Activities Allowed or Unallowed/Allowable Costs/Cost Principles Head Start ALN# 93.600 US Department of Health & Human Services Federal Grant/Contract Number: 10CH011215-02; 10CH011215-03; 10HE000901-01 Grant period – 2021 & 2022 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 – The following exceptions were noted during testing of 138 program disbursements, 93 payroll disbursements, and 100 journal entry transactions: • 20 invoices could not be located related to program disbursements • 6 invoices tested did not agree to the approved allocation of Head Start expenses • 1 timecard could not be located • multiple instances where an approved pay rate covering the appropriate time-period could not be obtained • 12 instances where supporting documentation for journal entries to adjust Head Start expenses could not be obtained. 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 – $151,608. 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”.
Activities Allowed or Unallowed/Allowable Costs/Cost Principles Head Start ALN# 93.600 US Department of Health & Human Services Federal Grant/Contract Number: 10CH011215-02; 10CH011215-03; 10HE000901-01 Grant period – 2021 & 2022 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 – The following exceptions were noted during testing of 138 program disbursements, 93 payroll disbursements, and 100 journal entry transactions: • 20 invoices could not be located related to program disbursements • 6 invoices tested did not agree to the approved allocation of Head Start expenses • 1 timecard could not be located • multiple instances where an approved pay rate covering the appropriate time-period could not be obtained • 12 instances where supporting documentation for journal entries to adjust Head Start expenses could not be obtained. 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 – $151,608. 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”.
Activities Allowed or Unallowed/Allowable Costs/Cost Principles Head Start ALN# 93.600 US Department of Health & Human Services Federal Grant/Contract Number: 10CH011215-02; 10CH011215-03; 10HE000901-01 Grant period – 2021 & 2022 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 – The following exceptions were noted during testing of 138 program disbursements, 93 payroll disbursements, and 100 journal entry transactions: • 20 invoices could not be located related to program disbursements • 6 invoices tested did not agree to the approved allocation of Head Start expenses • 1 timecard could not be located • multiple instances where an approved pay rate covering the appropriate time-period could not be obtained • 12 instances where supporting documentation for journal entries to adjust Head Start expenses could not be obtained. 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 – $151,608. 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”.
Activities Allowed or Unallowed/Allowable Costs/Cost Principles Head Start ALN# 93.600 US Department of Health & Human Services Federal Grant/Contract Number: 10CH011215-02; 10CH011215-03; 10HE000901-01 Grant period – 2021 & 2022 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 – The following exceptions were noted during testing of 138 program disbursements, 93 payroll disbursements, and 100 journal entry transactions: • 20 invoices could not be located related to program disbursements • 6 invoices tested did not agree to the approved allocation of Head Start expenses • 1 timecard could not be located • multiple instances where an approved pay rate covering the appropriate time-period could not be obtained • 12 instances where supporting documentation for journal entries to adjust Head Start expenses could not be obtained. 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 – $151,608. 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”.
Activities Allowed or Unallowed/Allowable Costs/Cost Principles Head Start ALN# 93.600 US Department of Health & Human Services Federal Grant/Contract Number: 10CH011215-02; 10CH011215-03; 10HE000901-01 Grant period – 2021 & 2022 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 – The following exceptions were noted during testing of 138 program disbursements, 93 payroll disbursements, and 100 journal entry transactions: • 20 invoices could not be located related to program disbursements • 6 invoices tested did not agree to the approved allocation of Head Start expenses • 1 timecard could not be located • multiple instances where an approved pay rate covering the appropriate time-period could not be obtained • 12 instances where supporting documentation for journal entries to adjust Head Start expenses could not be obtained. 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 – $151,608. 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”.
2022-002 Improve Controls and Documentation Over Payroll Federal Agency: U.S. Department of Education Award Name: COVID-19 – Education Stabilization Fund AL Number(s): 84.425 Award Year: 2022 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding Compliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement In accordance with 2 CFR § 200.430 and program requirements for the Education Stabilization Fund, payroll costs charged to federal awards must be supported by appropriate documentation, such as approved pay rates. Costs must relate to approved activities, be allowable under the grant, and be supported by the City’s payroll records. Additionally, for transfers or allocations of payroll costs, documentation of the transfer or allocation to the federal grant must be maintained. Condition and Context During our testing of 22 payroll transactions charged to the ESSER grant, pay rate documentation supporting the amounts charged to the grant was not provided for 16 employees. Further, for 10 employees receiving summer enrichment stipends, the City was unable to provide evidence of the balance transfer of stipend costs to the ESSER grant. Cause The City did not maintain or was unable to provide the required payroll documentation, such as pay rates, and did not retain evidence of payroll balance transfers or allocations to the ESSER grant for summer enrichment stipends. This indicates a lack of effective internal controls over payroll documentation and grant cost allocations. Effect or Potential Effect Without supporting documentation for pay rates, there is an increased risk that amounts charged to the grant may be incorrect or unallowable. Failure to document transfers or allocations to the grant could result in improper charging of costs, questioned costs, or noncompliance with federal regulations. Questioned Costs Due to the condition noted, we were unable to determine if the costs charged to the grant were allowable. AL Number(s) Name of Federal Program or Cluster Questioned Costs 84.425 COVID-19 – Education Stabilization Fund $31,493 Recommendation The City should develop and implement policies and procedures to ensure that documentation supporting pay rates and payroll allocations is retained and readily available for all grant-funded employees. The City should also ensure that all transfers and allocations of payroll costs to federal grants are properly documented, reviewed, and approved. Views of Responsible Official and Planned Corrective Action Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
Finding 2022.003: Allowable Costs/Activities Allowed or Unallowed - Material Weakness Name of Federal Agency: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) COVID-19 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Grants for New and Expanded Services under the Health Center Program Federal Assistance Listing Numbers: 93.224 and 93.527 Federal Award Identification Number and Year: H80CS26638 - 2022 and 2023, H8DCS35487 - 2021, and H8F40829 - 2023 Criteria In accordance with 2 CFR, Part 200.430I(i)(1), charges to Federal Awards for salaries and wages must be based on records that accurately reflect the actual work performed, which must, among other things: (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) and reasonably reflect the total activity for which the employee is compensated by the non-Federal entity. Additionally, costs must be adequately documented, as per 2 CFR 200.40.3(g). Condition Charges to Federal Awards for salaries and wages were not supported by properly approved payrates, and timesheets did not agree to payroll registers. Additionally, nonpayroll expenditures were not supported by proper approval. Cause The Center's internal controls over payroll were not consistently followed to ensure payrates were approved and timesheets agreed to payroll registers. Additionally, the Center's internal controls over nonpayroll expenditures were not consistently followed to ensure that expenditures were approved. Effect or Potential Effect Failure to ensure accurate wage and allocation of employees' time across programs could result in non-compliance with the grant requirements or unallowable costs being charged. Additionally, failure to ensure accurate nonpayroll expenditures could result in non-compliance with the grant requirements or unallowable costs being charged. Questioned Costs None. Context We selected 25 payroll transactions charged to the federal program for testing. Out of the 25 transactions tested, we noted 16 instances where there was no formal approval of payrates and where they were not appropriately reflected in the payroll registers; 23 instances where timecards were not appropriately reflected in the payroll registers; and all 25 labor reports showed no formal approval documented. Additionally, for nonpayroll allowable costs, out of 13 transactions tested, we noted 6 instances where there was no formal approval showing review that the cost was allowable under the program. Identification of Repeat Finding Yes, see finding 2021-003. Recommendation We recommend that the Center consistently enforce its internal controls over payroll to ensure that the timesheet and payrates are reviewed and approved by the appropriate supervisor. Additionally, we recommend that the Center consistently reinforces its internal controls over nonpayroll expenditures to ensure all expenditures were approved by the appropriate supervisor. Views of Responsible Officials Management and the Board of Directors agree with the finding and will implement additional controls to ensure all expenditures have evidence of formal approval of review.
