Finding 2025-003, Significant deficiency Identification of federal program: US DEPARTMENT OF AGRICULTURE passed through the Indiana Department of Education Child Nutrition Cluster 10.553 & 10.555, Criteria: According to 2CFR 200.431(c) The recipient or subrecipient must allocate fringe benefits to Federal awards and all other activities in a manner consistent with the pattern of benefits attributable to the individuals or group(s) of employees whose salaries and wages are chargeable to such Federal awards and other activities, and charged as direct or indirect costs following the recipient's or subrecipient's accounting practices. Condition: The School over-allocated health insurance benefits to the Child Nutrition Cluster Cause: The School was using an outdated allocation formula that did not reflect changes to personnel in the program. Effect: The School over-allocated health insurance benefits to the Child Nutrition Cluster. Questioned costs: $9,215 Context: Of the six employees in the program tested, one employee had health insurance benefits. The outdated allocation formula was used for all twelve months of the school year. Recommendation: We recommend that the School review fringe benefit allocations at the start of each school year, and then at least quarterly throughout the year to monitor for personnel changes that may impact allocations so that allocations may be adjusted timely. Views of Responsible Officials: See attached Corrective Action Plan.
Finding 2025-003 (Material Weakness) Program(s): Special Education Cluster (IDEA) Federal Agency: United States Department of Education AL #: Cluster 84.027 / 84.173 Federal Award Identification Number and Year: Various – See SEFA Pass-through Entities: Missouri Department of Elementary and Secondary Education Type of Compliance Finding: A) Activities Allowed or Unallowed and B) Allowable Costs/Cost Principles Criteria: Per relevant statutory and regulatory provisions, costs must be allowable as specified in the regulations indicated for each program. Criteria must be met to determine if costs, such as separation leave costs (2 CFR section 200.431(b)), severance costs (2 CFR section 200.431(i), and post-retirement health benefits (PRHB) costs (2 CFR section 200.431(h)) are allowable. Condition: The District must demonstrate that costs incurred are allowable and internal controls are in place to record hours worked and required educational credentials for staffing levels. The Auditor noted hours per timesheet did not reconcile to hours per payroll system for services rendered for four samples and one sample did not hold the required educator credentials for their staffing level. Cause: The District did not follow internal control processes / procedures for payroll funded by federal assistance. Effect: Unallowable salary expenses were charged to the federal award. Questioned Costs: $7,821 Context: The total salaries and wages were $4,010,539 and the likely questioned costs are $422,283. Is the finding a repeat finding: No Recommendation: We recommend the District implement additional review procedures for the time and effort reporting process and continue to ensure personnel hold required educator credentials for their staffing level by periodically monitoring this information. Views of Responsible Officials/ Planned Corrective Actions: Management agrees with the finding. See Corrective Action Plan on Organization’s letterhead.
2025-002 - Lack of Written Federal Program Policies. Type: Material Weakness. Condition: The Village does not have documented policies and procedures specific to the administration of the Coronavirus State and Local Fiscal Recovery Funds program. This includes the absence of written guidance on key compliance areas such as payments, procurement, allowability of costs charged to federal programs, compensation, and travel costs under Uniform Guidance. Criteria: Per 2 CFR 200.303 and 200.331 of the Uniform Guidance, non-federal entities are required to establish and maintain effective internal controls and written policies to ensure compliance with federal statutes, regulations, and the terms and conditions of federal awards. These policies should be tailored to the specific requirements of each federal program. Cause: The entity has not developed formal written policies and procedures for the Coronavirus State and Local Fiscal Recovery Funds program, possibly due to reliance on informal practices or general administrative policies that do not address federal-specific requirements. Effect: Without documented policies, there is an increased risk of noncompliance with federal requirements, inconsistent program administration, and lack of accountability. This may result in questioned costs, audit findings, or potential repayment of federal funds. Recommendation: We recommend that the Village develop and implement written policies and procedures specific to the Coronavirus State and Local Fiscal Recovery Funds program. These should include: - Payments in accordance with §200.302 (6), - Procurement in accordance with §200.318, - Allowability of costs charged to federal programs in accordance with §200.302 (7), - Compensation in accordance with §200.430 and §200.431, - Travel costs in accordance with §200.474. Training should also be provided to staff responsible for administering the program to ensure consistent application of these policies. Views of Responsible Officials: Management acknowledges the auditor’s finding regarding the absence of formally documented federal program policies. We recognize the importance of maintaining written procedures to ensure consistent compliance with Uniform Guidance requirements and to strengthen internal controls over federal awards. While informal practices have historically guided our federal program administration, we agree that formalizing these policies will enhance transparency, accountability, and operational efficiency. Management is currently in the process of developing written policies covering key areas such as procurement, allowable costs, subrecipient monitoring, and cash management. We anticipate completing this documentation and implementing the policies by February 28, 2026. We are committed to continuous improvement and appreciate the auditor’s recommendations as part of our efforts to maintain strong compliance and stewardship of federal funds.
2 CFR § 300 codified in 45 CFR part 75 and gives regulatory effect to the Department of Health and Human Services 2 CFR § 200; while 2 CFR § 400 gives regulatory effect to the Department of Agriculture for 2 CFR § 200. 2 CFR § 200.302(b)(6) states the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR § 200.305 for Payment. 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.430 states that 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, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR 200.431 requires established written leave policies if the entity intends to pay fringe benefits. 2 CFR 200.464(a)(2) requires reimbursement of relocation costs to employees be in accordance with an established written policy must be consistently followed by the employer. 2 CFR 200.475 requires reimbursement and/or charges to be consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. Additionally, for Federal awards, the Uniform Guidance requires a written policy for the procurement requirements outlined in 2 CFR § 200.318(c)(1), 2 CFR § 200.318(c)(2), and 2 CFR § 200.320(B). The Board of Health did not have written policies as required by the Uniform Guidance as they were not aware of the requirements. The failure to implement written policies as required by the Uniform Guidance could result in noncompliance with the District’s federal programs. The Board of Health should adopt written policies in accordance with the Uniform Guidance to help improve internal controls over federal compliance.
2 CFR § 300 codified in 45 CFR part 75 and gives regulatory effect to the Department of Health and Human Services 2 CFR § 200; while 2 CFR § 400 gives regulatory effect to the Department of Agriculture for 2 CFR § 200. 2 CFR § 200.302(b)(6) states the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR § 200.305 for Payment. 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.430 states that 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, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR 200.431 requires established written leave policies if the entity intends to pay fringe benefits. 2 CFR 200.464(a)(2) requires reimbursement of relocation costs to employees be in accordance with an established written policy must be consistently followed by the employer. 2 CFR 200.475 requires reimbursement and/or charges to be consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. Additionally, for Federal awards, the Uniform Guidance requires a written policy for the procurement requirements outlined in 2 CFR § 200.318(c)(1), 2 CFR § 200.318(c)(2), and 2 CFR § 200.320(B). The Board of Health did not have written policies as required by the Uniform Guidance as they were not aware of the requirements. The failure to implement written policies as required by the Uniform Guidance could result in noncompliance with the District’s federal programs. The Board of Health should adopt written policies in accordance with the Uniform Guidance to help improve internal controls over federal compliance.
