization will implement a daily timesheet record, which requires each program service employee to classify their daily time between federal grant programs. At the end of each week, staff members will submit their timesheet to their supervisor. The supervisor will review each week’s daily timesheet to confirm the staff are recognizing their activities properly. At the end of each month, the Organization’s outsourced accountant, will review these timesheets and determine the proper allocation needed to record each employee’s payroll activities in the accounting software by appropriate federal program. This process will allow for the allocation of actuals to each federal program by the end of the month.
Opioid STR Grant ALN 93.788 Criteria The Office of Management and Budget issuance of the Code of Federal Regulations (CFR) specifically states uniform administrative requirements, cost principles, and audit requirements for federal awards. CFR 200.430(i)(viii) states, “Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) the system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) significant changes in the corresponding work activity are identified and entered into the records in a timely manner; and (C) the non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition During the course of the audit, we noted that employee time charged to multiple programs was based on an estimated percentage of time established at the beginning of the fiscal year. The methodology is allowable when an after-the-fact review of the estimate is completed to ensure the federal award is charged the proper amount. The Organization reviews and adjusts allocations annually but makes changes on a prospective basis. Cause The Organization’s internal controls do not include a process for adjustments to estimated percentages for charging employee time. Effect The potential effects of not reconciling contemporaneous time and effort reporting to allocated payroll expenses could include an over or understatement of salary expenses allocated to the federal grant. Questioned Costs None Perspective Information The finding noted related to four (4) pay periods tested where it was noted that no allocation based on actual time spent on the grants was performed. It was noted that all employees tested were allocated 100% to the grant. Identification as a repeat finding There was a similar finding in the prior year. Recommendation We recommend the Organization develop a process to review the percentages used to charge employee time to the Federal grants during the fiscal year and update accounting records accordingly. View of Responsible Official Currently, the Organization’s CEO and the bookkeeper will review each grant’s funding details prior to the grant’s fiscal year to determine how each employee’s salary percentages should be allocated according to the grant contract. Throughout the fiscal year, the CEO and bookkeeper will meet regularly to review and incorporate any new hires to determine how their salary is expected to be allocated. Additionally, the outsourced accountant will review the allocations periodically throughout the year to ensure that it is being done properly. Over the next year, as considered efficient, the Organization will implement a daily timesheet record, which requires each program service employee to classify their daily time between federal grant programs. At the end of each week, staff members will submit their timesheet to their supervisor. The supervisor will review each week’s daily timesheet to confirm the staff are recognizing their activities properly. At the end of each month, the Organization’s outsourced accountant, will review these timesheets and determine the proper allocation needed to record each employee’s payroll activities in the accounting software by appropriate federal program. This process will allow for the allocation of actuals to each federal program by the end of the month.
Criteria: The Uniform Guidance, 2 CFR 200.430, requires that payroll charges be based on actual costs incurred and accurately reflects the work performed. Further, documentation must be maintained that supports payroll related costs that are allocated to more than one federal program or to a federal program and nonfederal programs. Condition: We selected thirty-five payroll transactions charged to the program with thirty-five different employees. Of these thirty-five transactions, the Organization did not charge 100% of the employees’ payroll to the program for fourteen employees, indicating that the remaining amount was charged to other federal and nonfederal programs. The Organization did not maintain detailed timesheets or time studies to support the actual time spent on the activities funded by the Coronavirus State and Local Fiscal Recovery Funds program that corresponded to the percentage of time charged to this program for each employee. Our sample of payroll transactions totaled $41,701 charged to the program of the total wages of these employees for these pay periods selected of $59,886. Cause and Effect: The Organization has not implemented procedures that require payroll costs that are allocated to multiple programs be supported by detailed documentation (such as timesheets or recent time studies) supporting the allocation. As a result, costs could be charged to federal programs that do not coincide with actual work performed by the employee. Auditors’ Recommendations: The Organization should establish policies to ensure that payroll costs charged to multiple departments or programs be based on actual time incurred by each employee and that the allocation be supported by time and attendance records.
Criteria: The Uniform Guidance, 2 CFR 200.430, requires that payroll charges be based on actual costs incurred and accurately reflects the work performed. Further, documentation must be maintained that supports payroll related costs that are allocated to more than one federal program or to a federal program and nonfederal programs. Condition: We selected thirty-five payroll transactions charged to the program with thirty-five different employees. Of these thirty-five transactions, the Organization did not charge 100% of the employees’ payroll to the program for fourteen employees, indicating that the remaining amount was charged to other federal and nonfederal programs. The Organization did not maintain detailed timesheets or time studies to support the actual time spent on the activities funded by the Coronavirus State and Local Fiscal Recovery Funds program that corresponded to the percentage of time charged to this program for each employee. Our sample of payroll transactions totaled $41,701 charged to the program of the total wages of these employees for these pay periods selected of $59,886. Cause and Effect: The Organization has not implemented procedures that require payroll costs that are allocated to multiple programs be supported by detailed documentation (such as timesheets or recent time studies) supporting the allocation. As a result, costs could be charged to federal programs that do not coincide with actual work performed by the employee. Auditors’ Recommendations: The Organization should establish policies to ensure that payroll costs charged to multiple departments or programs be based on actual time incurred by each employee and that the allocation be supported by time and attendance records.
2023-005 – Delayed Approval of Compensation Rates (SD) Federal Program Title: Section 8 Housing Choice Vouchers Assistance Listing Number: 14.871 Federal Agency: U.S. Department of Housing and Urban Development Category of Finding: Allowable Costs and Cost Principles Criteria: Per 2 CFR §200.430 of the Uniform Guidance, compensation for personnel services, including any adjustments, must be based on documented and approved procedures in accordance with the organization’s established policies. All changes to compensation must be approved and documented in a timely manner to ensure compliance with both federal and non-federal funding requirements. The City uses personnel action forms (PAF) to document changes to compensation. The PAF must be approved by authorized personnel in advance. Condition: During the review of personnel costs, it was observed that changes in the compensation rates for employees charged to the federally funded project were not approved in a timely manner. Documentation showed delays in the authorization of salary adjustments, with compensation changes becoming effective before formal approval by the City. Cause: The City’s internal control processes for reviewing and approving compensation changes were not followed promptly. There was a lack of procedures ensuring that salary adjustments were approved prior to the effective date. Effect or Potential Effect: Untimely approval of compensation changes increases the risk of inaccurate or unallowable personnel costs being charged to the federal award. This may result in questioned costs, noncompliance with federal regulations, and potential audit findings. Questioned Cost: None. Context: We selected four employees who worked on the program and in all cases, the PAF were authorized much later than the effective date of the compensation change. Statistical Sampling Validity: More than 50% of employees who work on the program were selected. Repeat of a Prior-Year Finding: 2022-005. Recommendation: The City should reinforce internal controls to ensure that all compensation changes are reviewed and approved promptly. This should include: Establishing a timeline for the approval of compensation adjustments. Implementing procedures that prevent compensation changes from being applied until formal approval is obtained. Ensuring proper documentation of all approved salary changes is maintained. Management Response and Corrective Action Plan City's Response: The City concurs with the recommendation and has implemented hiring for temporary work assignments in order to facilitate update. Corrective Action Plan: The HR and payroll software will be updated by the City by December 2025. Planned Implementation Date: December 2025 Responsible Person(s): City Manager
Criteria: Payroll payments are based on the timecard submitted for work performed, and the approved rate of pay the employee is entitled to. Time and effort requirements are outlined in 2 CFR 200.430. Condition: In testing payroll transactions, there were numerous instances of inadequate documentation for payroll. There were missing approved pay rate forms and lack of supporting documentation for stipends and differentials paid. There were timecards submitted for support of the payroll which were unapproved, mathematically incorrect, and/or which did not agree to the payroll paid. Cause: The lack of formal processes and procedures for payroll documentation paired with the limited oversight of payroll processing resulted in insufficient supporting information for payroll payments made. Effect or potential effect: Internal control over the financial activities of the YWCA New Hampshire is weakened. Failure to maintain accurate supporting documentation for payroll increases the risk employees are over- or under- paid for work performed. Questioned costs: The questioned costs are unknown, as the amount of payroll that could have been inappropriately charged is unable to be recalculated at this time. Context: The YWCA New Hampshire expended in excess of $750,000 in federal awards and assistance during the year ending June 30, 2023 requiring a compliance audit in accordance with the Uniform Guidance. The organization has not required a compliance audit in previous years and management was not aware of the various requirements of the Uniform Guidance. The payroll deficiencies were a systemic problem noted during the audit. Recommendation: Policies and procedures surrounding payroll should be reviewed with all relevant personnel. Rate of pay forms should be maintained for each employee, signed and approved, and updated for any rate changes. Formal pay rates should be established for all shift differentials and stipends. Timecards should be appropriately completed each week, approved, and reviewed during the payroll processing. Views of Responsible Officials: YWCA New Hampshire’s management concurs with this audit finding.
