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.
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: 2023-213 STATE AGENCY: Oklahoma Department of Education FEDERAL AGENCY: United States Department of Health and Human Services ALN: 93.323 FEDERAL PROGRAM NAME: Epidemiology and Laboratory Capacity for Infectious Diseases, passed through the Oklahoma State Department of Health FEDERAL AWARD NUMBER: NU50CK000535 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: Unknown Criteria: 2 CFR § 200.430(g)(1) Compensation – personal services states in part “Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (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 subrecipients; (iii) encompass federally-assisted and all other activities compensated by the recipient or subrecipient on an integrated basis but may include the use of subsidiary record as defined in the recipient or subrecipient’s written policy; (iv) 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.” Condition and Context: The Oklahoma State Department of Education (“OSDE”) reimbursed subrecipient Local Education Agencies (“LEA”) for payroll related costs without obtaining certified time and effort or adequate supporting details of time and attendance for hours worked in payroll related reimbursement requests. Additionally, budgets based on pre-determined percentages cannot be relied upon without actual validation. As such, 15 of 60 (25%) subrecipient reimbursement contained payments made to LEAs for payroll related costs, without evidence of adequate time and effort records. Cause and Effect: Due to a lack of detailed payroll records, OSDE reimbursed LEAs for costs which may not have been actual time worked against Assistance Listing Number (AL#) 93.323. As a result, the grant could have been overcharged based on budgeted position setup rather than true time and effort spent towards the grant. Recommendation: We recommend OSDE requires LEAs to provide evidence of certified time and effort and accurate time tracking of hours spent prior to approving subrecipient claims for reimbursement. Views of Responsible Official(s) Contact Person: Kellie Carter, Program Manager, School Health Services Anticipated Completion Date: 6/30/2025 Corrective Action Planned: The Oklahoma Department of Education agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-213 STATE AGENCY: Oklahoma Department of Education FEDERAL AGENCY: United States Department of Health and Human Services ALN: 93.323 FEDERAL PROGRAM NAME: Epidemiology and Laboratory Capacity for Infectious Diseases, passed through the Oklahoma State Department of Health FEDERAL AWARD NUMBER: NU50CK000535 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: Unknown Criteria: 2 CFR § 200.430(g)(1) Compensation – personal services states in part “Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (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 subrecipients; (iii) encompass federally-assisted and all other activities compensated by the recipient or subrecipient on an integrated basis but may include the use of subsidiary record as defined in the recipient or subrecipient’s written policy; (iv) 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.” Condition and Context: The Oklahoma State Department of Education (“OSDE”) reimbursed subrecipient Local Education Agencies (“LEA”) for payroll related costs without obtaining certified time and effort or adequate supporting details of time and attendance for hours worked in payroll related reimbursement requests. Additionally, budgets based on pre-determined percentages cannot be relied upon without actual validation. As such, 15 of 60 (25%) subrecipient reimbursement contained payments made to LEAs for payroll related costs, without evidence of adequate time and effort records. Cause and Effect: Due to a lack of detailed payroll records, OSDE reimbursed LEAs for costs which may not have been actual time worked against Assistance Listing Number (AL#) 93.323. As a result, the grant could have been overcharged based on budgeted position setup rather than true time and effort spent towards the grant. Recommendation: We recommend OSDE requires LEAs to provide evidence of certified time and effort and accurate time tracking of hours spent prior to approving subrecipient claims for reimbursement. Views of Responsible Official(s) Contact Person: Kellie Carter, Program Manager, School Health Services Anticipated Completion Date: 6/30/2025 Corrective Action Planned: The Oklahoma Department of Education agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-213 STATE AGENCY: Oklahoma Department of Education FEDERAL AGENCY: United States Department of Health and Human Services ALN: 93.323 FEDERAL PROGRAM NAME: Epidemiology and Laboratory Capacity for Infectious Diseases, passed through the Oklahoma State Department of Health FEDERAL AWARD NUMBER: NU50CK000535 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: Unknown Criteria: 2 CFR § 200.430(g)(1) Compensation – personal services states in part “Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (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 subrecipients; (iii) encompass federally-assisted and all other activities compensated by the recipient or subrecipient on an integrated basis but may include the use of subsidiary record as defined in the recipient or subrecipient’s written policy; (iv) 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.” Condition and Context: The Oklahoma State Department of