Federal Agency: Department of Housing and Urban Development and Department of Veterans Affairs Federal Program Name: Emergency Solutions Grant Program and VA Homeless Providers Grant and Per Diem Program Assistance Listing Number: 14.231 and 64.024 Federal Award Identification Number and Year: E20DW37001-2022 and ODMH543-1306-659-PD-21 Pass-Through Agency: North Carolina Department of Health and Human Services, Division of Aging and Adult Services Pass-Through Number(s): 00041416 Award Period: 7/29/2020 – 6/30/2022 and 10/1/2021 – 9/30/2022 Type of Finding: - Material Weakness in Internal Control over Compliance - Material Noncompliance (Modified Opinion) Criteria or specific requirement: In accordance with 2 CFR 200.302(b)(3), the recipient’s financial management system must maintain records sufficient to identify the amount, source, and expenditure of federal funds for federal awards, These records must contain information necessary to identify federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. In accordance with the Compliance Supplement, Part 6 – Internal Control, 2 CFR section 200.303 requires that non-Federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-Federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In accordance with 2 CFR 200.430 (a), costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non- Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, when applicable. In accordance with 2 CFR 200.430(g), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. The records must: (1) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated, (2) Be incorporated into the official records of the recipient (3) Reasonably reflect the total activity for which the employee is compensated. Condition: During our testing, we noted the Organization did not have adequate controls to ensure that expenditures of federal awards were properly supported, reasonably reflective of the work performed, and properly reviewed and approved. Questioned costs: Assistance listing number: 14.231 Federal award identification number: E20DW37001-2022 Known questioned costs: $18,419 Assistance listing number: 64.024 Federal award identification number: ODMH543-1306-659-PD-21 Known questioned costs: $49,676 Context: During our testing, we noted the following related to the VA Homeless Providers Grant and Per Diem Program: 40 out of 40 payroll transactions tested for allowable costs and allowable activities were not allocated based on actual time worked on the grant and lacked adequate records. 11 out of 40 tested for allowable costs and allowable activities did not have evidence showingexpenditures were allowable under the grant. 17 out of 40 tested for allowable costs and allowable activities lacked evidence of review and approval. During our testing, we noted the following related to the Emergency Solutions Grant Program: 18 of 40 tested for allowable costs and allowable activities lacked evidence showing the expenditures were allowable under the grant. 8 out of 11 payroll transactions tested for allowable costs and allowable activities were not allocated based on actual time worked on the grant and lacked adequate records. Cause: The Organization’s controls were not sufficient to ensure that expenditures of federal funds were supported, reasonably reflecting the work performed under the program, reviewed and approved, and only for allowable costs and allowable activities. Effect: The Organization could have incurred expenses that were not allowable under the grant beyond those identified. Repeat Finding: Yes Recommendation: We recommend the Organization develop a system of internal controls to ensure that salaries and related payroll expenses are tracked to reasonably reflect the actual time spent working on the programs. In addition we recommend that management retain all documents including evidence of review and approval for all expenditures of federal funds until the latter of the legally required retention period or completion of required audits. Views of responsible officials: There is no disagreement with the audit finding.
Finding Number: 2022-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Repeat Finding: Yes – 2021-SA3 Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award, a Federal award and non-Federal award, and charges for the salaries and wages of nonexempt employee must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to 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 activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: These issues stem from policies and procedures established by former key accounting personnel, predate current management’s oversight, and were therefore outside their direct control. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to Finding No. 2022-SA3, management agrees with the finding. Corrective actions were implemented in subsequent fiscal years. Unallowable costs are identified and documented in the Accounting Policies and Procedures Manual and communicated to the Finance Department and the Organization’s employees. The CFO regularly communicates these requirements to directors and staff through weekly and monthly meetings to ensure a clear understanding of allowable versus unallowable costs. In addition, quarterly budget-to-actual analyses are prepared and reviewed to monitor expenditure and ensure costs remain within approved budget limitations.
We identified the following Other Matter related to internal controls over federal awards: 2022-002 Documentation of Timesheet Review Federal Program: HIV Emergency Relief Project Grants CFDA Number: 93.914 Federal Agency: U.S. Department of Health and Human Services Year: 2022 Questioned Costs: $0 Criteria: 2 CFR 200.430, Compensation ? personal services, states, in part: ?(i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated;? Condition We reviewed a sample of employee timesheets and approvals were not documented either by paper or system electronic approvals. Recommendation We recommend the Center review timesheets and document timesheet review either by documenting it in paper or by system electronic approvals.
We identified the following Other Matter related to internal controls over federal awards: 2022-002 Documentation of Timesheet Review Federal Program: HIV Emergency Relief Project Grants CFDA Number: 93.914 Federal Agency: U.S. Department of Health and Human Services Year: 2022 Questioned Costs: $0 Criteria: 2 CFR 200.430, Compensation ? personal services, states, in part: ?(i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated;? Condition We reviewed a sample of employee timesheets and approvals were not documented either by paper or system electronic approvals. Recommendation We recommend the Center review timesheets and document timesheet review either by documenting it in paper or by system electronic approvals.
2021‐006 – Deficiencies in Activities Allowed, Allowable Costs, and Period of Performance Controls over Compliance with Payroll – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ During our review of payroll related transactions, the following were noted For 5 of the 40 payroll transactions tested, the employee did not have an approved timesheet or time and effort available for the pay period. For 3 of the 40 payroll transactions tested, no timesheet or other record of hours worked was available to support hours paid for the pay period. For 1 of the 40 payroll transactions tested, employee was not paid for all hours worked on timesheet. Criteria – 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal 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. Questioned Costs –$1,010 Effect ‐ The Entity may unintentionally expense employee’s salary out of the federal grant that does not qualify or 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 Entity does not have proper controls in place to verify that documentation was maintained to indicate the employees’ time paid under the federal grant. Controls were put in place during the year but were not consistently followed.
2021‐006 – Deficiencies in Activities Allowed, Allowable Costs, and Period of Performance Controls over Compliance with Payroll – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ During our review of payroll related transactions, the following were noted For 5 of the 40 payroll transactions tested, the employee did not have an approved timesheet or time and effort available for the pay period. For 3 of the 40 payroll transactions tested, no timesheet or other record of hours worked was available to support hours paid for the pay period. For 1 of the 40 payroll transactions tested, employee was not paid for all hours worked on timesheet. Criteria – 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal 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. Questioned Costs –$1,010 Effect ‐ The Entity may unintentionally expense employee’s salary out of the federal grant that does not qualify or 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 Entity does not have proper controls in place to verify that documentation was maintained to indicate the employees’ time paid under the federal grant. Controls were put in place during the year but were not consistently followed.
2021‐006 – Deficiencies in Activities Allowed, Allowable Costs, and Period of Performance Controls over Compliance with Payroll – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ During our review of payroll related transactions, the following were noted For 5 of the 40 payroll transactions tested, the employee did not have an approved timesheet or time and effort available for the pay period. For 3 of the 40 payroll transactions tested, no timesheet or other record of hours worked was available to support hours paid for the pay period. For 1 of the 40 payroll transactions tested, employee was not paid for all hours worked on timesheet. Criteria – 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal 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. Questioned Costs –$1,010 Effect ‐ The Entity may unintentionally expense employee’s salary out of the federal grant that does not qualify or 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 Entity does not have proper controls in place to verify that documentation was maintained to indicate the employees’ time paid under the federal grant. Controls were put in place during the year but were not consistently followed.