Criteria: Payroll payments are based on the timecard submitted for work performed, and the approved rate of pay the employee is entitled to. Time and effort requirements are outlined in 2 CFR 200.430. Condition: In testing payroll transactions, there were numerous instances of inadequate documentation for payroll. There were missing approved pay rate forms and lack of supporting documentation for stipends and differentials paid. There were timecards submitted for support of the payroll which were unapproved, mathematically incorrect, and/or which did not agree to the payroll paid. Cause: The lack of formal processes and procedures for payroll documentation paired with the limited oversight of payroll processing resulted in insufficient supporting information for payroll payments made. Effect or potential effect: Internal control over the financial activities of the YWCA New Hampshire is weakened. Failure to maintain accurate supporting documentation for payroll increases the risk employees are over- or under- paid for work performed. Questioned costs: The questioned costs are unknown, as the amount of payroll that could have been inappropriately charged is unable to be recalculated at this time. Context: The YWCA New Hampshire expended in excess of $750,000 in federal awards and assistance during the year ending June 30, 2023 requiring a compliance audit in accordance with the Uniform Guidance. The organization has not required a compliance audit in previous years and management was not aware of the various requirements of the Uniform Guidance. The payroll deficiencies were a systemic problem noted during the audit. Recommendation: Policies and procedures surrounding payroll should be reviewed with all relevant personnel. Rate of pay forms should be maintained for each employee, signed and approved, and updated for any rate changes. Formal pay rates should be established for all shift differentials and stipends. Timecards should be appropriately completed each week, approved, and reviewed during the payroll processing. Views of Responsible Officials: YWCA New Hampshire’s management concurs with this audit finding.
Criteria: Time and effort requirements state that employee time must be maintained with sufficient documentation to provide for appropriate allocation to the federal program. Time and effort requirements are outlined in 2 CFR 200.430. 32 Condition: Payroll charges for the grant were based on a percentage of time by employee. This percentage was based on management’s decision and set when budgeting; the percentage charged to the grant was not based on actual hours worked. Cause: Payroll was processed by an outside service provider based on information provided by management. Management did not require the breakdown of hours as it relates to the federal programs which were being charged. Management was unaware of this time and effort requirement. Effect or potential effect: The costs submitted for reimbursement under the grant may not be appropriate. The failure to report time appropriately and allocate by program could increase the risk of errors in amounts reported as expended. Questioned costs: The questioned costs are unknown, as the amount of payroll that could have been inappropriately charged to the grant is unable to be recalculated at this time. The true allocation of hours was not recorded. Context: The YWCA New Hampshire expended in excess of $750,000 in federal awards and assistance during the year ending June 30, 2023 requiring a compliance audit in accordance with the Uniform Guidance. The organization has not required a compliance audit in previous years and management was not aware of the various requirements of the Uniform Guidance. The payroll deficiencies were a systemic problem noted during the audit. Recommendation: We recommend that time and effort be maintained in accordance with the Uniform Guidance. We recommend that employees clearly identify hours by grant program for appropriate allocation of the expenses. Views of Responsible Officials: YWCA New Hampshire’s management concurs with this audit finding.
Condition: The auditee submitted reimbursement requests to the Mississippi Department of Education (MDE) that were not fully supported: Standard monthly amounts requested for Digital Learning Instructor (DLI) labor exceeded actual contract costs, resulting in overstatements. 1 of 60 items sampled lacked support for $11,700 in charges. Cause: The Consortium requested funds before receiving invoices or verifying actual expenses. There was no reconciliation process in place to verify that reimbursement requests matched actual expenditures. Effect: Federal funds were received in excess of allowable costs and not returned to the grantor. These excess reimbursements represent questioned costs which the grantor could request funds to be refunded. Criteria: In accordance with 2 CFR §200.403 and §200.430, costs must be necessary, reasonable, and allocable, and adequately documented to be allowable under federal awards. Questioned Costs: Total known questioned costs are $49,082, which includes: $37,382 related to Digital Learning Instructor (DLI) contract labor, including $34,445 in excess labor charges and $2,937 in related indirect costs. These charges were identified through a 100% review of all DLI contract labor activity for fiscal year 2023. $11,700 from a single reimbursement request that partially lacked supporting documentation. This item was identified during testing of a sample of 60 items totaling $6,545,759.87. Based on this sample, we project likely questioned costs of $16,918, using a non-statistical method. Therefore, total questioned costs are estimated at $54,300. Recommendation: Reimbursement requests should only be submitted after expenses are incurred and documented. The Consortium should wait for invoices before requesting funds, or reconcile estimates to actual costs and return excess funds, and maintain full documentation for all requests. Views of Responsible Officials: The Consortium acknowledges the finding and is working to establish a reconciliation process to identify and return any excess funds, and providing staff training on documentation and cost principles.
2023-002 Payroll Costs Federal Program - U.S. Department of the Treasury – Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027) Federal Award Number - SLFRP0136 Compliance Requirement - Allowable Costs/Cost Principles (2 CFR § 200.430) Criteria - Under 2 CFR § 200.430(g), charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Compensation for leave must be granted under established leave policies and must be allocable and reasonable for the services rendered. Costs for leave that is not earned or used, or that is forfeited, are generally not allowable under federal awards. Condition - The organization uses a calculated hourly rate to allocate payroll costs to programs. This rate includes a pro rata amount for vacation and sick time earned each pay period. However, the organization’s leave policy does not allow for carryover of unused vacation or sick time. As a result, some of the accrued leave may never be used or paid out but was still charged to federal programs through the calculated rate. Cause - The organization’s methodology for allocating payroll costs does not differentiate between earned and used leave and does not account for the forfeiture of unused time at year-end. Effect - Federal awards may have been charged for leave benefits that were never realized or paid to employees, resulting in an overstatement of payroll costs charged to the program. However, based on our analysis, the financial impact of this condition was not material to the federal award and the estimated questioned costs were below the $25,000 reporting threshold. Questioned Costs - $0. No questioned costs are reported as the estimated impact is below the reporting threshold and not material to the award. Recommendation - We recommend that the organization revise its payroll allocation methodology to ensure only used or vested leave is charged to federal awards. If estimates are used, they should be supported by documentation and periodically reconciled to actual costs. Non-vested leave that may be forfeited should not be included in federally funded rates. Views of Responsible Officials - We agree with the findings and determined it was due to outdated processes and a gap in technical expertise utilizing the payroll allocations within the accounting software.