Education (“OSDE”) reimbursed subrecipient Local Education Agencies (“LEA”) for payroll related costs without obtaining certified time and effort or adequate supporting details of time and attendance for hours worked in payroll related reimbursement requests. Additionally, budgets based on pre-determined percentages cannot be relied upon without actual validation. As such, 15 of 60 (25%) subrecipient reimbursement contained payments made to LEAs for payroll related costs, without evidence of adequate time and effort records. Cause and Effect: Due to a lack of detailed payroll records, OSDE reimbursed LEAs for costs which may not have been actual time worked against Assistance Listing Number (AL#) 93.323. As a result, the grant could have been overcharged based on budgeted position setup rather than true time and effort spent towards the grant. Recommendation: We recommend OSDE requires LEAs to provide evidence of certified time and effort and accurate time tracking of hours spent prior to approving subrecipient claims for reimbursement. Views of Responsible Official(s) Contact Person: Kellie Carter, Program Manager, School Health Services Anticipated Completion Date: 6/30/2025 Corrective Action Planned: The Oklahoma Department of Education agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-213 STATE AGENCY: Oklahoma Department of Education FEDERAL AGENCY: United States Department of Health and Human Services ALN: 93.323 FEDERAL PROGRAM NAME: Epidemiology and Laboratory Capacity for Infectious Diseases, passed through the Oklahoma State Department of Health FEDERAL AWARD NUMBER: NU50CK000535 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: Unknown Criteria: 2 CFR § 200.430(g)(1) Compensation – personal services states in part “Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (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 subrecipients; (iii) encompass federally-assisted and all other activities compensated by the recipient or subrecipient on an integrated basis but may include the use of subsidiary record as defined in the recipient or subrecipient’s written policy; (iv) 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.” Condition and Context: The Oklahoma State Department of Education (“OSDE”) reimbursed subrecipient Local Education Agencies (“LEA”) for payroll related costs without obtaining certified time and effort or adequate supporting details of time and attendance for hours worked in payroll related reimbursement requests. Additionally, budgets based on pre-determined percentages cannot be relied upon without actual validation. As such, 15 of 60 (25%) subrecipient reimbursement contained payments made to LEAs for payroll related costs, without evidence of adequate time and effort records. Cause and Effect: Due to a lack of detailed payroll records, OSDE reimbursed LEAs for costs which may not have been actual time worked against Assistance Listing Number (AL#) 93.323. As a result, the grant could have been overcharged based on budgeted position setup rather than true time and effort spent towards the grant. Recommendation: We recommend OSDE requires LEAs to provide evidence of certified time and effort and accurate time tracking of hours spent prior to approving subrecipient claims for reimbursement. Views of Responsible Official(s) Contact Person: Kellie Carter, Program Manager, School Health Services Anticipated Completion Date: 6/30/2025 Corrective Action Planned: The Oklahoma Department of Education agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-213 STATE AGENCY: Oklahoma Department of Education FEDERAL AGENCY: United States Department of Health and Human Services ALN: 93.323 FEDERAL PROGRAM NAME: Epidemiology and Laboratory Capacity for Infectious Diseases, passed through the Oklahoma State Department of Health FEDERAL AWARD NUMBER: NU50CK000535 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: Unknown Criteria: 2 CFR § 200.430(g)(1) Compensation – personal services states in part “Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (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 subrecipients; (iii) encompass federally-assisted and all other activities compensated by the recipient or subrecipient on an integrated basis but may include the use of subsidiary record as defined in the recipient or subrecipient’s written policy; (iv) 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.” Condition and Context: The Oklahoma State Department of Education (“OSDE”) reimbursed subrecipient Local Education Agencies (“LEA”) for payroll related costs without obtaining certified time and effort or adequate supporting details of time and attendance for hours worked in payroll related reimbursement requests. Additionally, budgets based on pre-determined percentages cannot be relied upon without actual validation. As such, 15 of 60 (25%) subrecipient reimbursement contained payments made to LEAs for payroll related costs, without evidence of adequate time and effort records. Cause and Effect: Due to a lack of detailed payroll records, OSDE reimbursed LEAs for costs which may not have been actual time worked against Assistance Listing Number (AL#) 93.323. As a result, the grant could have been overcharged based on budgeted position setup rather than true time and effort spent towards the grant. Recommendation: We recommend OSDE requires LEAs to provide evidence of certified time and effort and accurate time tracking of hours spent prior to approving subrecipient claims for