#2021-002 – Material Weakness – Allowable Costs/Cost Principles 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 states, “Charges to Federal Awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.” Condition During the course of the audit, we noted that the Organization used an allocation methodology to allocate salaries to the federal award based upon time spent on the program. However, for eleven of the employees, there were no timesheets to support the amount of time allocated to the Organization’s grant programs. Cause The cause is a lack of proper internal controls which would require the Organization to maintain adequate support for time spent on grant programs and a formal allocation process to allocate payroll costs across the grant programs. Effect The potential effects of not having supporting documentation for the allocation of payroll expenses is potential overbilling of expenses to the grant program. Questioned Costs $33,316 Perspective Information We reviewed a sample of monthly reports filed with the Pennsylvania Department of Military and Veterans Affairs and the Drug and Alcohol Program. We examined the payroll for each employee charged to the grant for a total of twenty-six employees. The finding is related to eleven individuals who did not complete timesheets or provide supporting documentation for the amount of time spent on the Organization’s grant programs. Identification as a repeat finding A similar issue was noted in prior year finding #2020-002. Recommendation We recommend that the Organization require timesheets for the hours allocated to the grant programs for all employees whether they are salary or hourly to ensure that the payroll charged to grants is accurate and properly supported. View of responsible officials and planned corrective action Starting in 2023 all employees of the Organization will complete formal time sheets. These sheets will be signed by the Administrative Coordinator and by the Fiscal Coordinator and then entered into the system each pay period to rectify this finding.
#2021-003 – Material Weakness – Activities Allowed or Unallowed 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. In accordance with CFR 200.430, payroll costs charged to the program are allowable when: the total compensation paid to individual employees is reasonable according to the work performed on the program and the compensation is in accordance with the established policies of the organization. Condition During the audit we noted the Organization does not have established policies and procedures over payroll. We noted that while the Organization has established hourly and salary pay rates, these rates are not formally established and approved by the Organization’s Board. Cause The cause is a lack of a proper control structure that requires Board approval of pay rates and salaries. The Organization also does not have a process in place to ensure that payroll reports are properly reviewed and approved by a second independent reviewer prior to submission to the payroll company for processing. Effect The potential effects of not having formally approved pay rates and not having payroll reports reviewed by a second level prior to payroll processing is the potential for errors and overcharging of grants. Questioned Costs None Perspective Information We reviewed a sample of reports filed with the Pennsylvania Department of Military and Veterans Affairs and the Drug and Alcohol Program. We examined the payroll for each employee charged to the grant for a total of twenty-six employees. The finding represents the unsupported costs noted from this review. Identification as a repeat finding A similar issue was noted in prior year finding #2020-003. Recommendation We recommend that the Organization begin to formally establish and approve employee pay rates and salaries at Official Board Meetings and that these rates are documented in the Board Minutes. The Organization should also implement procedures to include a second level review of the payroll report for accuracy and completeness prior to submission for payment. View of responsible officials and planned corrective action JFT does have all the board minutes on file. However, because we were a small agency, salary rates were not often changed. Additionally, all salary rates and changes were always driven by the ability to obtain the funding needed. Since we were small and there was not always a lot to discuss with the board our board only met twice a year. Therefore, all salary was discussed with the board president, then taken to the board unfortunately there is no formal documentation at this time. As of 2023 our board now meets quarterly. Therefore, the following policy will be included in the fiscal manual: the JFT board of directors will hold a public meeting quarterly. All matters of pay rates and salaries will be approved at the start of each grant cycle. State and county grants will be discussed prior to the July 1 start dates, all federal will be discussed prior to October 1. Any changes in salary must be approved by the board and documented in official board minutes. All board minutes will be placed in a lock file in the Fiscal Coordinator’s office.
#2021-007 – Significant Deficiency – Special Tests Criteria Uniform Guidance (UG) requires non-Federal entities that receive grant funding to have written policies in the following areas: Internal Controls (2CFR 200.303) Travel (2CFR 200.474) Financial Management and Accounting which includes Cash Management and Allowability (2CFR 200.302) Personnel Compensation – Time and Effort Reporting (2CFR 200.430(i)) Conflict of Interest/Disclosures (2CFR 200.318) Procurement (2CFR 200.319) Condition During the audit we noted that the Organization does not have written policies in place over these areas in accordance with Uniform Guidance. Cause The Organization was not aware of the requirement to have these written policies in place. Effect The potential effect of not having these policies in place is that Organization’s expenses are not in accordance with UGG. Questioned Costs None Perspective Information No policies or procedures were noted that are in accordance with Uniform Guidance. As a response to the prior year finding, the Organization noted that they will add policies to the fiscal manual for future compliance. Identification as a repeat finding A similar issue was noted in prior year finding #2020-007. Recommendation We recommend that the Organization update the fiscal manual to include policies that are compliant with Uniform Guidance. View of responsible officials and planned corrective action Policies will be placed and adopted by the agency that meet the UG code. These policies will be placed in the fiscal manual. The fiscal manual will be created by using federal guidelines and by using the DDAP fiscal manual as guidance.
#2021-002 – Material Weakness – Allowable Costs/Cost Principles 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 states, “Charges to Federal Awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.” Condition During the course of the audit, we noted that the Organization used an allocation methodology to allocate salaries to the federal award based upon time spent on the program. However, for eleven of the employees, there were no timesheets to support the amount of time allocated to the Organization’s grant programs. Cause The cause is a lack of proper internal controls which would require the Organization to maintain adequate support for time spent on grant programs and a formal allocation process to allocate payroll costs across the grant programs. Effect The potential effects of not having supporting documentation for the allocation of payroll expenses is potential overbilling of expenses to the grant program. Questioned Costs $33,316 Perspective Information We reviewed a sample of monthly reports filed with the Pennsylvania Department of Military and Veterans Affairs and the Drug and Alcohol Program. We examined the payroll for each employee charged to the grant for a total of twenty-six employees. The finding is related to eleven individuals who did not complete timesheets or provide supporting documentation for the amount of time spent on the Organization’s grant programs. Identification as a repeat finding A similar issue was noted in prior year finding #2020-002. Recommendation We recommend that the Organization require timesheets for the hours allocated to the grant programs for all employees whether they are salary or hourly to ensure that the payroll charged to grants is accurate and properly supported. View of responsible officials and planned corrective action Starting in 2023 all employees of the Organization will complete formal time sheets. These sheets will be signed by the Administrative Coordinator and by the Fiscal Coordinator and then entered into the system each pay period to rectify this finding.
#2021-003 – Material Weakness – Activities Allowed or Unallowed 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. In accordance with CFR 200.430, payroll costs charged to the program are allowable when: the total compensation paid to individual employees is reasonable according to the work performed on the program and the compensation is in accordance with the established policies of the organization. Condition During the audit we noted the Organization does not have established policies and procedures over payroll. We noted that while the Organization has established hourly and salary pay rates, these rates are not formally established and approved by the Organization’s Board. Cause The cause is a lack of a proper control structure that requires Board approval of pay rates and salaries. The Organization also does not have a process in place to ensure that payroll reports are properly reviewed and approved by a second independent reviewer prior to submission to the payroll company for processing. Effect The potential effects of not having formally approved pay rates and not having payroll reports reviewed by a second level prior to payroll processing is the potential for errors and overcharging of grants. Questioned Costs None Perspective Information We reviewed a sample of reports filed with the Pennsylvania Department of Military and Veterans Affairs and the Drug and Alcohol Program. We examined the payroll for each employee charged to the grant for a total of twenty-six employees. The finding represents the unsupported costs noted from this review. Identification as a repeat finding A similar issue was noted in prior year finding #2020-003. Recommendation We recommend that the Organization begin to formally establish and approve employee pay rates and salaries at Official Board Meetings and that these rates are documented in the Board Minutes. The Organization should also implement procedures to include a second level review of the payroll report for accuracy and completeness prior to submission for payment. View of responsible officials and planned corrective action JFT does have all the board minutes on file. However, because we were a small agency, salary rates were not often changed. Additionally, all salary rates and changes were always driven by the ability to obtain the funding needed. Since we were small and there was not always a lot to discuss with the board our board only met twice a year. Therefore, all salary was discussed with the board president, then taken to the board unfortunately there is no formal documentation at this time. As of 2023 our board now meets quarterly. Therefore, the following policy will be included in the fiscal manual: the JFT board of directors will hold a public meeting quarterly. All matters of pay rates and salaries will be approved at the start of each grant cycle. State and county grants will be discussed prior to the July 1 start dates, all federal will be discussed prior to October 1. Any changes in salary must be approved by the board and documented in official board minutes. All board minutes will be placed in a lock file in the Fiscal Coordinator’s office.