2023-001 Lack of Documentation to Support Distribution of Wages (Material Weakness) Federal Agency: Department of Education Pass-through Agency: New Hampshire Department of Education Cluster/Program: Education Stabilization Fund Assistance Listing Number: 84.425U Passed-through Identification: #20221232 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Federal regulations 2 CFR 200.303 states, the School District, as a recipient of Federal funds, must establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, under 2 CFR 200.430, it states that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must (1) be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, (2) be incorporated into the official records of the non-Federal entity, (3) reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities, and (4) support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award or a federal award and non-Federal award. Condition: During our review of payroll expenditures charged to the grant, we noted that one employee who worked solely on a single federal program did not have a completed semi-annual certification on file to support the time and effort charged to the grant. As required by 2 CFR 200.430, charges to federal awards for salaries must be supported by documentation that accurately reflects the work performed. For employees working 100% on a single federal program, this requirement is typically met through semi-annual certifications. Cause: Administrative oversight, turnover of internal staffing. Effect: By not obtaining a completed semi-annual certification for an employee working solely on a federal program, the School District did not comply with federal requirements under 2 CFR 200.430. This lack of documentation diminishes the School District’s ability to demonstrate that salary costs charged to the grant were accurate, allowable, and properly supported, potentially placing the $27,615 in questioned costs at risk of disallowance. Questioned Costs: $27,615 Repeat Finding: No Recommendation: We recommend that the School District implement procedures to ensure that semi-annual certifications are completed and retained for all employees whose salaries are charged 100% to a single federal program. These certifications should be signed by the employee or a supervisory official with firsthand knowledge of the work performed and maintained as part of the School District’s official records to support compliance with 2 CFR 200.430. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.
2023-006 – Payroll (Material Weakness in Internal Controls over Compliance/Material Noncompliance) Federal Program Information Federal Award Title and ALN: Research & Development Cluster, 84.031 Federal Awarding Agency: U.S. Department of Education Federal Award ID Number: P031S210287, P031S210288, P031C200002, P031C210215 Federal Award Year: 2023 Condition: The College’s supporting documentation did not match to the amount of employee’s pay charged to grant. Criteria: Per 2 CFR 200.303(a), the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.430(i)(1) – Compensation – personal services, Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Cause: The College does not have sufficient controls in place to ensure the accuracy of the amounts paid to employees nor include appropriate approvals documented to be allowable to be charged to the federal grant. Effect: Lack of approval and inaccurate documentation for costs charged to grants puts the College at risk of charging unallowable costs, which in turn could result in required repayment to grantor agencies. Questioned Costs: Known questioned costs of $6,812 and likely questioned costs of $83,407. Auditor recommendation: We recommend the College develop and implement adequate policies and procedures to ensure charging of expenses for allowability are based off approved amounts.
2023-006 – Payroll (Material Weakness in Internal Controls over Compliance/Material Noncompliance) Federal Program Information Federal Award Title and ALN: Research & Development Cluster, 84.031 Federal Awarding Agency: U.S. Department of Education Federal Award ID Number: P031S210287, P031S210288, P031C200002, P031C210215 Federal Award Year: 2023 Condition: The College’s supporting documentation did not match to the amount of employee’s pay charged to grant. Criteria: Per 2 CFR 200.303(a), the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.430(i)(1) – Compensation – personal services, Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Cause: The College does not have sufficient controls in place to ensure the accuracy of the amounts paid to employees nor include appropriate approvals documented to be allowable to be charged to the federal grant. Effect: Lack of approval and inaccurate documentation for costs charged to grants puts the College at risk of charging unallowable costs, which in turn could result in required repayment to grantor agencies. Questioned Costs: Known questioned costs of $6,812 and likely questioned costs of $83,407. Auditor recommendation: We recommend the College develop and implement adequate policies and procedures to ensure charging of expenses for allowability are based off approved amounts.
2023-006 – Payroll (Material Weakness in Internal Controls over Compliance/Material Noncompliance) Federal Program Information Federal Award Title and ALN: Research & Development Cluster, 84.031 Federal Awarding Agency: U.S. Department of Education Federal Award ID Number: P031S210287, P031S210288, P031C200002, P031C210215 Federal Award Year: 2023 Condition: The College’s supporting documentation did not match to the amount of employee’s pay charged to grant. Criteria: Per 2 CFR 200.303(a), the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.430(i)(1) – Compensation – personal services, Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Cause: The College does not have sufficient controls in place to ensure the accuracy of the amounts paid to employees nor include appropriate approvals documented to be allowable to be charged to the federal grant. Effect: Lack of approval and inaccurate documentation for costs charged to grants puts the College at risk of charging unallowable costs, which in turn could result in required repayment to grantor agencies. Questioned Costs: Known questioned costs of $6,812 and likely questioned costs of $83,407. Auditor recommendation: We recommend the College develop and implement adequate policies and procedures to ensure charging of expenses for allowability are based off approved amounts.
2023-006 – Payroll (Material Weakness in Internal Controls over Compliance/Material Noncompliance) Federal Program Information Federal Award Title and ALN: Research & Development Cluster, 84.031 Federal Awarding Agency: U.S. Department of Education Federal Award ID Number: P031S210287, P031S210288, P031C200002, P031C210215 Federal Award Year: 2023 Condition: The College’s supporting documentation did not match to the amount of employee’s pay charged to grant. Criteria: Per 2 CFR 200.303(a), the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.430(i)(1) – Compensation – personal services, Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Cause: The College does not have sufficient controls in place to ensure the accuracy of the amounts paid to employees nor include appropriate approvals documented to be allowable to be charged to the federal grant. Effect: Lack of approval and inaccurate documentation for costs charged to grants puts the College at risk of charging unallowable costs, which in turn could result in required repayment to grantor agencies. Questioned Costs: Known questioned costs of $6,812 and likely questioned costs of $83,407. Auditor recommendation: We recommend the College develop and implement adequate policies and procedures to ensure charging of expenses for allowability are based off approved amounts.
FINDING NO: 2023-088 (Repeat 2022-085) STATE AGENCY: State of Oklahoma, Office of Management and Enterprise Services FEDERAL AGENCY: US Department of Treasury ALN: 21.023 FEDERAL PROGRAM NAME: Emergency Rental Assistance (ERA 1 and ERA 2) FEDERAL AWARD NUMBER: ERA028 and ERAE0259 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; and Allowable Costs/Cost Principles QUESTIONED COSTS: $2,410,251 Criteria: U.S. Department of the Treasury Emergency Rental Assistance Grantee Award Form (8) (a-b) Compliance with Applicable Law and Regulations, states in part, “a. Recipient agrees to comply with the requirements of Section 501 and Treasury interpretive guidance regarding such requirements. Recipient also agrees to comply with all other applicable federal statutes, regulations, and executive orders, and Recipient shall provide for such compliance in any agreements it enters into with other parties relating to this award. b. Federal regulations applicable to this award include, without limitation, the following: i. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 C.F.R. Part 200, other than such provisions as Treasury may determine are inapplicable to this Award and subject to such exceptions as may be otherwise provided by Treasury.” 2 CFR § 200.303(a) – Internal Controls states in part, “The Non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” The Consolidated Appropriations Act § Section 501 (c)(5) Use of Funds - Administrative Costs states in part, “A. IN GENERAL.- Not more than 10 percent of the amount paid to an eligible grantee under this section may be used for administrative costs attributable to providing financial assistance and housing stability services under paragraphs (2) and (3), respectively, including for data collection and reporting requirements related to such funds. B. No OTHER ADMINISTRATIVE COSTS.- Amounts paid under this section shall not be used for any administrative costs other than to the extent allowed under subparagraph (A)” 2 CFR § 200.334 – Retention requirements for records state in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” 2 CFR § 200.337 – Access to records states in part, “(a) Records of non-Federal entities. The Federal awarding agency, Inspectors General, the Comptroller General of the United States, and the pass-through entity, or any of their authorized representatives, must have the right of access to any documents, papers, or other records of the non-Federal entity which are pertinent to the Federal award, in order to make audits, examinations, excerpts, and transcripts. The right also includes timely and reasonable access to the non-Federal entity's personnel for the purpose of interview and discussion related to such documents.” 