reimbursement. Views of Responsible Official(s) Contact Person: Kellie Carter, Program Manager, School Health Services Anticipated Completion Date: 6/30/2025 Corrective Action Planned: The Oklahoma Department of Education agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-213 STATE AGENCY: Oklahoma Department of Education FEDERAL AGENCY: United States Department of Health and Human Services ALN: 93.323 FEDERAL PROGRAM NAME: Epidemiology and Laboratory Capacity for Infectious Diseases, passed through the Oklahoma State Department of Health FEDERAL AWARD NUMBER: NU50CK000535 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: Unknown Criteria: 2 CFR § 200.430(g)(1) Compensation – personal services states in part “Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (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 subrecipients; (iii) encompass federally-assisted and all other activities compensated by the recipient or subrecipient on an integrated basis but may include the use of subsidiary record as defined in the recipient or subrecipient’s written policy; (iv) 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.” Condition and Context: The Oklahoma State Department of Education (“OSDE”) reimbursed subrecipient Local Education Agencies (“LEA”) for payroll related costs without obtaining certified time and effort or adequate supporting details of time and attendance for hours worked in payroll related reimbursement requests. Additionally, budgets based on pre-determined percentages cannot be relied upon without actual validation. As such, 15 of 60 (25%) subrecipient reimbursement contained payments made to LEAs for payroll related costs, without evidence of adequate time and effort records. Cause and Effect: Due to a lack of detailed payroll records, OSDE reimbursed LEAs for costs which may not have been actual time worked against Assistance Listing Number (AL#) 93.323. As a result, the grant could have been overcharged based on budgeted position setup rather than true time and effort spent towards the grant. Recommendation: We recommend OSDE requires LEAs to provide evidence of certified time and effort and accurate time tracking of hours spent prior to approving subrecipient claims for reimbursement. Views of Responsible Official(s) Contact Person: Kellie Carter, Program Manager, School Health Services Anticipated Completion Date: 6/30/2025 Corrective Action Planned: The Oklahoma Department of Education agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
ALLOWABLE COSTS/COST PRINCIPLES - PAYROLL ALLOCATIONS Finding Type: Significant Deficiency in Internal Controls over Compliance, Noncompliance ALN/CSFA and Program Title: 93.658 – Foster Care - Title IV-E, 93.676, Unaccompanied Alien Children Program, 60.074 – Out-of-Home Supports Federal/State Agency: U.S. Department of Health and Human Services, Florida Department of Children and Families Pass-Through Entity: Big Bend Community Based Care, Inc. dba NWF Health Network; Brevard Family Partnership; Children’s Network of Hillsborough; Children’s Network of Southwest Florida Social Services; Communities Connected for Kids; Community Partnership for Children; Embrace Families, Inc.; Families First Network, Inc.; Family Support Services of North Florida, Inc.; Family Support Services of Suncoast; Heartland for Children; Kids Central, Inc.; Partnership for Strong Families; Safe Children Coalition, Inc., Liberty Wilderness Crossroads Camp Contract Number: 0299-22, C0900, PCM776, N/A (Emergency Shelter), 90ZU0362 (direct), 90ZU0501 Criteria: Under 2 CFR 200.430(g) of the Uniform Guidance, "Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed", and "Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to federal awards...". Per the Reference Guide for State Expenditures of the Florida Department of Financial Services, "Timesheets that support the hours worked on the project or activity must be kept." Additionally, 2 CFR 200.303(a) of the Uniform Guidance requires non-federal entities to establish and maintain effective internal control over federal awards that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award, and Section 215.97(10), Florida Statutes, requires nonstate entities to have internal controls in place to provide reasonable assurance of compliance with the provisions of laws, regulations, and other rules, pertaining to state awards that have a material effect on each major state project. Condition: Time and pay for certain employees who perform work for multiple programs is allocated among these programs. The allocations are based on program budgets or other budgeted expectations of the employees’ activity. The Organization's internal control structure does not address adjusting these allocations to reflect actual time and effort expended. Cause: These employees do not record their time to each program, and management was unaware of federal and state requirements for the allocations. Effect: Time and pay being allocated charged to the programs may not accurately reflect their actual time spent on each program. Questioned Costs: None Recommendation: We recommend all employees record their time to each program that they work on, or that time studies be completed at least annually by the employees whose time needs to be allocated and those time studies be used to determine how the employes’ time and pay should be allocated. Views of Responsible Officials and Planned Corrective Actions: See management’s response and Corrective Action Plan on page 57.