#2021-007 – Significant Deficiency – Special Tests Criteria Uniform Guidance (UG) requires non-Federal entities that receive grant funding to have written policies in the following areas: Internal Controls (2CFR 200.303) Travel (2CFR 200.474) Financial Management and Accounting which includes Cash Management and Allowability (2CFR 200.302) Personnel Compensation – Time and Effort Reporting (2CFR 200.430(i)) Conflict of Interest/Disclosures (2CFR 200.318) Procurement (2CFR 200.319) Condition During the audit we noted that the Organization does not have written policies in place over these areas in accordance with Uniform Guidance. Cause The Organization was not aware of the requirement to have these written policies in place. Effect The potential effect of not having these policies in place is that Organization’s expenses are not in accordance with UGG. Questioned Costs None Perspective Information No policies or procedures were noted that are in accordance with Uniform Guidance. As a response to the prior year finding, the Organization noted that they will add policies to the fiscal manual for future compliance. Identification as a repeat finding A similar issue was noted in prior year finding #2020-007. Recommendation We recommend that the Organization update the fiscal manual to include policies that are compliant with Uniform Guidance. View of responsible officials and planned corrective action Policies will be placed and adopted by the agency that meet the UG code. These policies will be placed in the fiscal manual. The fiscal manual will be created by using federal guidelines and by using the DDAP fiscal manual as guidance.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance ‐ Allowable Costs and Cost Principles Criteria: The Association’s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls that ensure expenditures are properly charged to program and allocated in accordance with the federal grant requirements. The objective of the Assistance Listing 93.600 Head Start program (including Early Head Start and Early Head Start Partnerships) is to promote school readiness of low‐income children (including American Indians, Alaska Natives and migrant and seasonal farm workers) by enhancing children’s cognitive, social and emotional development. During the fiscal year ending December 31, 2021, the Association expended $4,720,185 in federal funding. Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the Association to have adequate time‐and‐effort documentation to support all payroll costs charged to the Head Start awards. 2 CFR 200.430, Compensation – personal services, states, in part: “(i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (ii) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated…” Depending on the number and types of activities employees perform, time and effort documentation can be in the form of semi‐annual certification or monthly personnel activity reports, such as a timesheet. Condition: The Association’s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. During review of payroll costs for the year ended December 31, 2021, the following was noted: • Payroll costs were charged according to budgeted time rather than reconciling to actual hours worked. • Two payroll disbursements were not allocated in compliance with the Associations approved cost allocation plan. This internal control deficiency is considered to be a significant deficiency. Questioned Costs: None. Context: Procedures included examining payroll charges for 40 randomly selected employees for January through December 2021. Cause: The Association changed the software used for payroll processing from QuickBooks to MIP in July 2020. They then changed their fiscal accounting software from QuickBooks to MIP in January 2021. The new software implementation was fraught with many challenges, one of which being implementing electronic processes that met the time and effort requirements outlined in the Association’s policy manual. Effect: By not keeping proper time‐and‐effort records, the Association cannot demonstrate compliance with grantor’s requirements that require support for payroll costs charged to the federal program. The Association provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: The Association follow its own documented controls to ensure it prepares adequate time‐ and‐effort documentation to support payroll costs charged to the federal grant. View of Responsible Officials: There is no disagreement with this audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance ‐ Allowable Costs and Cost Principles Criteria: The Association’s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls that ensure expenditures are properly charged to program and allocated in accordance with the federal grant requirements. The objective of the Assistance Listing 93.600 Head Start program (including Early Head Start and Early Head Start Partnerships) is to promote school readiness of low‐income children (including American Indians, Alaska Natives and migrant and seasonal farm workers) by enhancing children’s cognitive, social and emotional development. During the fiscal year ending December 31, 2021, the Association expended $4,720,185 in federal funding. Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the Association to have adequate time‐and‐effort documentation to support all payroll costs charged to the Head Start awards. 2 CFR 200.430, Compensation – personal services, states, in part: “(i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (ii) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated…” Depending on the number and types of activities employees perform, time and effort documentation can be in the form of semi‐annual certification or monthly personnel activity reports, such as a timesheet. Condition: The Association’s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. During review of payroll costs for the year ended December 31, 2021, the following was noted: • Payroll costs were charged according to budgeted time rather than reconciling to actual hours worked. • Two payroll disbursements were not allocated in compliance with the Associations approved cost allocation plan. This internal control deficiency is considered to be a significant deficiency. Questioned Costs: None. Context: Procedures included examining payroll charges for 40 randomly selected employees for January through December 2021. Cause: The Association changed the software used for payroll processing from QuickBooks to MIP in July 2020. They then changed their fiscal accounting software from QuickBooks to MIP in January 2021. The new software implementation was fraught with many challenges, one of which being implementing electronic processes that met the time and effort requirements outlined in the Association’s policy manual. Effect: By not keeping proper time‐and‐effort records, the Association cannot demonstrate compliance with grantor’s requirements that require support for payroll costs charged to the federal program. The Association provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: The Association follow its own documented controls to ensure it prepares adequate time‐ and‐effort documentation to support payroll costs charged to the federal grant. View of Responsible Officials: There is no disagreement with this audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance ‐ Allowable Costs and Cost Principles Criteria: The Association’s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls that ensure expenditures are properly charged to program and allocated in accordance with the federal grant requirements. The objective of the Assistance Listing 93.600 Head Start program (including Early Head Start and Early Head Start Partnerships) is to promote school readiness of low‐income children (including American Indians, Alaska Natives and migrant and seasonal farm workers) by enhancing children’s cognitive, social and emotional development. During the fiscal year ending December 31, 2021, the Association expended $4,720,185 in federal funding. Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the Association to have adequate time‐and‐effort documentation to support all payroll costs charged to the Head Start awards. 2 CFR 200.430, Compensation – personal services, states, in part: “(i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (ii) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated…” Depending on the number and types of activities employees perform, time and effort documentation can be in the form of semi‐annual certification or monthly personnel activity reports, such as a timesheet. Condition: The Association’s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. During review of payroll costs for the year ended December 31, 2021, the following was noted: • Payroll costs were charged according to budgeted time rather than reconciling to actual hours worked. • Two payroll disbursements were not allocated in compliance with the Associations approved cost allocation plan. This internal control deficiency is considered to be a significant deficiency. Questioned Costs: None. Context: Procedures included examining payroll charges for 40 randomly selected employees for January through December 2021. Cause: The Association changed the software used for payroll processing from QuickBooks to MIP in July 2020. They then changed their fiscal accounting software from QuickBooks to MIP in January 2021. The new software implementation was fraught with many challenges, one of which being implementing electronic processes that met the time and effort requirements outlined in the Association’s policy manual. Effect: By not keeping proper time‐and‐effort records, the Association cannot demonstrate compliance with grantor’s requirements that require support for payroll costs charged to the federal program. The Association provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: The Association follow its own documented controls to ensure it prepares adequate time‐ and‐effort documentation to support payroll costs charged to the federal grant. View of Responsible Officials: There is no disagreement with this audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance ‐ Allowable Costs and Cost Principles Criteria: The Association’s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls that ensure expenditures are properly charged to program and allocated in accordance with the federal grant requirements. The objective of the Assistance Listing 93.600 Head Start program (including Early Head Start and Early Head Start Partnerships) is to promote school readiness of low‐income children (including American Indians, Alaska Natives and migrant and seasonal farm workers) by enhancing children’s cognitive, social and emotional development. During the fiscal year ending December 31, 2021, the Association expended $4,720,185 in federal funding. Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the Association to have adequate time‐and‐effort documentation to support all payroll costs charged to the Head Start awards. 