2 CFR § 200.403 – Factors affecting allowability of costs states in part, “Except where otherwise authorized by statute, costs must meet the following criteria 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.” Condition and Context: When reviewing SFY23 payroll administrative expenditures, we noted that Communities Foundation of Oklahoma paid $2,372,400 in bonuses to 146 employees. Of these bonuses, 47 people received between $10,000 - $19,999, and 44 people received more than $20,000. We found the expenditures to be unallowable; we found no guidance that stated ERA administrative funds could be expended on bonuses. Also, while testing 116 of 5,284 payroll administrative expenditures we noted the following: • For 4 of 116, or 3.45% of claims tested, the contract was for an unreasonable rate and the invoices provided were not itemized and specific enough to determine if the time spent was for an allowable activity related to ERA 1 or ERA 2. • For 9 of 116, or 7.76% of claims tested, the payment was for more than the contracted rate. • For 23 of 116, or 19.83% of claims tested, the subrecipient was unable to provide a contract for the period paid. • For 9 of 116, or 7.76% of claims tested, the contract was not signed by the Executive Director and was not valid. • For 22 of 115, or 19.13% of claims tested, the payroll cost was allowable; however, the expense was attributable to multiple jurisdictions and only 90.33% of the cost should have been charged to the State of Oklahoma, but the subrecipient was unable to support the allocation was completed and that 100% of the cost was not charged to the State. The issues noted above resulted in total questioned cost of $37,851. We are unable to note the questioned costs per exception due to the same sample items being noted on multiple exceptions. Cause: OMES personnel responsible for oversight of the ERA 1 and ERA 2 grants do not normally oversee Federal grant programs; they do not understand the types of activities that may be supported by the ERA 1 and ERA 2 grants, nor do they have adequate experience with administering Federal grant funds. OMES did not establish and maintain effective internal control over the Federal award that provides reasonable assurance that OMES is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. OMES did not ensure that the subrecipients established and maintained effective internal control over the Federal award to provide reasonable assurance that the non-Federal entity was managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effect: Unallowable payroll costs totaling $2,410,251, including unallowable bonus payments of $2,372,400, were charged to the ERA program as payroll administrative expenditures. These funds could have been used toward Oklahoma applicants in need of ERA funding. Recommendation: We recommend that OMES develop and implement internal controls to ensure it administers current and future ERA grants in accordance with applicable Federal laws and grant requirements, including ensuring that grant subrecipients are properly informed of federal requirements related to allowable costs. In addition, we recommend that OMES ensure the subrecipient has established effective internal controls over the Federal award to provide reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. We recommend that OMES ensure adequate supporting documentation for administrative expenditures incurred is obtained, reviewed, and maintained by OMES to ensure subrecipients only expend ERA funds for allowable activities and costs. We recommend that OMES only reimburse subrecipients for administrative costs based on supporting documentation of actual costs incurred. We recommend OMES ensure the personnel responsible for oversight for the ERA grant obtain the necessary training and knowledge to ensure compliance with the Federal grant requirements. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: Ongoing throughout the life of the grant Corrective Action Planned: The Office of Management and Enterprise Services partially agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Auditor Response: Per 2 CFR 200.430(f), the payroll bonuses were not approved per the contract with the State Oklahoma. Further, the bonus policy created by CFO was not written until 2024, which is after the audit period. CFO states the contractors ‘continued to be paid the same remuneration in the time period between the expiration of the original contracts and when the new contracts and/or addendums were created and signed’; however, for nine of 10, SAI did not receive a contract that was for the rate paid for the contractor. OMES states ‘The entities were addressing more urgent matter to assist the people of Oklahoma with the objectives of the program and did not have the bandwidth to draft and sign new agreements.’ SAI disagrees with the lack of bandwidth. We reviewed the number of contracts received per contractors mentioned above and found that we received anywhere from two to six contracts per contractor. In addition, CFO closed their application portal on 8/31/2022, which is a month prior to the first missing contract date. We do understand that applications were still being reviewed and payments were being made; however, we find that CFO had the capacity to create, and sign amended contracts for the time periods being paid.
FINDING NO: 2023-088 (Repeat 2022-085) STATE AGENCY: State of Oklahoma, Office of Management and Enterprise Services FEDERAL AGENCY: US Department of Treasury ALN: 21.023 FEDERAL PROGRAM NAME: Emergency Rental Assistance (ERA 1 and ERA 2) FEDERAL AWARD NUMBER: ERA028 and ERAE0259 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; and Allowable Costs/Cost Principles QUESTIONED COSTS: $2,410,251 Criteria: U.S. Department of the Treasury Emergency Rental Assistance Grantee Award Form (8) (a-b) Compliance with Applicable Law and Regulations, states in part, “a. Recipient agrees to comply with the requirements of Section 501 and Treasury interpretive guidance regarding such requirements. Recipient also agrees to comply with all other applicable federal statutes, regulations, and executive orders, and Recipient shall provide for such compliance in any agreements it enters into with other parties relating to this award. b. Federal regulations applicable to this award include, without limitation, the following: i. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 C.F.R. Part 200, other than such provisions as Treasury may determine are inapplicable to this Award and subject to such exceptions as may be otherwise provided by Treasury.” 2 CFR § 200.303(a) – Internal Controls states in part, “The Non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” The Consolidated Appropriations Act § Section 501 (c)(5) Use of Funds - Administrative Costs states in part, “A. IN GENERAL.- Not more than 10 percent of the amount paid to an eligible grantee under this section may be used for administrative costs attributable to providing financial assistance and housing stability services under paragraphs (2) and (3), respectively, including for data collection and reporting requirements related to such funds. B. No OTHER ADMINISTRATIVE COSTS.- Amounts paid under this section shall not be used for any administrative costs other than to the extent allowed under subparagraph (A)” 2 CFR § 200.334 – Retention requirements for records state in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” 2 CFR § 200.337 – Access to records states in part, “(a) Records of non-Federal entities. The Federal awarding agency, Inspectors General, the Comptroller General of the United States, and the pass-through entity, or any of their authorized representatives, must have the right of access to any documents, papers, or other records of the non-Federal entity which are pertinent to the Federal award, in order to make audits, examinations, excerpts, and transcripts. The right also includes timely and reasonable access to the non-Federal entity's personnel for the purpose of interview and discussion related to such documents.” 2 CFR § 200.403 – Factors affecting allowability of costs states in part, “Except where otherwise authorized by statute, costs must meet the following criteria 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.” Condition and Context: When reviewing SFY23 payroll administrative expenditures, we noted that Communities Foundation of Oklahoma paid $2,372,400 in bonuses to 146 employees. Of these bonuses, 47 people received between $10,000 - $19,999, and 44 people received more than $20,000. We found the expenditures to be unallowable; we found no guidance that stated ERA administrative funds could be expended on bonuses. Also, while testing 116 of 5,284 payroll administrative expenditures we noted the following: • For 4 of 116, or 3.45% of claims tested, the contract was for an unreasonable rate and the invoices provided were not itemized and specific enough to determine if the time spent was for an allowable activity related to ERA 1 or ERA 2. • For 9 of 116, or 7.76% of claims tested, the payment was for more than the contracted rate. • For 23 of 116, or 19.83% of claims tested, the subrecipient was unable to provide a contract for the period paid. • For 9 of 116, or 7.76% of claims tested, the contract was not signed by the Executive Director and was not valid. • For 22 of 115, or 19.13% of claims tested, the payroll cost was allowable; however, the expense was attributable to multiple jurisdictions and only 90.33% of the cost should have been charged to the State of Oklahoma, but the subrecipient was unable to support the allocation was completed and that 100% of the cost was not charged to the State. The issues noted above resulted in total questioned cost of $37,851. We are unable to note the questioned costs per exception due to the same sample items being noted on multiple exceptions. Cause: OMES personnel responsible for oversight of the ERA 1 and ERA 2 grants do not normally oversee Federal grant programs; they do not understand the types of activities that may be supported by the ERA 1 and ERA 2 grants, nor do they have adequate experience with administering Federal grant funds. OMES did not establish and maintain effective internal control over the Federal award that provides reasonable assurance that OMES is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. OMES did not ensure that the subrecipients established and maintained effective internal control over the Federal award to provide reasonable assurance that the non-Federal entity was managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effect: Unallowable payroll costs totaling $2,410,251, including unallowable bonus payments of $2,372,400, were charged to the ERA program as payroll administrative expenditures. These funds could have been used toward Oklahoma applicants in need of ERA funding. Recommendation: We recommend that OMES develop and implement internal controls to ensure it administers current and future ERA grants in accordance with applicable Federal laws and grant requirements, including ensuring that grant subrecipients are properly informed of federal requirements related to allowable costs. In addition, we recommend that OMES ensure the subrecipient has established effective internal controls over the Federal award to provide reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. We recommend that OMES ensure adequate supporting documentation for administrative expenditures incurred is obtained, reviewed, and maintained by OMES to ensure subrecipients only expend ERA funds for allowable activities and costs. We recommend that OMES only reimburse subrecipients for administrative costs based on supporting documentation of actual costs incurred. We recommend OMES ensure the personnel responsible for oversight for the ERA grant obtain the necessary training and knowledge to ensure compliance with the Federal grant requirements. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: Ongoing throughout the life of the grant Corrective Action Planned: The Office of Management and Enterprise Services partially agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Auditor Response: Per 2 CFR 200.430(f), the payroll bonuses were not approved per the contract with the State Oklahoma. Further, the bonus policy created by CFO was not written until 2024, which is after the audit period. CFO states the contractors ‘continued to be paid the same remuneration in the time period between the expiration of the original contracts and when the new contracts and/or addendums were created and signed’; however, for nine of 10, SAI did not receive a contract that was for the rate paid for the contractor. OMES states ‘The entities were addressing more urgent matter to assist the people of Oklahoma with the objectives of the program and did not have the bandwidth to draft and sign new agreements.’ SAI disagrees with the lack of bandwidth. We reviewed the number of contracts received per contractors mentioned above and found that we received anywhere from two to six contracts per contractor. In addition, CFO closed their application portal on 8/31/2022, which is a month prior to the first missing contract date. We do understand that applications were still being reviewed and payments were being made; however, we find that CFO had the capacity to create, and sign amended contracts for the time periods being paid.