Agency: U.S. Department of Health and Human Services Federal Assistance Listing Number: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Criteria: In accordance with 2 CFR §200.430(i) of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), compensation for personal services charged to federal awards must be based on records that accurately reflect the work performed. When budget estimates are used for interim accounting purposes, they must: produce reasonable approximations of the activity actually performed, be reconciled to actual effort on a regular basis, and be adjusted in a timely manner to reflect significant changes in work activity. Documentation may include timesheets, effort certifications, payroll distribution reports, and other personnel activity records, and must be reviewed and approved by authorized personnel. Condition and Context: The Organization did not maintain documentation evidencing a hindsight review of employee working hours to verify alignment between actual hours worked and budgeted hours. This oversight was noted in instances where payroll costs for individual employees were allocated across multiple federal programs. While a time and effort certification was lacking for the items included in our sample, there was evidence of work performed on the grants and the amounts allocated aligned closely to the budget. Questioned Costs: We were unable to quantify an amount of questioned costs. While a time and effort certification was lacking for the items included in our sample, there was evidence of work performed on the grants and the amounts allocated aligned closely to the budget. Therefore, we were unable to quantify the amount of questioned costs. Cause: The Organization has not established or enforced formal policies and procedures requiring the documentation of time and effort for employees. Effect: The lack of documentation of hindsight review increases the risk of inaccurate payroll cost allocations and potential noncompliance with federal grant requirements. Recommendation: The Organization should update its policies and procedures to require and document a formal hindsight review of employee working hours. This review should verify that actual hours worked align with budgeted hours, particularly in cases where payroll costs are allocated across multiple federal programs. The updated procedures should include clear guidelines for conducting and retaining evidence of such reviews to support accurate cost allocations and ensure compliance with federal grant requirements.