2 CFR 200.430, Compensation – personal services, states, in part: “(i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (ii) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated…” Depending on the number and types of activities employees perform, time and effort documentation can be in the form of semi‐annual certification or monthly personnel activity reports, such as a timesheet. Condition: The Association’s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. During review of payroll costs for the year ended December 31, 2021, the following was noted: • Payroll costs were charged according to budgeted time rather than reconciling to actual hours worked. • Two payroll disbursements were not allocated in compliance with the Associations approved cost allocation plan. This internal control deficiency is considered to be a significant deficiency. Questioned Costs: None. Context: Procedures included examining payroll charges for 40 randomly selected employees for January through December 2021. Cause: The Association changed the software used for payroll processing from QuickBooks to MIP in July 2020. They then changed their fiscal accounting software from QuickBooks to MIP in January 2021. The new software implementation was fraught with many challenges, one of which being implementing electronic processes that met the time and effort requirements outlined in the Association’s policy manual. Effect: By not keeping proper time‐and‐effort records, the Association cannot demonstrate compliance with grantor’s requirements that require support for payroll costs charged to the federal program. The Association provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: The Association follow its own documented controls to ensure it prepares adequate time‐ and‐effort documentation to support payroll costs charged to the federal grant. View of Responsible Officials: There is no disagreement with this audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance ‐ Allowable Costs and Cost Principles Criteria: The Association’s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls that ensure expenditures are properly charged to program and allocated in accordance with the federal grant requirements. The objective of the Assistance Listing 93.600 Head Start program (including Early Head Start and Early Head Start Partnerships) is to promote school readiness of low‐income children (including American Indians, Alaska Natives and migrant and seasonal farm workers) by enhancing children’s cognitive, social and emotional development. During the fiscal year ending December 31, 2021, the Association expended $4,720,185 in federal funding. Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the Association to have adequate time‐and‐effort documentation to support all payroll costs charged to the Head Start awards. 2 CFR 200.430, Compensation – personal services, states, in part: “(i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (ii) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated…” Depending on the number and types of activities employees perform, time and effort documentation can be in the form of semi‐annual certification or monthly personnel activity reports, such as a timesheet. Condition: The Association’s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. During review of payroll costs for the year ended December 31, 2021, the following was noted: • Payroll costs were charged according to budgeted time rather than reconciling to actual hours worked. • Two payroll disbursements were not allocated in compliance with the Associations approved cost allocation plan. This internal control deficiency is considered to be a significant deficiency. Questioned Costs: None. Context: Procedures included examining payroll charges for 40 randomly selected employees for January through December 2021. Cause: The Association changed the software used for payroll processing from QuickBooks to MIP in July 2020. They then changed their fiscal accounting software from QuickBooks to MIP in January 2021. The new software implementation was fraught with many challenges, one of which being implementing electronic processes that met the time and effort requirements outlined in the Association’s policy manual. Effect: By not keeping proper time‐and‐effort records, the Association cannot demonstrate compliance with grantor’s requirements that require support for payroll costs charged to the federal program. The Association provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: The Association follow its own documented controls to ensure it prepares adequate time‐ and‐effort documentation to support payroll costs charged to the federal grant. View of Responsible Officials: There is no disagreement with this audit finding.
Questioned Cost: None Criteria: The cost principles in 2 CFR Part 200, subpart E (Cost Principles) prescribe requirements for allowable costs relative to compensation and substantiation requirements specifically, 2 CFR Part 200.430(i) states “Cost must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.” Condition: Employee change of status forms are not consistently maintained in accordance with applicable requirements. Context: 13 Employee files were selected for verification disclosed 10 instances where forms were not available for review. Cause: Employee change of status forms or offer letters were not maintained on file or available for review. Effect: Inability to review employee change of status forms or offer letters limits the ability to verify costs allowability as required. As a result of the missing forms, it is not possible to fully ascertain compliance with allowable costs as required by 2 CFR 200.430. Recommendation: Offer letters or employee change of status forms should be maintained on file. Views of Responsible Official: Personnel files were not maintained while CRA was without a Director and human resources professional for 2020 and 2021. We have since hired a Human Resources Director, Beth Anne Falco, who is in the process of bringing all employee files current. As part of the updated files, CRA intends to issue new employee forms in the beginning of FY25, which will include updated job descriptions, salary information, payroll, and benefits.
2021‐006 – Deficiencies in Activities Allowed, Allowable Costs, and Period of Performance Controls over Compliance with Payroll – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ During our review of payroll related transactions, the following were noted For 5 of the 40 payroll transactions tested, the employee did not have an approved timesheet or time and effort available for the pay period. For 3 of the 40 payroll transactions tested, no timesheet or other record of hours worked was available to support hours paid for the pay period. For 1 of the 40 payroll transactions tested, employee was not paid for all hours worked on timesheet. Criteria – 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal 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. Questioned Costs –$1,010 Effect ‐ The Entity may unintentionally expense employee’s salary out of the federal grant that does not qualify or 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 Entity does not have proper controls in place to verify that documentation was maintained to indicate the employees’ time paid under the federal grant. Controls were put in place during the year but were not consistently followed.
2021‐006 – Deficiencies in Activities Allowed, Allowable Costs, and Period of Performance Controls over Compliance with Payroll – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ During our review of payroll related transactions, the following were noted For 5 of the 40 payroll transactions tested, the employee did not have an approved timesheet or time and effort available for the pay period. For 3 of the 40 payroll transactions tested, no timesheet or other record of hours worked was available to support hours paid for the pay period. For 1 of the 40 payroll transactions tested, employee was not paid for all hours worked on timesheet. Criteria – 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal 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. Questioned Costs –$1,010 Effect ‐ The Entity may unintentionally expense employee’s salary out of the federal grant that does not qualify or 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 Entity does not have proper controls in place to verify that documentation was maintained to indicate the employees’ time paid under the federal grant. Controls were put in place during the year but were not consistently followed.
2021‐006 – Deficiencies in Activities Allowed, Allowable Costs, and Period of Performance Controls over Compliance with Payroll – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ During our review of payroll related transactions, the following were noted For 5 of the 40 payroll transactions tested, the employee did not have an approved timesheet or time and effort available for the pay period. For 3 of the 40 payroll transactions tested, no timesheet or other record of hours worked was available to support hours paid for the pay period. For 1 of the 40 payroll transactions tested, employee was not paid for all hours worked on timesheet. Criteria – 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal 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. Questioned Costs –$1,010 Effect ‐ The Entity may unintentionally expense employee’s salary out of the federal grant that does not qualify or 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 Entity does not have proper controls in place to verify that documentation was maintained to indicate the employees’ time paid under the federal grant. Controls were put in place during the year but were not consistently followed.
#2021-002 – Material Weakness – Allowable Costs/Cost Principles 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 states, “Charges to Federal Awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.” Condition During the course of the audit, we noted that the Organization used an allocation methodology to allocate salaries to the federal award based upon time spent on the program. However, for eleven of the employees, there were no timesheets to support the amount of time allocated to the Organization’s grant programs. Cause The cause is a lack of proper internal controls which would require the Organization to maintain adequate support for time spent on grant programs and a formal allocation process to allocate payroll costs across the grant programs. Effect The potential effects of not having supporting documentation for the allocation of payroll expenses is potential overbilling of expenses to the grant program. Questioned Costs $33,316 Perspective Information We reviewed a sample of monthly reports filed with the Pennsylvania Department of Military and Veterans Affairs and the Drug and Alcohol Program. We examined the payroll for each employee charged to the grant for a total of twenty-six employees. The finding is related to eleven individuals who did not complete timesheets or provide supporting documentation for the amount of time spent on the Organization’s grant programs. Identification as a repeat finding A similar issue was noted in prior year finding #2020-002. Recommendation We recommend that the Organization require timesheets for the hours allocated to the grant programs for all employees whether they are salary or hourly to ensure that the payroll charged to grants is accurate and properly supported. View of responsible officials and planned corrective action Starting in 2023 all employees of the Organization will complete formal time sheets. These sheets will be signed by the Administrative Coordinator and by the Fiscal Coordinator and then entered into the system each pay period to rectify this finding.