2 CFR § 300 codified in 45 CFR part 75 and gives regulatory effect to the Department of Health and Human Services 2 CFR § 200; while 2 CFR § 400 gives regulatory effect to the Department of Agriculture for 2 CFR § 200. 2 CFR § 200.302(b)(6) states the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR § 200.305 for Payment. 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.430 states that 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, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR 200.431 requires established written leave policies if the entity intends to pay fringe benefits. 2 CFR 200.464(a)(2) requires reimbursement of relocation costs to employees be in accordance with an established written policy must be consistently followed by the employer. 2 CFR 200.475 requires reimbursement and/or charges to be consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. Additionally, for Federal awards, the Uniform Guidance requires a written policy for the procurement requirements outlined in 2 CFR § 200.318(c)(1), 2 CFR § 200.318(c)(2), and 2 CFR § 200.320(B). The Board of Health did not have written policies as required by the Uniform Guidance as they were not aware of the requirements. The failure to implement written policies as required by the Uniform Guidance could result in noncompliance with the District’s federal programs. The Board of Health should adopt written policies in accordance with the Uniform Guidance to help improve internal controls over federal compliance.
2 CFR § 300 codified in 45 CFR part 75 and gives regulatory effect to the Department of Health and Human Services 2 CFR § 200; while 2 CFR § 400 gives regulatory effect to the Department of Agriculture for 2 CFR § 200. 2 CFR § 200.302(b)(6) states the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR § 200.305 for Payment. 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.430 states that 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, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR 200.431 requires established written leave policies if the entity intends to pay fringe benefits. 2 CFR 200.464(a)(2) requires reimbursement of relocation costs to employees be in accordance with an established written policy must be consistently followed by the employer. 2 CFR 200.475 requires reimbursement and/or charges to be consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. Additionally, for Federal awards, the Uniform Guidance requires a written policy for the procurement requirements outlined in 2 CFR § 200.318(c)(1), 2 CFR § 200.318(c)(2), and 2 CFR § 200.320(B). The Board of Health did not have written policies as required by the Uniform Guidance as they were not aware of the requirements. The failure to implement written policies as required by the Uniform Guidance could result in noncompliance with the District’s federal programs. The Board of Health should adopt written policies in accordance with the Uniform Guidance to help improve internal controls over federal compliance.
2 CFR § 300 codified in 45 CFR part 75 and gives regulatory effect to the Department of Health and Human Services 2 CFR § 200; while 2 CFR § 400 gives regulatory effect to the Department of Agriculture for 2 CFR § 200. 2 CFR § 200.302(b)(6) states the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR § 200.305 for Payment. 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.430 states that 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, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR 200.431 requires established written leave policies if the entity intends to pay fringe benefits. 2 CFR 200.464(a)(2) requires reimbursement of relocation costs to employees be in accordance with an established written policy must be consistently followed by the employer. 2 CFR 200.475 requires reimbursement and/or charges to be consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. Additionally, for Federal awards, the Uniform Guidance requires a written policy for the procurement requirements outlined in 2 CFR § 200.318(c)(1), 2 CFR § 200.318(c)(2), and 2 CFR § 200.320(B). The Board of Health did not have written policies as required by the Uniform Guidance as they were not aware of the requirements. The failure to implement written policies as required by the Uniform Guidance could result in noncompliance with the District’s federal programs. The Board of Health should adopt written policies in accordance with the Uniform Guidance to help improve internal controls over federal compliance.
Criteria: In accordance with 2 CFR Section 200.431(d), fringe benefits may be assigned to cost objectives by identifying specific benefits to specific individuals or by allocating on the basis of entity-wide salaries and wages of the employees receiving the benefits. When the allocation method is used, separate allocations must be made to selective groupings of employees, unless the non-Federal entity demonstrates that costs in relationships to salaries and wages do not differ significantly for different groups of employees. Condition: During our testing of fringe benefits expenses, we noted that all 182 sampled transactions did not include detail by program. Charges to the Federal award for fringe benefits were based on an anticipated fringe benefit cost, for which the Corporation did not maintain an assignment of cost objectives calculation and its related requirements. Cause:The Corporation did not have formal process and policies to demonstrate adherence to the fringe benefits cost objectives of 2 CFR Section 200.431(d). Effect or Potential Effect: We were unable to determine whether charges to Federal awards for fringe benefits reflect specific time worked or amounts allocated to specific Federal programs, even though the charges are not in excess of amounts approved for the grant period. Questioned costs: None Context: We selected 182 fringe benefit transactions charged to the Federal programs to test controls over allowable costs. Each fringe benefit transaction was calculated by applying a fringe benefit cost rate to actual salaries and wages of each employee tested. The fringe benefit cost rate was based on anticipated fringe benefit cost rate which was neither supported by an actual calculation nor analysis of the related group of employees used in such calculation. This is a condition identified per review of the Corporation’s compliance with specified requirements using a statistically valid sample.. Repeat finding: This is a repeat finding from prior year. This was reported as finding 2023-006 in the 2023 report. Recommendation: We recommend the Corporation develop and incorporate internal controls and policies to demonstrate adherence to the fringe benefits cost objectives of 2 CFR Section 200.431(d). View of Responsible Officials: Due to the financial system and time keeping infrastructure, the Corporation did not maintain evidence of fringe benefit cost objectives calculations. Also, the current fringe cost rate and allocations is based on historical assumptions.
Criteria: Under 2 CFR 200.403, costs charged to federal awards must be necessary, reasonable, and allocable, and must conform to limitations or exclusions set forth in the Uniform Guidance. 2 CFR 200.431 further specifies that fringe benefits must be actually incurred and in accordance with established written policies. Condition: During testing of payroll and related benefits, we identified instances where the organization billed federal awards for employee benefits (e.g., health insurance and retirement contributions) that were not provided or paid on behalf of the employees. The amounts were charged based on estimated budget allocations rather than actual costs incurred, and no reconciliation was performed. Cause: The Organization lacked adequate internal controls to ensure only paid fringe benefit costs were charged to federal awards. There was no process in place to reconcile estimated benefits to paid benefits. Effect: Charging unexpended costs to federal awards resulted in questioned costs totaling $22,241. This practice may lead to misrepresentation of expenditures and noncompliance with federal cost principles. Questioned Costs: $22,241 Recommendation: We recommend the organization implement procedures to ensure benefits charged to federal awards reflect actual costs expended, perform regular reconciliations between estimated and actual benefit costs, and update written policies to align with Uniform Guidance requirements for allowable fringe benefit charges. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and in the summer of 2024, the Organization has contracted with a third party accounting company to provide services.