FINDING NO: 2023-047 STATE AGENCY: Oklahoma State Department of Education (OSDE) FEDERAL AGENCY: United States Department of Education (USDE) ALN: 84.010; 84.027; 84.173; 84.425 – 84.425D & U FEDERAL PROGRAM NAME: Title I – Grants to Local Educational Agencies; Special Education IDEA, Part B and Preschool; Education stabilization Fund (ESF) - Elementary and Secondary School Emergency Relief (ESER) Fund and American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP ESSER) FEDERAL AWARD NUMBER: S010A220036; H027A220051-22A; H173A220084; S425D210024, S425U210024 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.430 Compensation—personal services states in part, “(g) Standards for Documentation of Personnel Expenses. (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the recipient or subrecipient; (iii) Reasonably reflect the total activity for which the employee is compensated by the recipient or subrecipient, not exceeding 100 percent of compensated activities (for IHEs, this is the IBS); (iv) Encompass federally-assisted and all other activities compensated by the recipient or subrecipient on an integrated basis but may include the use of subsidiary records as defined in the recipient's or subrecipient's written policy; (v) Comply with the established accounting policies and procedures of the recipient or subrecipient (See paragraph (i)(1)(ii) of this section for treatment of incidental work for IHEs.); 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 allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (vii) Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic afterthe- fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated. (viii) Because practices vary as to the activity constituting a full workload (for example, the Institutional Base Salary (IBS) for IHEs), records may reflect categories of activities expressed as a percentage distribution of total activities. Condition and Context: Charges to Federal awards (Title IA, Special Education IDEA and IDEA Preschool, ESF – ESSER II and ARP ESSER III) for salaries and wages were not based on records that accurately reflect the work performed and were not properly allocated. While documenting controls, SAI requested the time and effort data for payroll totaling $7,493,331.34 charged to the Title IA, Special Education and the ESF – ESSER II and ARP ESSER III programs; however, OSDE did not provide the data requested. In addition, the United States Department of Education (USDOE) in their Consolidated Performance Review of Oklahoma dated July 25, 2024, (which included the SFY 23 audit period), noted that OSDE had used estimates to allocate payroll costs to federal awards but had not reconciled those estimates to the actual work performed on each federal program as required per 2 CFR § 200.430. Cause: Technical issue with the State’s recently adopted time and attendance system: the system will not allow OSDE to accurately charge fringe benefits for employees who are paid from both State and Federal sources and OSDE has not implemented an alternative process to accurately allocate payroll costs to federal awards. In addition, OSDE’s failure to provide requested time and effort data was impacted by significant staff turnover and inadequate record retention processes. Effect: Payroll costs charged to Federal programs may be incorrect or unallowable. Recommendation: We recommend that OSDE develop policies and procedures for ensuring personnel costs that are charged to Federal awards comply with the time and effort requirements per 2 CFR § 200.430. We recommend OSDE develop policies and procedures for ensuring all records are appropriately retained, especially when staff turnover is high. In addition, we recommend OSDE develop policies and procedures to provide adequate training for staff members regarding federal requirements for recording time and effort data and appropriately allocating salaries and wages to federal awards. Views of Responsible Official(s) Contact Person: Tammy Smith, Senior Director of Federal Programs | Office of Title Services Anticipated Completion Date: January 2024 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Contact Person: Sherri Coats, Director of Special Education Service | Office of Special Education Services Anticipated Completion Date: June 30, 2025 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-047 STATE AGENCY: Oklahoma State Department of Education (OSDE) FEDERAL AGENCY: United States Department of Education (USDE) ALN: 84.010; 84.027; 84.173; 84.425 – 84.425D & U FEDERAL PROGRAM NAME: Title I – Grants to Local Educational Agencies; Special Education IDEA, Part B and Preschool; Education stabilization Fund (ESF) - Elementary and Secondary School Emergency Relief (ESER) Fund and American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP ESSER) FEDERAL AWARD NUMBER: S010A220036; H027A220051-22A; H173A220084; S425D210024, S425U210024 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.430 Compensation—personal services states in part, “(g) Standards for Documentation of Personnel Expenses. (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the recipient or subrecipient; (iii) Reasonably reflect the total activity for which the employee is compensated by the recipient or subrecipient, not exceeding 100 percent of compensated activities (for IHEs, this is the IBS); (iv) Encompass federally-assisted and all other activities compensated by the recipient or subrecipient on an integrated basis but may include the use of subsidiary records as defined in the recipient's or subrecipient's written policy; (v) Comply with the established accounting policies and procedures of the recipient or subrecipient (See paragraph (i)(1)(ii) of this section for treatment of incidental work for IHEs.); 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 allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (vii) Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic afterthe- fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated. (viii) Because practices vary as to the activity constituting a full workload (for example, the Institutional Base Salary (IBS) for IHEs), records may reflect categories of activities expressed as a percentage distribution of total activities. Condition and Context: Charges to Federal awards (Title IA, Special Education IDEA and IDEA Preschool, ESF – ESSER II and ARP ESSER III) for salaries and wages were not based on records that accurately reflect the work performed and were not properly allocated. While documenting controls, SAI requested the time and effort data for payroll totaling $7,493,331.34 charged to the Title IA, Special Education and the ESF – ESSER II and ARP ESSER III programs; however, OSDE did not provide the data requested. In addition, the United States Department of Education (USDOE) in their Consolidated Performance Review of Oklahoma dated July 25, 2024, (which included the SFY 23 audit period), noted that OSDE had used estimates to allocate payroll costs to federal awards but had not reconciled those estimates to the actual work performed on each federal program as required per 2 CFR § 200.430. Cause: Technical issue with the State’s recently adopted time and attendance system: the system will not allow OSDE to accurately charge fringe benefits for employees who are paid from both State and Federal sources and OSDE has not implemented an alternative process to accurately allocate payroll costs to federal awards. In addition, OSDE’s failure to provide requested time and effort data was impacted by significant staff turnover and inadequate record retention processes. Effect: Payroll costs charged to Federal programs may be incorrect or unallowable. Recommendation: We recommend that OSDE develop policies and procedures for ensuring personnel costs that are charged to Federal awards comply with the time and effort requirements per 2 CFR § 200.430. We recommend OSDE develop policies and procedures for ensuring all records are appropriately retained, especially when staff turnover is high. In addition, we recommend OSDE develop policies and procedures to provide adequate training for staff members regarding federal requirements for recording time and effort data and appropriately allocating salaries and wages to federal awards. Views of Responsible Official(s) Contact Person: Tammy Smith, Senior Director of Federal Programs | Office of Title Services Anticipated Completion Date: January 2024 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Contact Person: Sherri Coats, Director of Special Education Service | Office of Special Education Services Anticipated Completion Date: June 30, 2025 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-047 STATE AGENCY: Oklahoma State Department of Education (OSDE) FEDERAL AGENCY: United States Department of Education (USDE) ALN: 84.010; 84.027; 84.173; 84.425 – 84.425D & U FEDERAL PROGRAM NAME: Title I – Grants to Local Educational Agencies; Special Education IDEA, Part B and Preschool; Education stabilization Fund (ESF) - Elementary and Secondary School Emergency Relief (ESER) Fund and American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP ESSER) FEDERAL AWARD NUMBER: S010A220036; H027A220051-22A; H173A220084; S425D210024, S425U210024 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.430 Compensation—personal services states in part, “(g) Standards for Documentation of Personnel Expenses. (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the recipient or subrecipient; (iii) Reasonably reflect the total activity for which the employee is compensated by the recipient or subrecipient, not exceeding 100 percent of compensated activities (for IHEs, this is the IBS); (iv) Encompass federally-assisted and all other activities compensated by the recipient