#2021-003 – Material Weakness – Activities Allowed or Unallowed 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. In accordance with CFR 200.430, payroll costs charged to the program are allowable when: the total compensation paid to individual employees is reasonable according to the work performed on the program and the compensation is in accordance with the established policies of the organization. Condition During the audit we noted the Organization does not have established policies and procedures over payroll. We noted that while the Organization has established hourly and salary pay rates, these rates are not formally established and approved by the Organization’s Board. Cause The cause is a lack of a proper control structure that requires Board approval of pay rates and salaries. The Organization also does not have a process in place to ensure that payroll reports are properly reviewed and approved by a second independent reviewer prior to submission to the payroll company for processing. Effect The potential effects of not having formally approved pay rates and not having payroll reports reviewed by a second level prior to payroll processing is the potential for errors and overcharging of grants. Questioned Costs None Perspective Information We reviewed a sample of reports filed with the Pennsylvania Department of Military and Veterans Affairs and the Drug and Alcohol Program. We examined the payroll for each employee charged to the grant for a total of twenty-six employees. The finding represents the unsupported costs noted from this review. Identification as a repeat finding A similar issue was noted in prior year finding #2020-003. Recommendation We recommend that the Organization begin to formally establish and approve employee pay rates and salaries at Official Board Meetings and that these rates are documented in the Board Minutes. The Organization should also implement procedures to include a second level review of the payroll report for accuracy and completeness prior to submission for payment. View of responsible officials and planned corrective action JFT does have all the board minutes on file. However, because we were a small agency, salary rates were not often changed. Additionally, all salary rates and changes were always driven by the ability to obtain the funding needed. Since we were small and there was not always a lot to discuss with the board our board only met twice a year. Therefore, all salary was discussed with the board president, then taken to the board unfortunately there is no formal documentation at this time. As of 2023 our board now meets quarterly. Therefore, the following policy will be included in the fiscal manual: the JFT board of directors will hold a public meeting quarterly. All matters of pay rates and salaries will be approved at the start of each grant cycle. State and county grants will be discussed prior to the July 1 start dates, all federal will be discussed prior to October 1. Any changes in salary must be approved by the board and documented in official board minutes. All board minutes will be placed in a lock file in the Fiscal Coordinator’s office.
#2021-007 – Significant Deficiency – Special Tests Criteria Uniform Guidance (UG) requires non-Federal entities that receive grant funding to have written policies in the following areas: Internal Controls (2CFR 200.303) Travel (2CFR 200.474) Financial Management and Accounting which includes Cash Management and Allowability (2CFR 200.302) Personnel Compensation – Time and Effort Reporting (2CFR 200.430(i)) Conflict of Interest/Disclosures (2CFR 200.318) Procurement (2CFR 200.319) Condition During the audit we noted that the Organization does not have written policies in place over these areas in accordance with Uniform Guidance. Cause The Organization was not aware of the requirement to have these written policies in place. Effect The potential effect of not having these policies in place is that Organization’s expenses are not in accordance with UGG. Questioned Costs None Perspective Information No policies or procedures were noted that are in accordance with Uniform Guidance. As a response to the prior year finding, the Organization noted that they will add policies to the fiscal manual for future compliance. Identification as a repeat finding A similar issue was noted in prior year finding #2020-007. Recommendation We recommend that the Organization update the fiscal manual to include policies that are compliant with Uniform Guidance. View of responsible officials and planned corrective action Policies will be placed and adopted by the agency that meet the UG code. These policies will be placed in the fiscal manual. The fiscal manual will be created by using federal guidelines and by using the DDAP fiscal manual as guidance.
#2021-002 – Material Weakness – Allowable Costs/Cost Principles 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 states, “Charges to Federal Awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.” Condition During the course of the audit, we noted that the Organization used an allocation methodology to allocate salaries to the federal award based upon time spent on the program. However, for eleven of the employees, there were no timesheets to support the amount of time allocated to the Organization’s grant programs. Cause The cause is a lack of proper internal controls which would require the Organization to maintain adequate support for time spent on grant programs and a formal allocation process to allocate payroll costs across the grant programs. Effect The potential effects of not having supporting documentation for the allocation of payroll expenses is potential overbilling of expenses to the grant program. Questioned Costs $33,316 Perspective Information We reviewed a sample of monthly reports filed with the Pennsylvania Department of Military and Veterans Affairs and the Drug and Alcohol Program. We examined the payroll for each employee charged to the grant for a total of twenty-six employees. The finding is related to eleven individuals who did not complete timesheets or provide supporting documentation for the amount of time spent on the Organization’s grant programs. Identification as a repeat finding A similar issue was noted in prior year finding #2020-002. Recommendation We recommend that the Organization require timesheets for the hours allocated to the grant programs for all employees whether they are salary or hourly to ensure that the payroll charged to grants is accurate and properly supported. View of responsible officials and planned corrective action Starting in 2023 all employees of the Organization will complete formal time sheets. These sheets will be signed by the Administrative Coordinator and by the Fiscal Coordinator and then entered into the system each pay period to rectify this finding.
#2021-003 – Material Weakness – Activities Allowed or Unallowed 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. In accordance with CFR 200.430, payroll costs charged to the program are allowable when: the total compensation paid to individual employees is reasonable according to the work performed on the program and the compensation is in accordance with the established policies of the organization. Condition During the audit we noted the Organization does not have established policies and procedures over payroll. We noted that while the Organization has established hourly and salary pay rates, these rates are not formally established and approved by the Organization’s Board. Cause The cause is a lack of a proper control structure that requires Board approval of pay rates and salaries. The Organization also does not have a process in place to ensure that payroll reports are properly reviewed and approved by a second independent reviewer prior to submission to the payroll company for processing. Effect The potential effects of not having formally approved pay rates and not having payroll reports reviewed by a second level prior to payroll processing is the potential for errors and overcharging of grants. Questioned Costs None Perspective Information We reviewed a sample of reports filed with the Pennsylvania Department of Military and Veterans Affairs and the Drug and Alcohol Program. We examined the payroll for each employee charged to the grant for a total of twenty-six employees. The finding represents the unsupported costs noted from this review. Identification as a repeat finding A similar issue was noted in prior year finding #2020-003. Recommendation We recommend that the Organization begin to formally establish and approve employee pay rates and salaries at Official Board Meetings and that these rates are documented in the Board Minutes. The Organization should also implement procedures to include a second level review of the payroll report for accuracy and completeness prior to submission for payment. View of responsible officials and planned corrective action JFT does have all the board minutes on file. However, because we were a small agency, salary rates were not often changed. Additionally, all salary rates and changes were always driven by the ability to obtain the funding needed. Since we were small and there was not always a lot to discuss with the board our board only met twice a year. Therefore, all salary was discussed with the board president, then taken to the board unfortunately there is no formal documentation at this time. As of 2023 our board now meets quarterly. Therefore, the following policy will be included in the fiscal manual: the JFT board of directors will hold a public meeting quarterly. All matters of pay rates and salaries will be approved at the start of each grant cycle. State and county grants will be discussed prior to the July 1 start dates, all federal will be discussed prior to October 1. Any changes in salary must be approved by the board and documented in official board minutes. All board minutes will be placed in a lock file in the Fiscal Coordinator’s office.