Program Name – Temporary Assistance for Needy Families (TANF); Services for Trafficking Victims ; Violence Against Women Formula Grants CFDA Number – 93.558 16.320, 16.588 Finding Type – Significant Deficiency and Noncompliance Criteria – Title 2 CFR 200.430(i)(1) states that 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. Title 2 CFR 200.431(b) states for Leave the cost of fringe benefits in the form of regular compensation paid to employees during periods of authorized absences from the job, such as for annual leave, family-related sick leave, sick leave, holidays, court leave, military leave, administrative leave, and other similar benefits, are allowable if the costs are equitably allocated to all related activities, including Federal awards. Condition and Description – During our procedures, we noted, the Agency did not properly allocate its employees’ leave hours for employees working on multiple activities. For 13 out of 20 samples selected for testing, Controls were not in place to ensure that leave time was proportionately distributed based on actual time worked on each activity. Question Costs – Unknown Identification of a Repeat Finding – This is not a repeat finding from the immediate previous audit. Cause/Effect – Controls were not in place to ensure the proper allocation of its employees’ leave hours for employees working on multiple projects. Recommendation – We recommend that the Agency implement formal policies and procedures to ensure leave hours are allocated consistently and accurately across all activities based on the actual proportion of time employees spend on each activity. Views of Responsible Officials and Planned Corrective Actions – Corrective action was implemented in March 2025. No employee leave hours are to be billed to the TANF grant. The cost of employee leave will be born by non-governmental grants for all Victim Service staff.
Assistance Listing Number: 10.728 Name of Federal Program: Inflation Reduction Act Hazardous Fuels Transportation Assistance Name of Federal Agency: Department of Agriculture Award Period: January 1, 2024 – December 31, 2024 Criteria or Specific Requirement: Per 2 CFR Part 200, non-federal entities receiving federal award must establish and maintain written policies and procedures addressing areas including, but not limited to, cash management (§200.302(b)(6)), allowability of costs (§200.302(b)(7)), procurement (§200.318-.326), compensation (§200.430(a)(1)), and fringe benefits (§200.431). Condition: ALC has not implemented all policies and procedures required by 2CFR Part 200, such as cash management, allowability of costs, procurement, compensation, and fringe benefits. Cause: ALC has not detailed its policies to conform with the requirements of the Uniform Guidance. Procurement policies and procedures have not been designed and implemented that adhere to Uniform Guidance requirements. Effect or Potential Effect: Without documented and implemented policies and procedures, ALC increases the risk of noncompliance with federal regulations, inconsistent application of requirements, unallowable costs being charged to federal awards, and potential questioned costs Context: Policies and procedures were inspected for compliance with the requirements of the Uniform Guidance. Repeat Finding: No Recommendation: ALC should develop, formally adopt, and implement all Uniform Guidance policies and procedures. Policies should be documented, communicated to relevant staff, and periodically reviewed to ensure ongoing compliance. Views of Responsible Officials: Management agrees with the finding and will implement procurement policies and procedures.
Finding 2024-001 (Material Weakness) Program(s): Special Education Cluster (IDEA) Federal Agency: United States Department of Education AL #: Cluster 84.027/84.173 Federal Award Identification Number and Year: Various – See SEFA Pass-through Entities: Missouri Department of Elementary and Secondary Education Type of Compliance Finding: A) Activities Allowed or Unallowed and B) Allowable Costs/Cost Principles Criteria Per relevant statutory and regulatory provisions, costs must be allowable as specified in the references indicated for each program. Criteria must be met to determine if costs, such as separation leave costs (2 CFR section 200.431(b)), severance costs (2 CFR section 200.431(i), and post-retirement health benefits (PRHB) costs (2 CFR section 200.431(h)) are allowable. Condition/Context The District must demonstrate that costs incurred are allowable. The Auditor noted overpayment of various payroll after the time of employee resignation in the above-mentioned federal programs. Cause The District did not follow internal control processes / procedures as outlined per the Employee Handbook related to the employee resignation process for payroll financed by federal assistance. Effect Employees no longer employed for the District were paid with federal assistance that were unallowable. Questioned Costs $26,857 Is the finding a repeat finding No Recommendation We recommend the District implement additional review procedures for the employee resignation process and continue to train management on the required documentation and timelines as required per their Employee Handbook. We also recommend the District consider an electronic, streamlined process for employee resignations that simultaneously alerts critical personnel and reduces the risk for errors. Views of Responsible Officials/ Planned Corrective Actions Management agrees with the finding. See Corrective Action Plan on Organization’s letterhead.
Finding 2024-001 (Material Weakness) Program(s): Special Education Cluster (IDEA) Federal Agency: United States Department of Education AL #: Cluster 84.027/84.173 Federal Award Identification Number and Year: Various – See SEFA Pass-through Entities: Missouri Department of Elementary and Secondary Education Type of Compliance Finding: A) Activities Allowed or Unallowed and B) Allowable Costs/Cost Principles Criteria Per relevant statutory and regulatory provisions, costs must be allowable as specified in the references indicated for each program. Criteria must be met to determine if costs, such as separation leave costs (2 CFR section 200.431(b)), severance costs (2 CFR section 200.431(i), and post-retirement health benefits (PRHB) costs (2 CFR section 200.431(h)) are allowable. Condition/Context The District must demonstrate that costs incurred are allowable. The Auditor noted overpayment of various payroll after the time of employee resignation in the above-mentioned federal programs. Cause The District did not follow internal control processes / procedures as outlined per the Employee Handbook related to the employee resignation process for payroll financed by federal assistance. Effect Employees no longer employed for the District were paid with federal assistance that were unallowable. Questioned Costs $26,857 Is the finding a repeat finding No Recommendation We recommend the District implement additional review procedures for the employee resignation process and continue to train management on the required documentation and timelines as required per their Employee Handbook. We also recommend the District consider an electronic, streamlined process for employee resignations that simultaneously alerts critical personnel and reduces the risk for errors. Views of Responsible Officials/ Planned Corrective Actions Management agrees with the finding. See Corrective Action Plan on Organization’s letterhead.
Finding 2024-001 (Material Weakness) Program(s): Special Education Cluster (IDEA) Federal Agency: United States Department of Education AL #: Cluster 84.027/84.173 Federal Award Identification Number and Year: Various – See SEFA Pass-through Entities: Missouri Department of Elementary and Secondary Education Type of Compliance Finding: A) Activities Allowed or Unallowed and B) Allowable Costs/Cost Principles Criteria Per relevant statutory and regulatory provisions, costs must be allowable as specified in the references indicated for each program. Criteria must be met to determine if costs, such as separation leave costs (2 CFR section 200.431(b)), severance costs (2 CFR section 200.431(i), and post-retirement health benefits (PRHB) costs (2 CFR section 200.431(h)) are allowable. Condition/Context The District must demonstrate that costs incurred are allowable. The Auditor noted overpayment of various payroll after the time of employee resignation in the above-mentioned federal programs. Cause The District did not follow internal control processes / procedures as outlined per the Employee Handbook related to the employee resignation process for payroll financed by federal assistance. Effect Employees no longer employed for the District were paid with federal assistance that were unallowable. Questioned Costs $26,857 Is the finding a repeat finding No Recommendation We recommend the District implement additional review procedures for the employee resignation process and continue to train management on the required documentation and timelines as required per their Employee Handbook. We also recommend the District consider an electronic, streamlined process for employee resignations that simultaneously alerts critical personnel and reduces the risk for errors. Views of Responsible Officials/ Planned Corrective Actions Management agrees with the finding. See Corrective Action Plan on Organization’s letterhead.