2023-002 Allocation of Program Effort by Employees – Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Program: Research and Development Cluster (ALN 47.049-Mathematical and Physical Sciences, Award 2043575, Award Period 3/15/21 – 2/28/23) Federal Agency: National Science Foundation Criteria: The financial management requirements include processes and controls over the allocation of personnel time and effort to program activities as required by 2 CFR 200.430. Condition: Our testing of payroll expenses charged to the program noted that the Organization allocates senior personnel time and effort in one journal entry as a program expense. Cause: The Organization did not adhere to documented policies for allocating senior personnel effort and time costs to program accounting records. Effect: The Organization does not maintain a compliant effort system and is not in compliance with 2 CFR 200.430 which could lead to inaccurate allocation of personnel costs to the federal program. Identification as a repeat finding, if applicable: The finding is a repeat of Finding 2022-004 in the prior year. Recommendation: We recommend the Organization communicate and enforce policies for allocating senior personnel effort and time costs to grant and accounting personnel and implement formal processes to monitor compliance with federal awards. View of Responsible Officials: The Organization has since improved its procedures for allocating senior personnel time and effort in its accounting and financial record keeping processes. Time and effort are now allocated via approved time and expense personnel reports and the charges are reconciled to the accounting records and there is a formal process to monitor compliance with this requirement. Questioned Costs: None
U.S. Department of Health and Human Services Leading Edge Acceleration Projects (LEAP) in Health Information Technology - 93.345 Award# 90AX0034/01-00 Criteria or Specific Requirement – Allowable Costs/Cost Principles/Cash Management Federal regulations state that “charges to federal awards for salaries and wages, must be based on records that accurately reflect the work performed.” The regulations also state that “the records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated” and “budget estimates alone do not qualify as support for charges to federal awards” (2 CFR 200.430(i)). Additionally, costs may not be included as a cost of any other federally-financed program in either the current or a prior period (2 CFR 200.403(f)). Non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR Section 200.305(b)).issuance or redemption of checks, warrants, or payment by other means (2 CFR Section 200.305(b)). Condition – During our test work over the LEAP grant, we noted the Organization did not have time and activity records with sufficient detail per federal regulations to support its compensation and fringe benefit expenses. Additionally, it appeared a substantial portion of certain employee's time was 100% charged to the LEAP award; however, may have also been included on other federal awards and been reimbursed. Lastly, indirect costs were charged to the federal program on the salary expenses which were not fully supported as required by the Uniform Guidance. Cause – There is a lack of understanding of the requirements of the time and activity reports and a lack of detail tracking by project of personnel time. Effect – Based on testing completed, the Organization did not have sufficient procedures to record and verify employees time and activity throughout fiscal year 2023. This resulted in the Organization drawing down funds for unsupported expenses. Questioned Costs – Total questioned costs are $278,735. This includes $192,231 of all salaries and benefits charged to the award which lacked documentation to support the charge and allocation to the grant and $86,504 in indirect costs charged on these related expenses. Context - There was a total of $192,231 in salaries and fringe benefits charged to the LEAP award during the year ended June 30, 2023 which encompassed six employees. One hundred percent of the employees were reviewed and none had proper documentation to support the charge and allocation to the grant (e.g ., daily time and activity records, etc.). Per discussions with management and further review, the amounts charged to the grant were based on the approved budget for the position and the internal allocation performed each payroll period. Additionally, it is uncertain how much of these employees' were also charged to other federally financed programs during the year. Identification as a Repeat Finding, if applicable – Not applicable Recommendation – We recommend that management utilize a time and activity method which meets the requirements of federal regulations. We also recommend employees and their supervisors are provided training on the requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with finding. See corrective action plan.
Federal Program: Head Start Cluster (CFDA #93.600) Federal Agency: U.S. Department of Health and Human Services Federal Award Number(s): 08CH012021-02-01 Compliance Requirement: Allowable Costs/Costs Principles Questioned Costs: $281 Condition – During testing of payroll expenditures charged to the Head Start program multiple deficiencies in payroll processing and documentation were identified including hours did not agree to approved timecards, incorrect pay rates, supporting documentation was missing or incomplete, retirement and/or FICA contributions were calculated incorrectly, and allocation percentages did not agree with approved allocations. Criteria – Under 2 CFR 200.430(i) charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed supported by documentation that is accurate, reflects actual hours worked, supported by the entity’s internal controls, and consistent with the entity’s established policies. Cause - Internal controls over payroll processing and documentation were not consistently followed or adequately monitored. There was insufficient review of payroll inputs, allocation percentages, and benefit calculations prior to posting payroll costs to the Head Start program. Additionally, staff responsible for payroll processing did not consistently retain or verify supporting documentation. Effect – Payroll costs charged to the Head Start program may be inaccurate or unallowable. Recommendation - We recommend that the government strengthen its internal controls related to payroll processing and documentation for federal program expenditures and ensure staff is knowledgeable regarding Uniform Guidance documentation requirements. Client Response – Management acknowledges this finding. With the changes in staffing at the time, there was not proper training for each employee. We no longer service this program. In the future if we take a grant of this size on, training will be held for any employees involved with the grant. Status of Finding – This is not a repeat finding from the prior year.