#2021-007 – Significant Deficiency – Special Tests Criteria Uniform Guidance (UG) requires non-Federal entities that receive grant funding to have written policies in the following areas: Internal Controls (2CFR 200.303) Travel (2CFR 200.474) Financial Management and Accounting which includes Cash Management and Allowability (2CFR 200.302) Personnel Compensation – Time and Effort Reporting (2CFR 200.430(i)) Conflict of Interest/Disclosures (2CFR 200.318) Procurement (2CFR 200.319) Condition During the audit we noted that the Organization does not have written policies in place over these areas in accordance with Uniform Guidance. Cause The Organization was not aware of the requirement to have these written policies in place. Effect The potential effect of not having these policies in place is that Organization’s expenses are not in accordance with UGG. Questioned Costs None Perspective Information No policies or procedures were noted that are in accordance with Uniform Guidance. As a response to the prior year finding, the Organization noted that they will add policies to the fiscal manual for future compliance. Identification as a repeat finding A similar issue was noted in prior year finding #2020-007. Recommendation We recommend that the Organization update the fiscal manual to include policies that are compliant with Uniform Guidance. View of responsible officials and planned corrective action Policies will be placed and adopted by the agency that meet the UG code. These policies will be placed in the fiscal manual. The fiscal manual will be created by using federal guidelines and by using the DDAP fiscal manual as guidance.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance ‐ Allowable Costs and Cost Principles Criteria: The Association’s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls that ensure expenditures are properly charged to program and allocated in accordance with the federal grant requirements. The objective of the Assistance Listing 93.600 Head Start program (including Early Head Start and Early Head Start Partnerships) is to promote school readiness of low‐income children (including American Indians, Alaska Natives and migrant and seasonal farm workers) by enhancing children’s cognitive, social and emotional development. During the fiscal year ending December 31, 2021, the Association expended $4,720,185 in federal funding. Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the Association to have adequate time‐and‐effort documentation to support all payroll costs charged to the Head Start awards. 2 CFR 200.430, Compensation – personal services, states, in part: “(i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (ii) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated…” Depending on the number and types of activities employees perform, time and effort documentation can be in the form of semi‐annual certification or monthly personnel activity reports, such as a timesheet. Condition: The Association’s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. During review of payroll costs for the year ended December 31, 2021, the following was noted: • Payroll costs were charged according to budgeted time rather than reconciling to actual hours worked. • Two payroll disbursements were not allocated in compliance with the Associations approved cost allocation plan. This internal control deficiency is considered to be a significant deficiency. Questioned Costs: None. Context: Procedures included examining payroll charges for 40 randomly selected employees for January through December 2021. Cause: The Association changed the software used for payroll processing from QuickBooks to MIP in July 2020. They then changed their fiscal accounting software from QuickBooks to MIP in January 2021. The new software implementation was fraught with many challenges, one of which being implementing electronic processes that met the time and effort requirements outlined in the Association’s policy manual. Effect: By not keeping proper time‐and‐effort records, the Association cannot demonstrate compliance with grantor’s requirements that require support for payroll costs charged to the federal program. The Association provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: The Association follow its own documented controls to ensure it prepares adequate time‐ and‐effort documentation to support payroll costs charged to the federal grant. View of Responsible Officials: There is no disagreement with this audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance ‐ Allowable Costs and Cost Principles Criteria: The Association’s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls that ensure expenditures are properly charged to program and allocated in accordance with the federal grant requirements. The objective of the Assistance Listing 93.600 Head Start program (including Early Head Start and Early Head Start Partnerships) is to promote school readiness of low‐income children (including American Indians, Alaska Natives and migrant and seasonal farm workers) by enhancing children’s cognitive, social and emotional development. During the fiscal year ending December 31, 2021, the Association expended $4,720,185 in federal funding. Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the Association to have adequate time‐and‐effort documentation to support all payroll costs charged to the Head Start awards. 2 CFR 200.430, Compensation – personal services, states, in part: “(i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (ii) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated…” Depending on the number and types of activities employees perform, time and effort documentation can be in the form of semi‐annual certification or monthly personnel activity reports, such as a timesheet. Condition: The Association’s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. During review of payroll costs for the year ended December 31, 2021, the following was noted: • Payroll costs were charged according to budgeted time rather than reconciling to actual hours worked. • Two payroll disbursements were not allocated in compliance with the Associations approved cost allocation plan. This internal control deficiency is considered to be a significant deficiency. Questioned Costs: None. Context: Procedures included examining payroll charges for 40 randomly selected employees for January through December 2021. Cause: The Association changed the software used for payroll processing from QuickBooks to MIP in July 2020. They then changed their fiscal accounting software from QuickBooks to MIP in January 2021. The new software implementation was fraught with many challenges, one of which being implementing electronic processes that met the time and effort requirements outlined in the Association’s policy manual. Effect: By not keeping proper time‐and‐effort records, the Association cannot demonstrate compliance with grantor’s requirements that require support for payroll costs charged to the federal program. The Association provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: The Association follow its own documented controls to ensure it prepares adequate time‐ and‐effort documentation to support payroll costs charged to the federal grant. View of Responsible Officials: There is no disagreement with this audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance ‐ Allowable Costs and Cost Principles Criteria: The Association’s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls that ensure expenditures are properly charged to program and allocated in accordance with the federal grant requirements. The objective of the Assistance Listing 93.600 Head Start program (including Early Head Start and Early Head Start Partnerships) is to promote school readiness of low‐income children (including American Indians, Alaska Natives and migrant and seasonal farm workers) by enhancing children’s cognitive, social and emotional development. During the fiscal year ending December 31, 2021, the Association expended $4,720,185 in federal funding. Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the Association to have adequate time‐and‐effort documentation to support all payroll costs charged to the Head Start awards. 2 CFR 200.430, Compensation – personal services, states, in part: “(i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (ii) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated…” Depending on the number and types of activities employees perform, time and effort documentation can be in the form of semi‐annual certification or monthly personnel activity reports, such as a timesheet. Condition: The Association’s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. During review of payroll costs for the year ended December 31, 2021, the following was noted: • Payroll costs were charged according to budgeted time rather than reconciling to actual hours worked. • Two payroll disbursements were not allocated in compliance with the Associations approved cost allocation plan. This internal control deficiency is considered to be a significant deficiency. Questioned Costs: None. Context: Procedures included examining payroll charges for 40 randomly selected employees for January through December 2021. Cause: The Association changed the software used for payroll processing from QuickBooks to MIP in July 2020. They then changed their fiscal accounting software from QuickBooks to MIP in January 2021. The new software implementation was fraught with many challenges, one of which being implementing electronic processes that met the time and effort requirements outlined in the Association’s policy manual. Effect: By not keeping proper time‐and‐effort records, the Association cannot demonstrate compliance with grantor’s requirements that require support for payroll costs charged to the federal program. The Association provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: The Association follow its own documented controls to ensure it prepares adequate time‐ and‐effort documentation to support payroll costs charged to the federal grant. View of Responsible Officials: There is no disagreement with this audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance ‐ Allowable Costs and Cost Principles Criteria: The Association’s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls that ensure expenditures are properly charged to program and allocated in accordance with the federal grant requirements. The objective of the Assistance Listing 93.600 Head Start program (including Early Head Start and Early Head Start Partnerships) is to promote school readiness of low‐income children (including American Indians, Alaska Natives and migrant and seasonal farm workers) by enhancing children’s cognitive, social and emotional development. During the fiscal year ending December 31, 2021, the Association expended $4,720,185 in federal funding. Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the Association to have adequate time‐and‐effort documentation to support all payroll costs charged to the Head Start awards. 