Finding - The District charged Federal programs for health insurance program premium costs totaling $496,203 for several Federally funded employees who did not participate in the health insurance program, resulting in Federal program questioned costs of that amount. Criteria - Title 2, Section 200.403, Code of Federal Regulations (CFR), provides that, for an expenditure to be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and must be adequately documented. Title 2, Section 200.431, CFR, provides that the costs of fringe benefits, including employee insurance, are allowable provided that the benefits are reasonable and required by law, District-employee agreement, or an established policy of the District. Condition - For the 2023-24 fiscal year, the District provided an employee health insurance program as an employee fringe benefit for program participants and the Board authorized District contributions for individual and family coverage, including contributions for Federally funded employees. The District recorded health insurance premium expenditures each pay period for each employee; however, several Federally funded employees did not participate in the health insurance program. Consequently, the Federal programs should not have incurred health insurance costs for those employees. Based on our discussions with District personnel and examination of District records, we found that the health insurance premium costs for Federally funded employees who did not participate in the health insurance program totaled $496,203. Cause - District personnel indicated that they did not monitor the health insurance program participants and related expenditures to ensure that the premium costs were only recorded for health insurance program participants. District personnel also agreed with the questioned costs calculations. Effect - The District did not comply with Federal regulations that require all Federal expenditures to represent reasonable and necessary charges. Consequently, the CNC incurred questioned costs totaling $306,926, the SEC incurred questioned costs totaling $108,444, and the Title I Program incurred questioned costs totaling $80,833. Recommendation - The District should establish effective procedures for monitoring the health insurance program participants and related expenditures to ensure that premium costs are only recorded for program participants. Also, the District should document to the respective grantors the allowability of the questioned costs totaling $496,203 or restore these moneys to the appropriate Federal programs. District Response - The District agrees with the finding. We will work with DOE and other district finance officers to ensure processes going forward are accurate and appropriate with no programs being overcharged.
Finding - The District charged Federal programs for health insurance program premium costs totaling $496,203 for several Federally funded employees who did not participate in the health insurance program, resulting in Federal program questioned costs of that amount. Criteria - Title 2, Section 200.403, Code of Federal Regulations (CFR), provides that, for an expenditure to be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and must be adequately documented. Title 2, Section 200.431, CFR, provides that the costs of fringe benefits, including employee insurance, are allowable provided that the benefits are reasonable and required by law, District-employee agreement, or an established policy of the District. Condition - For the 2023-24 fiscal year, the District provided an employee health insurance program as an employee fringe benefit for program participants and the Board authorized District contributions for individual and family coverage, including contributions for Federally funded employees. The District recorded health insurance premium expenditures each pay period for each employee; however, several Federally funded employees did not participate in the health insurance program. Consequently, the Federal programs should not have incurred health insurance costs for those employees. Based on our discussions with District personnel and examination of District records, we found that the health insurance premium costs for Federally funded employees who did not participate in the health insurance program totaled $496,203. Cause - District personnel indicated that they did not monitor the health insurance program participants and related expenditures to ensure that the premium costs were only recorded for health insurance program participants. District personnel also agreed with the questioned costs calculations. Effect - The District did not comply with Federal regulations that require all Federal expenditures to represent reasonable and necessary charges. Consequently, the CNC incurred questioned costs totaling $306,926, the SEC incurred questioned costs totaling $108,444, and the Title I Program incurred questioned costs totaling $80,833. Recommendation - The District should establish effective procedures for monitoring the health insurance program participants and related expenditures to ensure that premium costs are only recorded for program participants. Also, the District should document to the respective grantors the allowability of the questioned costs totaling $496,203 or restore these moneys to the appropriate Federal programs. District Response - The District agrees with the finding. We will work with DOE and other district finance officers to ensure processes going forward are accurate and appropriate with no programs being overcharged.
Finding - The District charged Federal programs for health insurance program premium costs totaling $496,203 for several Federally funded employees who did not participate in the health insurance program, resulting in Federal program questioned costs of that amount. Criteria - Title 2, Section 200.403, Code of Federal Regulations (CFR), provides that, for an expenditure to be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and must be adequately documented. Title 2, Section 200.431, CFR, provides that the costs of fringe benefits, including employee insurance, are allowable provided that the benefits are reasonable and required by law, District-employee agreement, or an established policy of the District. Condition - For the 2023-24 fiscal year, the District provided an employee health insurance program as an employee fringe benefit for program participants and the Board authorized District contributions for individual and family coverage, including contributions for Federally funded employees. The District recorded health insurance premium expenditures each pay period for each employee; however, several Federally funded employees did not participate in the health insurance program. Consequently, the Federal programs should not have incurred health insurance costs for those employees. Based on our discussions with District personnel and examination of District records, we found that the health insurance premium costs for Federally funded employees who did not participate in the health insurance program totaled $496,203. Cause - District personnel indicated that they did not monitor the health insurance program participants and related expenditures to ensure that the premium costs were only recorded for health insurance program participants. District personnel also agreed with the questioned costs calculations. Effect - The District did not comply with Federal regulations that require all Federal expenditures to represent reasonable and necessary charges. Consequently, the CNC incurred questioned costs totaling $306,926, the SEC incurred questioned costs totaling $108,444, and the Title I Program incurred questioned costs totaling $80,833. Recommendation - The District should establish effective procedures for monitoring the health insurance program participants and related expenditures to ensure that premium costs are only recorded for program participants. Also, the District should document to the respective grantors the allowability of the questioned costs totaling $496,203 or restore these moneys to the appropriate Federal programs. District Response - The District agrees with the finding. We will work with DOE and other district finance officers to ensure processes going forward are accurate and appropriate with no programs being overcharged.
Finding - The District charged Federal programs for health insurance program premium costs totaling $496,203 for several Federally funded employees who did not participate in the health insurance program, resulting in Federal program questioned costs of that amount. Criteria - Title 2, Section 200.403, Code of Federal Regulations (CFR), provides that, for an expenditure to be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and must be adequately documented. Title 2, Section 200.431, CFR, provides that the costs of fringe benefits, including employee insurance, are allowable provided that the benefits are reasonable and required by law, District-employee agreement, or an established policy of the District. Condition - For the 2023-24 fiscal year, the District provided an employee health insurance program as an employee fringe benefit for program participants and the Board authorized District contributions for individual and family coverage, including contributions for Federally funded employees. The District recorded health insurance premium expenditures each pay period for each employee; however, several Federally funded employees did not participate in the health insurance program. Consequently, the Federal programs should not have incurred health insurance costs for those employees. Based on our discussions with District personnel and examination of District records, we found that the health insurance premium costs for Federally funded employees who did not participate in the health insurance program totaled $496,203. Cause - District personnel indicated that they did not monitor the health insurance program participants and related expenditures to ensure that the premium costs were only recorded for health insurance program participants. District personnel also agreed with the questioned costs calculations. Effect - The District did not comply with Federal regulations that require all Federal expenditures to represent reasonable and necessary charges. Consequently, the CNC incurred questioned costs totaling $306,926, the SEC incurred questioned costs totaling $108,444, and the Title I Program incurred questioned costs totaling $80,833. Recommendation - The District should establish effective procedures for monitoring the health insurance program participants and related expenditures to ensure that premium costs are only recorded for program participants. Also, the District should document to the respective grantors the allowability of the questioned costs totaling $496,203 or restore these moneys to the appropriate Federal programs. District Response - The District agrees with the finding. We will work with DOE and other district finance officers to ensure processes going forward are accurate and appropriate with no programs being overcharged.