or subrecipient on an integrated basis but may include the use of subsidiary records as defined in the recipient's or subrecipient's written policy; (v) Comply with the established accounting policies and procedures of the recipient or subrecipient (See paragraph (i)(1)(ii) of this section for treatment of incidental work for IHEs.); 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 allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (vii) Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic afterthe- fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated. (viii) Because practices vary as to the activity constituting a full workload (for example, the Institutional Base Salary (IBS) for IHEs), records may reflect categories of activities expressed as a percentage distribution of total activities. Condition and Context: Charges to Federal awards (Title IA, Special Education IDEA and IDEA Preschool, ESF – ESSER II and ARP ESSER III) for salaries and wages were not based on records that accurately reflect the work performed and were not properly allocated. While documenting controls, SAI requested the time and effort data for payroll totaling $7,493,331.34 charged to the Title IA, Special Education and the ESF – ESSER II and ARP ESSER III programs; however, OSDE did not provide the data requested. In addition, the United States Department of Education (USDOE) in their Consolidated Performance Review of Oklahoma dated July 25, 2024, (which included the SFY 23 audit period), noted that OSDE had used estimates to allocate payroll costs to federal awards but had not reconciled those estimates to the actual work performed on each federal program as required per 2 CFR § 200.430. Cause: Technical issue with the State’s recently adopted time and attendance system: the system will not allow OSDE to accurately charge fringe benefits for employees who are paid from both State and Federal sources and OSDE has not implemented an alternative process to accurately allocate payroll costs to federal awards. In addition, OSDE’s failure to provide requested time and effort data was impacted by significant staff turnover and inadequate record retention processes. Effect: Payroll costs charged to Federal programs may be incorrect or unallowable. Recommendation: We recommend that OSDE develop policies and procedures for ensuring personnel costs that are charged to Federal awards comply with the time and effort requirements per 2 CFR § 200.430. We recommend OSDE develop policies and procedures for ensuring all records are appropriately retained, especially when staff turnover is high. In addition, we recommend OSDE develop policies and procedures to provide adequate training for staff members regarding federal requirements for recording time and effort data and appropriately allocating salaries and wages to federal awards. Views of Responsible Official(s) Contact Person: Tammy Smith, Senior Director of Federal Programs | Office of Title Services Anticipated Completion Date: January 2024 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Contact Person: Sherri Coats, Director of Special Education Service | Office of Special Education Services Anticipated Completion Date: June 30, 2025 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-047 STATE AGENCY: Oklahoma State Department of Education (OSDE) FEDERAL AGENCY: United States Department of Education (USDE) ALN: 84.010; 84.027; 84.173; 84.425 – 84.425D & U FEDERAL PROGRAM NAME: Title I – Grants to Local Educational Agencies; Special Education IDEA, Part B and Preschool; Education stabilization Fund (ESF) - Elementary and Secondary School Emergency Relief (ESER) Fund and American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP ESSER) FEDERAL AWARD NUMBER: S010A220036; H027A220051-22A; H173A220084; S425D210024, S425U210024 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.430 Compensation—personal services states in part, “(g) Standards for Documentation of Personnel Expenses. (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the recipient or subrecipient; (iii) Reasonably reflect the total activity for which the employee is compensated by the recipient or subrecipient, not exceeding 100 percent of compensated activities (for IHEs, this is the IBS); (iv) Encompass federally-assisted and all other activities compensated by the recipient or subrecipient on an integrated basis but may include the use of subsidiary records as defined in the recipient's or subrecipient's written policy; (v) Comply with the established accounting policies and procedures of the recipient or subrecipient (See paragraph (i)(1)(ii) of this section for treatment of incidental work for IHEs.); 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 allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (vii) Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic afterthe- fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated. (viii) Because practices vary as to the activity constituting a full workload (for example, the Institutional Base Salary (IBS) for IHEs), records may reflect categories of activities expressed as a percentage distribution of total activities. Condition and Context: Charges to Federal awards (Title IA, Special Education IDEA and IDEA Preschool, ESF – ESSER II and ARP ESSER III) for salaries and wages were not based on records that accurately reflect the work performed and were not properly allocated. While documenting controls, SAI requested the time and effort data for payroll totaling $7,493,331.34 charged to the Title IA, Special Education and the ESF – ESSER II and ARP ESSER III programs; however, OSDE did not provide the data requested. In addition, the United States Department of Education (USDOE) in their Consolidated Performance Review of Oklahoma dated July 25, 2024, (which included the SFY 23 audit period), noted that OSDE had used estimates to allocate payroll costs to federal awards but had not reconciled those estimates to the actual work performed on each federal program as required per 2 CFR § 200.430. Cause: Technical issue with the State’s recently adopted time and attendance system: the system will not allow OSDE to accurately charge fringe benefits for employees who are paid from both State and Federal sources and OSDE has not implemented an alternative process to accurately allocate payroll costs to federal awards. In addition, OSDE’s failure to provide requested time and effort data was impacted by significant staff turnover and inadequate record retention processes. Effect: Payroll costs charged to Federal programs may be incorrect or unallowable. Recommendation: We recommend that OSDE develop policies and procedures for ensuring personnel costs that are charged to Federal awards comply with the time and effort requirements per 2 CFR § 200.430. We recommend OSDE develop policies and procedures for ensuring all records are appropriately retained, especially when staff turnover is high. In addition, we recommend OSDE develop policies and procedures to provide adequate training for staff members regarding federal requirements for recording time and effort data and appropriately allocating salaries and wages to federal awards. Views of Responsible Official(s) Contact Person: Tammy Smith, Senior Director of Federal Programs | Office of Title Services Anticipated Completion Date: January 2024 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Contact Person: Sherri Coats, Director of Special Education Service | Office of Special Education Services Anticipated Completion Date: June 30, 2025 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-047 STATE AGENCY: Oklahoma State Department of Education (OSDE) FEDERAL AGENCY: United States Department of Education (USDE) ALN: 84.010; 84.027; 84.173; 84.425 – 84.425D & U FEDERAL PROGRAM NAME: Title I – Grants to Local Educational Agencies; Special Education IDEA, Part B and Preschool; Education stabilization Fund (ESF) - Elementary and Secondary School Emergency Relief (ESER) Fund and American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP ESSER) FEDERAL AWARD NUMBER: S010A220036; H027A220051-22A; H173A220084; S425D210024, S425U210024 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.430 Compensation—personal services states in part, “(g) Standards for Documentation of Personnel Expenses. (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the recipient or subrecipient; (iii) Reasonably reflect the total activity for which the employee is compensated by the recipient or subrecipient, not exceeding 100 percent of compensated activities (for IHEs, this is the IBS); (iv) Encompass federally-assisted and all other activities compensated by the recipient or subrecipient on an integrated basis but may include the use of subsidiary records as defined in the recipient's or subrecipient's written policy; (v) Comply with the established accounting policies and procedures of the recipient or subrecipient (See paragraph (i)(1)(ii) of this section for treatment of incidental work for IHEs.); 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 allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (vii) Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic afterthe- fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated. (viii) Because practices vary as to the activity constituting a full workload (for example, the Institutional Base Salary (IBS) for IHEs), records may reflect categories of activities expressed as a percentage distribution of total activities. Condition and Context: Charges to Federal awards (Title IA, Special Education IDEA and IDEA Preschool, ESF – ESSER II and ARP ESSER III) for salaries and wages were not based on records that accurately reflect the work performed and were not properly allocated. While documenting