2 CFR 200.430, Compensation – personal services, states, in part: “(i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (ii) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated…” Depending on the number and types of activities employees perform, time and effort documentation can be in the form of semi‐annual certification or monthly personnel activity reports, such as a timesheet. Condition: The Association’s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. During review of payroll costs for the year ended December 31, 2021, the following was noted: • Payroll costs were charged according to budgeted time rather than reconciling to actual hours worked. • Two payroll disbursements were not allocated in compliance with the Associations approved cost allocation plan. This internal control deficiency is considered to be a significant deficiency. Questioned Costs: None. Context: Procedures included examining payroll charges for 40 randomly selected employees for January through December 2021. Cause: The Association changed the software used for payroll processing from QuickBooks to MIP in July 2020. They then changed their fiscal accounting software from QuickBooks to MIP in January 2021. The new software implementation was fraught with many challenges, one of which being implementing electronic processes that met the time and effort requirements outlined in the Association’s policy manual. Effect: By not keeping proper time‐and‐effort records, the Association cannot demonstrate compliance with grantor’s requirements that require support for payroll costs charged to the federal program. The Association provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: The Association follow its own documented controls to ensure it prepares adequate time‐ and‐effort documentation to support payroll costs charged to the federal grant. View of Responsible Officials: There is no disagreement with this audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance ‐ Allowable Costs and Cost Principles Criteria: The Association’s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls that ensure expenditures are properly charged to program and allocated in accordance with the federal grant requirements. The objective of the Assistance Listing 93.600 Head Start program (including Early Head Start and Early Head Start Partnerships) is to promote school readiness of low‐income children (including American Indians, Alaska Natives and migrant and seasonal farm workers) by enhancing children’s cognitive, social and emotional development. During the fiscal year ending December 31, 2021, the Association expended $4,720,185 in federal funding. Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the Association to have adequate time‐and‐effort documentation to support all payroll costs charged to the Head Start awards. 2 CFR 200.430, Compensation – personal services, states, in part: “(i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (ii) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated…” Depending on the number and types of activities employees perform, time and effort documentation can be in the form of semi‐annual certification or monthly personnel activity reports, such as a timesheet. Condition: The Association’s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. During review of payroll costs for the year ended December 31, 2021, the following was noted: • Payroll costs were charged according to budgeted time rather than reconciling to actual hours worked. • Two payroll disbursements were not allocated in compliance with the Associations approved cost allocation plan. This internal control deficiency is considered to be a significant deficiency. Questioned Costs: None. Context: Procedures included examining payroll charges for 40 randomly selected employees for January through December 2021. Cause: The Association changed the software used for payroll processing from QuickBooks to MIP in July 2020. They then changed their fiscal accounting software from QuickBooks to MIP in January 2021. The new software implementation was fraught with many challenges, one of which being implementing electronic processes that met the time and effort requirements outlined in the Association’s policy manual. Effect: By not keeping proper time‐and‐effort records, the Association cannot demonstrate compliance with grantor’s requirements that require support for payroll costs charged to the federal program. The Association provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: The Association follow its own documented controls to ensure it prepares adequate time‐ and‐effort documentation to support payroll costs charged to the federal grant. View of Responsible Officials: There is no disagreement with this audit finding.
Questioned Cost: None Criteria: The cost principles in 2 CFR Part 200, subpart E (Cost Principles) prescribe requirements for allowable costs relative to compensation and substantiation requirements specifically, 2 CFR Part 200.430(i) states “Cost must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.” Condition: Employee change of status forms are not consistently maintained in accordance with applicable requirements. Context: 13 Employee files were selected for verification disclosed 10 instances where forms were not available for review. Cause: Employee change of status forms or offer letters were not maintained on file or available for review. Effect: Inability to review employee change of status forms or offer letters limits the ability to verify costs allowability as required. As a result of the missing forms, it is not possible to fully ascertain compliance with allowable costs as required by 2 CFR 200.430. Recommendation: Offer letters or employee change of status forms should be maintained on file. Views of Responsible Official: Personnel files were not maintained while CRA was without a Director and human resources professional for 2020 and 2021. We have since hired a Human Resources Director, Beth Anne Falco, who is in the process of bringing all employee files current. As part of the updated files, CRA intends to issue new employee forms in the beginning of FY25, which will include updated job descriptions, salary information, payroll, and benefits.
2021‐001 – Internal Controls over Activities Allowed and Allowable Costs – Significant Deficiency in Internal Controls over Compliance Federal Program Information: Funding Agency: U.S. Department of Health and Human Services Title: Provider Relief Fund CFDA Number: 93.498 Federal Award Identification number Award Year: 2020‐21 Condition: There were 2 samples that the Entity could not provide supporting documentation and 21 samples that the employee was not paid the approved pay rate. Criteria: Per 2 CFR section 200.303(a) the 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 200.403(g) – in order to be allowable under Federal awards, costs must be adequately documented and Per 2 CFR section 200.430(i) – Compensation – personal services – Standards for Documentation of Personnel Expenses, 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. Questioned costs: Employee paid a rate other than the approved pay rate. Total dollar amount of $874 was divided by the total payroll population tested to get a 7% error and then multiplied by the total payroll expenditures of the program to get a questioned costs of $6,848. Effect: The Entity paid employees time at a rate not approved. In addition the Entity did not retain supporting documentation. Cause: The Entity did not retain supporting documentation for expenditures paid with federal funding and did not have approved pay rate documentation to support the pay rate employee was paid. Auditors’ Recommendation: The Auditor recommends that the Entity implement controls for documenting and retaining information on expenditures charged to federal awards to follow the requirements over 2 CFR Section 200.430(g)(i) and in addition the Entity is properly paying employees at the approved pay rate. Views of Responsible Officials and Planned Corrective Action: See Corrective Action Plan.
2021‐001 – Internal Controls over Activities Allowed and Allowable Costs – Significant Deficiency in Internal Controls over Compliance Federal Program Information: Funding Agency: U.S. Department of Health and Human Services Title: Provider Relief Fund CFDA Number: 93.498 Federal Award Identification number Award Year: 2020‐21 Condition: There were 2 samples that the Entity could not provide supporting documentation and 21 samples that the employee was not paid the approved pay rate. Criteria: Per 2 CFR section 200.303(a) the 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 200.403(g) – in order to be allowable under Federal awards, costs must be adequately documented and Per 2 CFR section 200.430(i) – Compensation – personal services – Standards for Documentation of Personnel Expenses, 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. Questioned costs: Employee paid a rate other than the approved pay rate. Total dollar amount of $874 was divided by the total payroll population tested to get a 7% error and then multiplied by the total payroll expenditures of the program to get a questioned costs of $6,848. Effect: The Entity paid employees time at a rate not approved. In addition the Entity did not retain supporting documentation. Cause: The Entity did not retain supporting documentation for expenditures paid with federal funding and did not have approved pay rate documentation to support the pay rate employee was paid. Auditors’ Recommendation: The Auditor recommends that the Entity implement controls for documenting and retaining information on expenditures charged to federal awards to follow the requirements over 2 CFR Section 200.430(g)(i) and in addition the Entity is properly paying employees at the approved pay rate. Views of Responsible Officials and Planned Corrective Action: See Corrective Action Plan.
Criteria: The requirements for allowable costs related to wages and salaries are contained in 2 CFR Section 200.430. This states that salaries and wages charged to federal awards must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: During the year under audit, PAX did not have a time and effort reporting system that met the requirements of the federal cost principles. Citation: 2 CFR 200.430 Cause: PAX did not have an effective internal control system in place for monitoring and documenting wages and salaries charged to the federal awards. Effect: PAX did not maintain adequate documentation to support salaries charged to the federal awards throughout the year. However, they provided attestations and other support to demonstrate that the salaries and wages were accurate, allowable, and properly allocated after year-end as part of the audit process. Questioned Costs: PAX charged $1,135,897 of wages and salaries to the major program. Context: This sample was not intended to be, and was not, a statistically valid sample. Repeat Finding: Yes Recommendation: We recommend that management establish internal control process, such as a time sheet reporting system, to capture which grant each employee spends time on. View of Responsible Officials: See Corrective Action Plan attached.
Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to 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 activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.
Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to 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 activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.
Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to 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 activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.
Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to 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 activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.
Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to 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 activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.
Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to 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 activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.