Finding - The District charged Federal programs for health insurance program premium costs totaling $496,203 for several Federally funded employees who did not participate in the health insurance program, resulting in Federal program questioned costs of that amount. Criteria - Title 2, Section 200.403, Code of Federal Regulations (CFR), provides that, for an expenditure to be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and must be adequately documented. Title 2, Section 200.431, CFR, provides that the costs of fringe benefits, including employee insurance, are allowable provided that the benefits are reasonable and required by law, District-employee agreement, or an established policy of the District. Condition - For the 2023-24 fiscal year, the District provided an employee health insurance program as an employee fringe benefit for program participants and the Board authorized District contributions for individual and family coverage, including contributions for Federally funded employees. The District recorded health insurance premium expenditures each pay period for each employee; however, several Federally funded employees did not participate in the health insurance program. Consequently, the Federal programs should not have incurred health insurance costs for those employees. Based on our discussions with District personnel and examination of District records, we found that the health insurance premium costs for Federally funded employees who did not participate in the health insurance program totaled $496,203. Cause - District personnel indicated that they did not monitor the health insurance program participants and related expenditures to ensure that the premium costs were only recorded for health insurance program participants. District personnel also agreed with the questioned costs calculations. Effect - The District did not comply with Federal regulations that require all Federal expenditures to represent reasonable and necessary charges. Consequently, the CNC incurred questioned costs totaling $306,926, the SEC incurred questioned costs totaling $108,444, and the Title I Program incurred questioned costs totaling $80,833. Recommendation - The District should establish effective procedures for monitoring the health insurance program participants and related expenditures to ensure that premium costs are only recorded for program participants. Also, the District should document to the respective grantors the allowability of the questioned costs totaling $496,203 or restore these moneys to the appropriate Federal programs. District Response - The District agrees with the finding. We will work with DOE and other district finance officers to ensure processes going forward are accurate and appropriate with no programs being overcharged.
Finding - The District charged Federal programs for health insurance program premium costs totaling $496,203 for several Federally funded employees who did not participate in the health insurance program, resulting in Federal program questioned costs of that amount. Criteria - Title 2, Section 200.403, Code of Federal Regulations (CFR), provides that, for an expenditure to be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and must be adequately documented. Title 2, Section 200.431, CFR, provides that the costs of fringe benefits, including employee insurance, are allowable provided that the benefits are reasonable and required by law, District-employee agreement, or an established policy of the District. Condition - For the 2023-24 fiscal year, the District provided an employee health insurance program as an employee fringe benefit for program participants and the Board authorized District contributions for individual and family coverage, including contributions for Federally funded employees. The District recorded health insurance premium expenditures each pay period for each employee; however, several Federally funded employees did not participate in the health insurance program. Consequently, the Federal programs should not have incurred health insurance costs for those employees. Based on our discussions with District personnel and examination of District records, we found that the health insurance premium costs for Federally funded employees who did not participate in the health insurance program totaled $496,203. Cause - District personnel indicated that they did not monitor the health insurance program participants and related expenditures to ensure that the premium costs were only recorded for health insurance program participants. District personnel also agreed with the questioned costs calculations. Effect - The District did not comply with Federal regulations that require all Federal expenditures to represent reasonable and necessary charges. Consequently, the CNC incurred questioned costs totaling $306,926, the SEC incurred questioned costs totaling $108,444, and the Title I Program incurred questioned costs totaling $80,833. Recommendation - The District should establish effective procedures for monitoring the health insurance program participants and related expenditures to ensure that premium costs are only recorded for program participants. Also, the District should document to the respective grantors the allowability of the questioned costs totaling $496,203 or restore these moneys to the appropriate Federal programs. District Response - The District agrees with the finding. We will work with DOE and other district finance officers to ensure processes going forward are accurate and appropriate with no programs being overcharged.
Finding - The District charged Federal programs for health insurance program premium costs totaling $496,203 for several Federally funded employees who did not participate in the health insurance program, resulting in Federal program questioned costs of that amount. Criteria - Title 2, Section 200.403, Code of Federal Regulations (CFR), provides that, for an expenditure to be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and must be adequately documented. Title 2, Section 200.431, CFR, provides that the costs of fringe benefits, including employee insurance, are allowable provided that the benefits are reasonable and required by law, District-employee agreement, or an established policy of the District. Condition - For the 2023-24 fiscal year, the District provided an employee health insurance program as an employee fringe benefit for program participants and the Board authorized District contributions for individual and family coverage, including contributions for Federally funded employees. The District recorded health insurance premium expenditures each pay period for each employee; however, several Federally funded employees did not participate in the health insurance program. Consequently, the Federal programs should not have incurred health insurance costs for those employees. Based on our discussions with District personnel and examination of District records, we found that the health insurance premium costs for Federally funded employees who did not participate in the health insurance program totaled $496,203. Cause - District personnel indicated that they did not monitor the health insurance program participants and related expenditures to ensure that the premium costs were only recorded for health insurance program participants. District personnel also agreed with the questioned costs calculations. Effect - The District did not comply with Federal regulations that require all Federal expenditures to represent reasonable and necessary charges. Consequently, the CNC incurred questioned costs totaling $306,926, the SEC incurred questioned costs totaling $108,444, and the Title I Program incurred questioned costs totaling $80,833. Recommendation - The District should establish effective procedures for monitoring the health insurance program participants and related expenditures to ensure that premium costs are only recorded for program participants. Also, the District should document to the respective grantors the allowability of the questioned costs totaling $496,203 or restore these moneys to the appropriate Federal programs. District Response - The District agrees with the finding. We will work with DOE and other district finance officers to ensure processes going forward are accurate and appropriate with no programs being overcharged.