Finding 2023-006 – Activities Allowed or Unallowed/Allowable Costs/Cost Principles – Material Weakness in Internal Controls over Compliance and Instance of Noncompliance Head Start ALN# 93.600 (Repeat 2022-008) U.S. Department of Health & Human Services Federal Grant/Contract Number: 10CH011215-03-03; 10CH011215-03-C3; 10CH011215-04; 10HE000901-01-C6 Grant period – 2022 & 2023 Criteria – Per 2 CFR 200.303, 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 follow 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 200.403 – Factors affecting allowability of costs – Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: paragraph (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles; paragraph (g) Be adequately documented. Per 2 CFR section 200.404 – Reasonable costs – A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. Per 2 CFR section 200.405 – Allocable costs –focuses on how costs are allocable, ensuring they are directly tied to the federal award or its benefits. Per 2 CFR 200.430(i), charges to Federal awards for salaries and wages must be based on records that are supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated and that are incorporated into the official records of the non-Federal entity. Condition – From the population of all disbursements charged to the grant, we selected 25 program disbursements, of which 9 invoices could not be located. Cause – Turnover in staff and the passage of time since the period under audit has caused documentation to be misplaced. Effect – Inadequate or inconsistent documentation of expenses may result in erroneous or fraudulent transactions occurring, loss of funding, or disallowed costs. Questioned Costs – Known questioned costs totaling $121 were identified related to 10 invoices could not be located. In addition, likely questioned costs are estimated at $34,616, based on the projection of the error identified in the tested transactions to the applicable population. Recommendation – Documentation should be prepared, reviewed, and retained to support the expense. Management’s Response – Management has reviewed and accepted the finding. See “Corrective Action Plan”.
FINDING 2023-004 Subject: Title I Grants to Local Educational Agencies - Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A200014, S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Repeat Findings This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-003. Condition and Context Costs charged to grant funds must be adequately documented. To adequately document payroll expenses charged to the grant fund, contracts or other documentation supporting the employees' approved rates of pay are necessary. The School Corporation utilized a financial software system that has two different sides, an employee portal side and an administrator side. Employee contracts are approved by the employee, the Superintendent of Schools, and the President of the School Board within the system on the employee portal side. Once approved, the data in the employee portal side is fed into a process in the administrator side. The School Corporation could not provide contracts or approved payroll rates for 6 out of 24 employees tested. As such, we could not verify the employees were paid its correct rates for hours spent working on grant related activities. This resulted in known questioned costs of $149,870. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 24 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for the Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE's definition of IBS); . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." INDIANA STATE BOARD OF ACCOUNTS 25 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The School Corporation did not maintain or provide adequate documentation to support payroll expenses charged to the grant fund. While employee contracts are approved within the financial software system, the process lacked sufficient oversight and record retention practices to ensure that approved pay rates were accessible and verifiable. Effect Without access to approved contracts or documentation verifying payroll rates for 6 of the 24 employees tested, the School Corporation could not demonstrate that payroll costs charged to the grant were accurate and allowable. This lack of documentation resulted in known questioned costs totaling $149,870. Additionally, the absence of reliable records increases the risk of noncompliance with federal grant requirements and necessitates expanded audit procedures, which will likely lead to higher audit costs. Questioned Costs Questioned costs in the amount of $149,870 were identified as described in the Condition and Context. Recommendation The School Corporation should establish and enforce formal documentation procedures to verify payroll rates for all employees whose compensation is charged to federal grants. This includes maintaining approved contracts, salary schedules, and supporting records that clearly demonstrate the accuracy and allowability of payroll costs. A review and approval process by a second knowledgeable party should be implemented to ensure compliance prior to submission. Additionally, the School Corporation should provide necessary support and resources for staff involved in payroll and grant management to strengthen recordkeeping practices. These measures will reduce the risk of noncompliance, minimize questioned costs, and help control future audit expenses. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.