controls, SAI requested the time and effort data for payroll totaling $7,493,331.34 charged to the Title IA, Special Education and the ESF – ESSER II and ARP ESSER III programs; however, OSDE did not provide the data requested. In addition, the United States Department of Education (USDOE) in their Consolidated Performance Review of Oklahoma dated July 25, 2024, (which included the SFY 23 audit period), noted that OSDE had used estimates to allocate payroll costs to federal awards but had not reconciled those estimates to the actual work performed on each federal program as required per 2 CFR § 200.430. Cause: Technical issue with the State’s recently adopted time and attendance system: the system will not allow OSDE to accurately charge fringe benefits for employees who are paid from both State and Federal sources and OSDE has not implemented an alternative process to accurately allocate payroll costs to federal awards. In addition, OSDE’s failure to provide requested time and effort data was impacted by significant staff turnover and inadequate record retention processes. Effect: Payroll costs charged to Federal programs may be incorrect or unallowable. Recommendation: We recommend that OSDE develop policies and procedures for ensuring personnel costs that are charged to Federal awards comply with the time and effort requirements per 2 CFR § 200.430. We recommend OSDE develop policies and procedures for ensuring all records are appropriately retained, especially when staff turnover is high. In addition, we recommend OSDE develop policies and procedures to provide adequate training for staff members regarding federal requirements for recording time and effort data and appropriately allocating salaries and wages to federal awards. Views of Responsible Official(s) Contact Person: Tammy Smith, Senior Director of Federal Programs | Office of Title Services Anticipated Completion Date: January 2024 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Contact Person: Sherri Coats, Director of Special Education Service | Office of Special Education Services Anticipated Completion Date: June 30, 2025 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-047 STATE AGENCY: Oklahoma State Department of Education (OSDE) FEDERAL AGENCY: United States Department of Education (USDE) ALN: 84.010; 84.027; 84.173; 84.425 – 84.425D & U FEDERAL PROGRAM NAME: Title I – Grants to Local Educational Agencies; Special Education IDEA, Part B and Preschool; Education stabilization Fund (ESF) - Elementary and Secondary School Emergency Relief (ESER) Fund and American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP ESSER) FEDERAL AWARD NUMBER: S010A220036; H027A220051-22A; H173A220084; S425D210024, S425U210024 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.430 Compensation—personal services states in part, “(g) Standards for Documentation of Personnel Expenses. (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the recipient or subrecipient; (iii) Reasonably reflect the total activity for which the employee is compensated by the recipient or subrecipient, not exceeding 100 percent of compensated activities (for IHEs, this is the IBS); (iv) Encompass federally-assisted and all other activities compensated by the recipient or subrecipient on an integrated basis but may include the use of subsidiary records as defined in the recipient's or subrecipient's written policy; (v) Comply with the established accounting policies and procedures of the recipient or subrecipient (See paragraph (i)(1)(ii) of this section for treatment of incidental work for IHEs.); 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 allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (vii) Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic afterthe- fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated. (viii) Because practices vary as to the activity constituting a full workload (for example, the Institutional Base Salary (IBS) for IHEs), records may reflect categories of activities expressed as a percentage distribution of total activities. Condition and Context: Charges to Federal awards (Title IA, Special Education IDEA and IDEA Preschool, ESF – ESSER II and ARP ESSER III) for salaries and wages were not based on records that accurately reflect the work performed and were not properly allocated. While documenting controls, SAI requested the time and effort data for payroll totaling $7,493,331.34 charged to the Title IA, Special Education and the ESF – ESSER II and ARP ESSER III programs; however, OSDE did not provide the data requested. In addition, the United States Department of Education (USDOE) in their Consolidated Performance Review of Oklahoma dated July 25, 2024, (which included the SFY 23 audit period), noted that OSDE had used estimates to allocate payroll costs to federal awards but had not reconciled those estimates to the actual work performed on each federal program as required per 2 CFR § 200.430. Cause: Technical issue with the State’s recently adopted time and attendance system: the system will not allow OSDE to accurately charge fringe benefits for employees who are paid from both State and Federal sources and OSDE has not implemented an alternative process to accurately allocate payroll costs to federal awards. In addition, OSDE’s failure to provide requested time and effort data was impacted by significant staff turnover and inadequate record retention processes. Effect: Payroll costs charged to Federal programs may be incorrect or unallowable. Recommendation: We recommend that OSDE develop policies and procedures for ensuring personnel costs that are charged to Federal awards comply with the time and effort requirements per 2 CFR § 200.430. We recommend OSDE develop policies and procedures for ensuring all records are appropriately retained, especially when staff turnover is high. In addition, we recommend OSDE develop policies and procedures to provide adequate training for staff members regarding federal requirements for recording time and effort data and appropriately allocating salaries and wages to federal awards. Views of Responsible Official(s) Contact Person: Tammy Smith, Senior Director of Federal Programs | Office of Title Services Anticipated Completion Date: January 2024 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Contact Person: Sherri Coats, Director of Special Education Service | Office of Special Education Services Anticipated Completion Date: June 30, 2025 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-047 STATE AGENCY: Oklahoma State Department of Education (OSDE) FEDERAL AGENCY: United States Department of Education (USDE) ALN: 84.010; 84.027; 84.173; 84.425 – 84.425D & U FEDERAL PROGRAM NAME: Title I – Grants to Local Educational Agencies; Special Education IDEA, Part B and Preschool; Education stabilization Fund (ESF) - Elementary and Secondary School Emergency Relief (ESER) Fund and American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP ESSER) FEDERAL AWARD NUMBER: S010A220036; H027A220051-22A; H173A220084; S425D210024, S425U210024 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.430 Compensation—personal services states in part, “(g) Standards for Documentation of Personnel Expenses. (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the recipient or subrecipient; (iii) Reasonably reflect the total activity for which the employee is compensated by the recipient or subrecipient, not exceeding 100 percent of compensated activities (for IHEs, this is the IBS); (iv) Encompass federally-assisted and all other activities compensated by the recipient or subrecipient on an integrated basis but may include the use of subsidiary records as defined in the recipient's or subrecipient's written policy; (v) Comply with the established accounting policies and procedures of the recipient or subrecipient (See paragraph (i)(1)(ii) of this section for treatment of incidental work for IHEs.); 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 allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (vii) Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic afterthe- fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated. (viii) Because practices vary as to the activity constituting a full workload (for example, the Institutional Base Salary (IBS) for IHEs), records may reflect categories of activities expressed as a percentage distribution of total activities. Condition and Context: Charges to Federal awards (Title IA, Special Education IDEA and IDEA Preschool, ESF – ESSER II and ARP ESSER III) for salaries and wages were not based on records that accurately reflect the work performed and were not properly allocated. While documenting controls, SAI requested the time and effort data for payroll totaling $7,493,331.34 charged to the Title IA, Special Education and the ESF – ESSER II and ARP ESSER III programs; however, OSDE did not provide the data requested. In addition, the United States Department of Education (USDOE) in their Consolidated Performance Review of Oklahoma dated July 25, 2024, (which included the SFY 23 audit period), noted that OSDE had used estimates to allocate payroll costs to federal awards but had not reconciled those estimates to the actual work performed on each federal program as required per 2 CFR § 200.430. Cause: Technical issue with the State’s recently adopted time and attendance system: the system will not allow OSDE to accurately charge fringe benefits for employees who are paid from both State and Federal sources and OSDE has not implemented an alternative process to accurately allocate payroll costs to federal awards. In addition, OSDE’s failure to provide requested time and effort data was impacted by significant staff turnover and inadequate record retention processes. Effect: Payroll costs charged to Federal programs may be incorrect or unallowable. Recommendation: We recommend that OSDE develop policies and procedures for ensuring personnel costs that are charged to Federal awards comply with the time and effort requirements per 2 CFR § 200.430. We recommend OSDE develop policies and procedures for ensuring all records are appropriately retained, especially when staff turnover is high. In addition, we recommend OSDE develop policies and procedures to provide adequate training for staff members regarding federal requirements for recording time and effort data and appropriately allocating salaries and wages to federal awards. Views of Responsible Official(s) Contact Person: Tammy Smith, Senior Director of Federal Programs | Office of Title Services Anticipated Completion Date: January 2024 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Contact Person: Sherri Coats, Director of Special Education Service | Office of Special Education Services Anticipated Completion Date: June 30, 2025 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-047 STATE AGENCY: Oklahoma State Department of Education (OSDE) FEDERAL AGENCY: United States Department of Education (USDE) ALN: 84.010; 84.027; 84.173; 84.425 – 84.425D & U FEDERAL PROGRAM NAME: Title I – Grants to Local Educational Agencies; Special Education IDEA, Part B and Preschool; Education stabilization Fund (ESF) - Elementary and Secondary School Emergency Relief (ESER) Fund and American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP ESSER) FEDERAL AWARD NUMBER: S010A220036; H027A220051-22A; H173A220084; S425D210024, S425U210024 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.430 Compensation—personal services states in part, “(g) Standards for Documentation of Personnel Expenses. (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the recipient or subrecipient; (iii) Reasonably reflect the total activity for which the employee is compensated by the recipient or subrecipient, not exceeding 100 percent of compensated activities (for IHEs, this is the IBS); (iv) Encompass federally-assisted and all other activities compensated by the recipient or subrecipient on an integrated basis but may include the use of subsidiary records as defined in the recipient's or subrecipient's written policy; (v) Comply with the established accounting policies and procedures of the recipient or subrecipient (See paragraph (i)(1)(ii) of this section for treatment of incidental work for IHEs.); 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 allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (vii) Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic afterthe- fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated. (viii) Because practices vary as to the activity constituting a full workload (for example, the Institutional Base Salary (IBS) for IHEs), records may reflect categories of activities expressed as a percentage distribution of total activities. Condition and Context: Charges to Federal awards (Title IA, Special Education IDEA and IDEA Preschool, ESF – ESSER II and ARP ESSER III) for salaries and wages were not based on records that accurately reflect the work performed and were not properly allocated. While documenting controls, SAI requested the time and effort data for payroll totaling $7,493,331.34 charged to the Title IA, Special Education and the ESF – ESSER II and ARP ESSER III programs; however, OSDE did not provide the data requested. In addition, the United States Department of Education (USDOE) in their Consolidated Performance Review of Oklahoma dated July 25, 2024, (which included the SFY 23 audit period), noted that OSDE had used estimates to allocate payroll costs to federal awards but had not reconciled those estimates to the actual work performed on each federal program as required per 2 CFR § 200.430. Cause: Technical issue with the State’s recently adopted time and attendance system: the system will not allow OSDE to accurately charge fringe benefits for employees who are paid from both State and Federal sources and OSDE has not implemented an alternative process to accurately allocate payroll costs to federal awards. In addition, OSDE’s failure to provide requested time and effort data was impacted by significant staff turnover and inadequate record retention processes. Effect: Payroll costs charged to Federal programs may be incorrect or unallowable. Recommendation: We recommend that OSDE develop policies and procedures for ensuring personnel costs that are charged to Federal awards comply with the time and effort requirements per 2 CFR § 200.430. We recommend OSDE develop policies and procedures for ensuring all records are appropriately retained, especially when staff turnover is high. In addition, we recommend OSDE develop policies and procedures to provide adequate training for staff members regarding federal requirements for recording time and effort data and appropriately allocating salaries and wages to federal awards. Views of Responsible Official(s) Contact Person: Tammy Smith, Senior Director of Federal Programs | Office of Title Services Anticipated Completion Date: January 2024 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Contact Person: Sherri Coats, Director of Special Education Service | Office of Special Education Services Anticipated Completion Date: June 30, 2025 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-047 STATE AGENCY: Oklahoma State Department of Education (OSDE) FEDERAL AGENCY: United States Department of Education (USDE) ALN: 84.010; 84.027; 84.173; 84.425 – 84.425D & U FEDERAL PROGRAM NAME: Title I – Grants to Local Educational Agencies; Special Education IDEA, Part B and Preschool; Education stabilization Fund (ESF) - Elementary and Secondary School Emergency Relief (ESER) Fund and American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP ESSER) FEDERAL AWARD NUMBER: S010A220036; H027A220051-22A; H173A220084; S425D210024, S425U210024 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.430 Compensation—personal services states in part, “(g) Standards for Documentation of Personnel Expenses. (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the recipient or subrecipient; (iii) Reasonably reflect the total activity for which the employee is compensated by the recipient or subrecipient, not exceeding 100 percent of compensated activities (for IHEs, this is the IBS); (iv) Encompass federally-assisted and all other activities compensated by the recipient or subrecipient on an integrated basis but may include the use of subsidiary records as defined in the recipient's or subrecipient's written policy; (v) Comply with the established accounting policies and procedures of the recipient or subrecipient (See paragraph (i)(1)(ii) of this section for treatment of incidental work for IHEs.); 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 allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (vii) Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic afterthe- fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated. (viii) Because practices vary as to the activity constituting a full workload (for example, the Institutional Base Salary (IBS) for IHEs), records may reflect categories of activities expressed as a percentage distribution of total activities. Condition and Context: Charges to Federal awards (Title IA, Special Education IDEA and IDEA Preschool, ESF – ESSER II and ARP ESSER III) for salaries and wages were not based on records that accurately reflect the work performed and were not properly allocated. While documenting controls, SAI requested the time and effort data for payroll totaling $7,493,331.34 charged to the Title IA, Special Education and the ESF – ESSER II and ARP ESSER III programs; however, OSDE did not provide the data requested. In addition, the United States Department of Education (USDOE) in their Consolidated Performance Review of Oklahoma dated July 25, 2024, (which included the SFY 23 audit period), noted that OSDE had used estimates to allocate payroll costs to federal awards but had not reconciled those estimates to the actual work performed on each federal program as required per 2 CFR § 200.430. Cause: Technical issue with the State’s recently adopted time and attendance system: the system will not allow OSDE to accurately charge fringe benefits for employees who are paid from both State and Federal sources and OSDE has not implemented an alternative process to accurately allocate payroll costs to federal awards. In addition, OSDE’s failure to provide requested time and effort data was impacted by significant staff turnover and inadequate record retention processes. Effect: Payroll costs charged to Federal programs may be incorrect or unallowable. Recommendation: We recommend that OSDE develop policies and procedures for ensuring personnel costs that are charged to Federal awards comply with the time and effort requirements per 2 CFR § 200.430. We recommend OSDE develop policies and procedures for ensuring all records are appropriately retained, especially when staff turnover is high. In addition, we recommend OSDE develop policies and procedures to provide adequate training for staff members regarding federal requirements for recording time and effort data and appropriately allocating salaries and wages to federal awards. Views of Responsible Official(s) Contact Person: Tammy Smith, Senior Director of Federal Programs | Office of Title Services Anticipated Completion Date: January 2024 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Contact Person: Sherri Coats, Director of Special Education Service | Office of Special Education Services Anticipated Completion Date: June 30, 2025 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report.