Program: AL 15.611 – Wildlife Restoration and Basic Hunter Education and Safety – Allowability & Subrecipient Monitoring Grant Number & Year: F22AF01344-00, July 1, 2022, through June 30, 2025 Federal Grantor Agency: U.S. Department of the Interior Criteria: For the Wildlife Restoration program, Title 50 CFR § 80.50(a)(6)(iii) (October 1, 2023) states, in part, “Grantees and subgrantees must follow the requirements at 2 CFR part 200 when acquiring equipment, goods, and services under an award[.]” 2 CFR § 200.332(d) (January 1, 2024) requires a pass-through entity to do the following: Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward[.] 2 CFR § 200.403 (January 1, 2024) requires costs to be necessary, reasonable, and adequately documented. 2 CFR § 200.430(i) (January 1, 2024) provides the following, in relevant part: (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE’s definition of IBS); * * * * (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: * * * * (C) The non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. 2 CFR § 200.431(b) (January 1, 2024) states, in relevant part: The cost of fringe benefits in the form of regular compensation paid to employees during periods of authorized absences from the job, such as for annual leave, family-related leave, sick leave, holidays, court leave, military leave, administrative leave, and other similar benefits, are allowable if all of the following criteria are met: (1) They are provided under established written leave policies; (2) The costs are equitably allocated to all related activities, including Federal awards; and, (3) The accounting basis (cash or accrual) selected for costing each type of leave is consistently followed by the non-Federal entity or specified grouping of employees. (i) When a non-Federal entity uses the cash basis of accounting, the cost of leave is recognized in the period that the leave is taken and paid for. Payments for unused leave when an employee retires or terminates employment are allowable in the year of payment. (ii) The accrual basis may be only used for those types of leave for which a liability as defined by GAAP exists when the leave is earned. When a non-Federal entity uses the accrual basis of accounting, allowable leave costs are the lesser of the amount accrued or funded. 2 CFR § 200.431(c) (January 1, 2024) states the following: The cost of fringe benefits in the form of employer contributions or expenses for social security; employee life, health, unemployment, and worker’s compensation insurance (except as indicated in §200.447); pension plan costs (see paragraph (i) of this section); and other similar benefits are allowable, provided such benefits are granted under established written policies. Such benefits, must be allocated to Federal awards and all other activities in a manner consistent with the pattern of benefits attributable to the individuals or group(s) of employees whose salaries and wages are chargeable to such Federal awards and other activities, and charged as direct or indirect costs in accordance with the non-Federal entity’s accounting practices. A good internal control plan requires procedures to ensure that salaries and wages, as well as other costs charged to subawards, are documented properly. Condition: Adequate documentation was not on file to support a payment to a subrecipient. Repeat Finding: No Questioned Costs: $1,697 known Statistical Sample: No Context: We randomly selected 16 non-payroll documents to test. Our sample population included operating expenditures, capital outlay expenditures, and subrecipient reimbursements. One of 16 documents tested lacked adequate documentation to support that the costs were in accordance with Federal cost principles. The Agency paid $17,268 to a subrecipient that submitted an invoice for lodging and travel costs, payroll, and indirect costs for one employee. The employee’s base rate of $35.82 per hour for 378.5 hours worked on the grant was calculated according to the following: a pay rate of $24.76 per hour; a charge of 18% for paid time off; 22.6% for employer taxes and benefits; and 26.2% for indirect costs. However, the subrecipient provided no documentation, such as payroll records or bank statements, to support the payroll costs, totaling $17,110. After the APA requested support, the Agency provided paystubs and detailed payroll records from the subrecipient’s accounting system; however, based on the support provided, the wages, benefits, taxes, and indirect costs allocable to the grant totaled $15,413. As a result, we questioned the variance of $1,697 between the support provided and the amount charged to the grant for the payroll costs. Federal payment errors noted for the sample tested were $1,697. The total Federal sample tested was $300,860, and the total sample population was $10,649,122. Based on the sample tested, the case error rate was 6.25% (1/16). The dollar error rate was 0.56% ($1,697/$300,860), which estimates the potential dollars at risk for fiscal year 2024 to be $59,635 (dollar error rate multiplied by the population). Cause: Inadequate subrecipient monitoring procedures. Effect: Without adequate subrecipient monitoring procedures and supporting documentation on file, there is an increased risk for not only misuse of Federal funds but also payments not complying with State and Federal requirements. Recommendation: We recommend the Agency improve subrecipient monitoring to ensure both the allowability of costs and adherence to Federal regulations. Management Response: NGPC disagrees with the questioned costs identified by the APA. Our subrecipient policy includes the ability to ask for detailed records for any expense at any time. Accounting records, invoices, and paystubs were provided to substantiate the total invoice amount. The subrecipient has been audited and there were no issues with their financial systems. Explanations and calculations were provided to include the benefits and taxes paid out by the subrecipient, which matched the accounting records. Per their latest audit, these expenses are allocated on the basis of time and effort which complies with 2 CFR § 200.431(c). Performance reports were received and activity monitored by NGPC staff. NGPC works closely with the subrecipient which is considered a low-risk entity as demonstrated by the information provided for the audit. APA Response: Documentation provided to the auditors was inadequate to support the full amount charged to the grant. Documentation was not provided to support that the paid time off charged to the grant was reasonable, and no support was provided for Federal and State unemployment taxes, workers’ compensation costs, retirement plan fees, and other benefit costs.
2024-007. FINDING (Noncompliance with Activities Allowed or Unallowed and Allowable Costs and Cost Principles Requirements) Federal Department: U.S. Department of Education Assistance Listing Number: 84.425D Cluster Name: Education Stabilization Fund Program Name: Elementary and Secondary School Emergency Relief Fund Award Number: S425D210041 Questioned Cost: None Program Expenditures: $1,222,010 Cluster Expenditures: $1,466,030 Governors State University (University) did not comply with activities allowed or unallowed and allowable costs and cost principles requirements. CONDITION During our review of the Illinois Tutoring Initiative program under the Elementary and Secondary School Emergency Relief (ESSER) Fund which had total expenditures of $1,222,010, we identified 1 of 25 (4%) expenditures was inappropriately charged to the grant. The University inadvertently charged Central Management Services (CMS) insurance of $414 for an employee who did not work on the program. The sample was not intended to be, and was not, a statistically valid sample. CRITERIA The Code of Federal Regulations (2 CFR 200.431(c)) requires the University to allocate fringe benefits to federal awards and all other activities in a manner consistent with the pattern of benefits attributable to the individuals or group(s) of employees whose salaries and wages are chargeable to such federal awards and other activities, and charged as direct or indirect costs following the University's accounting practices. Additionally, the Uniform Guidance (2 CFR 200.303(a)) requires nonfederal entities receiving federal awards to establish and maintain effective internal control designed to reasonably ensure compliance with federal laws, statutes, regulations, and the terms and conditions of the federal award. CAUSE University officials stated the charge was meant for a different federal grant, but was inadvertently assigned to the ESSER grant due to a formula error in the supporting spreadsheet. EFFECT Failure to accurately charge the correct grant may result in disallowance of federal expenditures and questioned costs, and could jeopardize future federal funding. (Finding Code No. 2024-007) RECOMMENDATION We recommend the University improve its procedures to ensure fringe benefits allocated to the grant align consistently with the salaries and wages charged to the grant. UNIVERSITY RESPONSE The University agrees with this finding and accepts the recommendation. More stringent review procedures have been implemented to prevent the recurrence of this issue.
Criteria Part 2, CFR Part 200.430 notes “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed”. The document continues to state that documentation must “Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.” Additionally, Part 200.431 states “The cost of fringe benefits in the form of regular compensation paid to employees during periods of authorized absences from the job, such as for annual leave, family-related leave, sick leave, holidays, court leave, military leave, administrative leave, and other similar benefits, are allowable is all of the following criteria are met:”. The criteria include that “the costs are equitably allocated to all related activities, including Federal awards.” Condition While performing tests of NBCC’s internal controls over payroll transactions, we noted the Organization had incorrectly allocated time for 8 of the 50 selections. Additionally, we noted that the Organization had allocated time for leave based on pre-determined budgets, rather than actual hours worked in the pay period, for 27 of the 50 selections. Cause NBCC has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Repeat Finding No. Effect Noncompliance may impact future funding from Federal awards. Recommendation We recommend NBCC implement proper internal control procedures to document hours worked, by employee and by grant; and maintain the documentation to support charges allocated to each Federal award.
Criteria Part 2, CFR Part 200.430 notes “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed”. The document continues to state that documentation must “Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.” Additionally, Part 200.431 states “The cost of fringe benefits in the form of regular compensation paid to employees during periods of authorized absences from the job, such as for annual leave, family-related leave, sick leave, holidays, court leave, military leave, administrative leave, and other similar benefits, are allowable is all of the following criteria are met:”. The criteria include that “the costs are equitably allocated to all related activities, including Federal awards.” Condition While performing tests of NBCC’s internal controls over payroll transactions, we noted the Organization had incorrectly allocated time for 8 of the 50 selections. Additionally, we noted that the Organization had allocated time for leave based on pre-determined budgets, rather than actual hours worked in the pay period, for 27 of the 50 selections. Cause NBCC has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Repeat Finding No. Effect Noncompliance may impact future funding from Federal awards. Recommendation We recommend NBCC implement proper internal control procedures to document hours worked, by employee and by grant; and maintain the documentation to support charges allocated to each Federal award.
Criteria Part 2, CFR Part 200.430 notes “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed”. The document continues to state that documentation must “Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.” Additionally, Part 200.431 states “The cost of fringe benefits in the form of regular compensation paid to employees during periods of authorized absences from the job, such as for annual leave, family-related leave, sick leave, holidays, court leave, military leave, administrative leave, and other similar benefits, are allowable is all of the following criteria are met:”. The criteria include that “the costs are equitably allocated to all related activities, including Federal awards.” Condition While performing tests of NBCC’s internal controls over payroll transactions, we noted the Organization had incorrectly allocated time for 8 of the 50 selections. Additionally, we noted that the Organization had allocated time for leave based on pre-determined budgets, rather than actual hours worked in the pay period, for 27 of the 50 selections. Cause NBCC has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Repeat Finding No. Effect Noncompliance may impact future funding from Federal awards. Recommendation We recommend NBCC implement proper internal control procedures to document hours worked, by employee and by grant; and maintain the documentation to support charges allocated to each Federal award.
Criteria Part 2, CFR Part 200.430 notes “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed”. The document continues to state that documentation must “Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.” Additionally, Part 200.431 states “The cost of fringe benefits in the form of regular compensation paid to employees during periods of authorized absences from the job, such as for annual leave, family-related leave, sick leave, holidays, court leave, military leave, administrative leave, and other similar benefits, are allowable is all of the following criteria are met:”. The criteria include that “the costs are equitably allocated to all related activities, including Federal awards.” Condition While performing tests of NBCC’s internal controls over payroll transactions, we noted the Organization had incorrectly allocated time for 8 of the 50 selections. Additionally, we noted that the Organization had allocated time for leave based on pre-determined budgets, rather than actual hours worked in the pay period, for 27 of the 50 selections. Cause NBCC has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Repeat Finding No. Effect Noncompliance may impact future funding from Federal awards. Recommendation We recommend NBCC implement proper internal control procedures to document hours worked, by employee and by grant; and maintain the documentation to support charges allocated to each Federal award.
2024-002: Healthy Start Fringe Rate Grantor: Department of Health and Human Services Program Title: Healthy Start Initiative Award Name: Healthy Start Initiative‐Eliminating Racial/Ethnic Disparities Award Number: H4927805 Assistance Listing Title: Healthy Start Initiative Assistance Listing Number: 93.926 Award Year: April 1, 2023 – August 31, 2024 Passthrough Entity: None Criteria Per 2 CFR 200.431(c), the cost of fringe benefits are allowable provided that the benefits are reasonable. Condition Per the Johns Hopkins All Children's Hospital, Inc. Hospital Rate Agreement dated 12/23/2022, the agreedupon fringe rate was 27% for the period 7/1/2022 to 6/30/2026. JHHS charged costs for fringe benefits to the award at the rate of 29% during the 2024 fiscal year. Cause Since the Notice of Award #4H49MC27805-10-05 stated that up to 25% of the total approved budget may be reallocated within the approved categories without prior approval, management believed they were allowed to charge fringe costs at a rate higher than the agreed-upon negotiated rate if the difference in cost did not exceed 25% of the budget. Effect JHHS charged $5,906 of additional fringe costs to the award in excess of the agreed-upon negotiated rate. Questioned Costs The $5,906 of additional fringe charged to this award in excess of agreed-upon fringe rate is a questioned cost. Recommendation JHHS should establish a process to ensure that the appropriate or agreed-upon negotiated fringe rate is being used, unless the award agreement allows for any modification of the negotiated rate or prior agency approval is obtained. Management’s Views and Corrective Action Plan Refer to Management’s View’s and Corrective Action Plan at the end of the report.
Assistance Listing Number: 21.027 Program Title: Coronavirus State and Local Fiscal Recovery Funds Federal Award Number: N/A Federal Award Year: 2023/2024 Pass Through Entity: Chicago Cook Workforce Partnership Criteria: In accordance with 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. Condition: The Organization is either lacking or has nonconforming written policies and procedures for the following administrative functions, required by0 the Uniform Guidance: 1. Financial management - 2 CFR 200.302(b)(6) - spacing 2. Allowable Costs - 2 CFR 200.302(b)(7) 3. Federal payment - 2 CFR 200.305(b)(1) 4. Procurement - 2 CFR 200.318(a) and 2 CFR 200.318(c)(1) 5. Competition - 2 CFR 200.319(d) 6. Methods of procurement to be followed - 2 CFR 200.320 7. Compensation (Personal Services) - 2 CFR 200.430(a)(1) 8. Compensation (Fringe Benefits - Leave) - 2 CFR 200.431(b)(1) 9. Relocation costs of employees - 2 CFR 200.464(a)(2) 10. Travel costs - 2 CFR 200.474 Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our review of the Organization’s policies and procedures, which were found to be not in accordance with Uniform Guidance. Cause: The Organization was not aware of the specific Uniform Guidance requirements for certain written policies and procedures. Effect: The Organization did not have these policies and procedures in place to reasonably ensure that program functions are achieved effectively, efficiently and in compliance with Federal statutes, regulations, and the terms and conditions of the award. The Organization was not in compliance with the administrative requirements set forth in the Uniform Guidance. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization design procedures and implement internal control procedures to ensure that the Uniform Guidance administrative requirements are met. Views of Responsible Officials and Corrective Action Plan: See corrective action plan attached to financial statements.
Finding 2024-001 (Material Weakness) Program(s): Special Education Cluster (IDEA) Federal Agency: United States Department of Education AL #: Cluster 84.027/84.173 Federal Award Identification Number and Year: Various – See SEFA Pass-through Entities: Missouri Department of Elementary and Secondary Education Type of Compliance Finding: A) Activities Allowed or Unallowed and B) Allowable Costs/Cost Principles Criteria Per relevant statutory and regulatory provisions, costs must be allowable as specified in the references indicated for each program. Criteria must be met to determine if costs, such as separation leave costs (2 CFR section 200.431(b)), severance costs (2 CFR section 200.431(i), and post-retirement health benefits (PRHB) costs (2 CFR section 200.431(h)) are allowable. Condition/Context The District must demonstrate that costs incurred are allowable. The Auditor noted overpayment of various payroll after the time of employee resignation in the above-mentioned federal programs. Cause The District did not follow internal control processes / procedures as outlined per the Employee Handbook related to the employee resignation process for payroll financed by federal assistance. Effect Employees no longer employed for the District were paid with federal assistance that were unallowable. Questioned Costs $26,857 Is the finding a repeat finding No Recommendation We recommend the District implement additional review procedures for the employee resignation process and continue to train management on the required documentation and timelines as required per their Employee Handbook. We also recommend the District consider an electronic, streamlined process for employee resignations that simultaneously alerts critical personnel and reduces the risk for errors. Views of Responsible Officials/ Planned Corrective Actions Management agrees with the finding. See Corrective Action Plan on Organization’s letterhead.
Finding 2024-001 (Material Weakness) Program(s): Special Education Cluster (IDEA) Federal Agency: United States Department of Education AL #: Cluster 84.027/84.173 Federal Award Identification Number and Year: Various – See SEFA Pass-through Entities: Missouri Department of Elementary and Secondary Education Type of Compliance Finding: A) Activities Allowed or Unallowed and B) Allowable Costs/Cost Principles Criteria Per relevant statutory and regulatory provisions, costs must be allowable as specified in the references indicated for each program. Criteria must be met to determine if costs, such as separation leave costs (2 CFR section 200.431(b)), severance costs (2 CFR section 200.431(i), and post-retirement health benefits (PRHB) costs (2 CFR section 200.431(h)) are allowable. Condition/Context The District must demonstrate that costs incurred are allowable. The Auditor noted overpayment of various payroll after the time of employee resignation in the above-mentioned federal programs. Cause The District did not follow internal control processes / procedures as outlined per the Employee Handbook related to the employee resignation process for payroll financed by federal assistance. Effect Employees no longer employed for the District were paid with federal assistance that were unallowable. Questioned Costs $26,857 Is the finding a repeat finding No Recommendation We recommend the District implement additional review procedures for the employee resignation process and continue to train management on the required documentation and timelines as required per their Employee Handbook. We also recommend the District consider an electronic, streamlined process for employee resignations that simultaneously alerts critical personnel and reduces the risk for errors. Views of Responsible Officials/ Planned Corrective Actions Management agrees with the finding. See Corrective Action Plan on Organization’s letterhead.
Finding 2024-001 (Material Weakness) Program(s): Special Education Cluster (IDEA) Federal Agency: United States Department of Education AL #: Cluster 84.027/84.173 Federal Award Identification Number and Year: Various – See SEFA Pass-through Entities: Missouri Department of Elementary and Secondary Education Type of Compliance Finding: A) Activities Allowed or Unallowed and B) Allowable Costs/Cost Principles Criteria Per relevant statutory and regulatory provisions, costs must be allowable as specified in the references indicated for each program. Criteria must be met to determine if costs, such as separation leave costs (2 CFR section 200.431(b)), severance costs (2 CFR section 200.431(i), and post-retirement health benefits (PRHB) costs (2 CFR section 200.431(h)) are allowable. Condition/Context The District must demonstrate that costs incurred are allowable. The Auditor noted overpayment of various payroll after the time of employee resignation in the above-mentioned federal programs. Cause The District did not follow internal control processes / procedures as outlined per the Employee Handbook related to the employee resignation process for payroll financed by federal assistance. Effect Employees no longer employed for the District were paid with federal assistance that were unallowable. Questioned Costs $26,857 Is the finding a repeat finding No Recommendation We recommend the District implement additional review procedures for the employee resignation process and continue to train management on the required documentation and timelines as required per their Employee Handbook. We also recommend the District consider an electronic, streamlined process for employee resignations that simultaneously alerts critical personnel and reduces the risk for errors. Views of Responsible Officials/ Planned Corrective Actions Management agrees with the finding. See Corrective Action Plan on Organization’s letterhead.
Finding - The District charged Federal programs for health insurance program premium costs totaling $496,203 for several Federally funded employees who did not participate in the health insurance program, resulting in Federal program questioned costs of that amount. Criteria - Title 2, Section 200.403, Code of Federal Regulations (CFR), provides that, for an expenditure to be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and must be adequately documented. Title 2, Section 200.431, CFR, provides that the costs of fringe benefits, including employee insurance, are allowable provided that the benefits are reasonable and required by law, District-employee agreement, or an established policy of the District. Condition - For the 2023-24 fiscal year, the District provided an employee health insurance program as an employee fringe benefit for program participants and the Board authorized District contributions for individual and family coverage, including contributions for Federally funded employees. The District recorded health insurance premium expenditures each pay period for each employee; however, several Federally funded employees did not participate in the health insurance program. Consequently, the Federal programs should not have incurred health insurance costs for those employees. Based on our discussions with District personnel and examination of District records, we found that the health insurance premium costs for Federally funded employees who did not participate in the health insurance program totaled $496,203. Cause - District personnel indicated that they did not monitor the health insurance program participants and related expenditures to ensure that the premium costs were only recorded for health insurance program participants. District personnel also agreed with the questioned costs calculations. Effect - The District did not comply with Federal regulations that require all Federal expenditures to represent reasonable and necessary charges. Consequently, the CNC incurred questioned costs totaling $306,926, the SEC incurred questioned costs totaling $108,444, and the Title I Program incurred questioned costs totaling $80,833. Recommendation - The District should establish effective procedures for monitoring the health insurance program participants and related expenditures to ensure that premium costs are only recorded for program participants. Also, the District should document to the respective grantors the allowability of the questioned costs totaling $496,203 or restore these moneys to the appropriate Federal programs. District Response - The District agrees with the finding. We will work with DOE and other district finance officers to ensure processes going forward are accurate and appropriate with no programs being overcharged.
Finding - The District charged Federal programs for health insurance program premium costs totaling $496,203 for several Federally funded employees who did not participate in the health insurance program, resulting in Federal program questioned costs of that amount. Criteria - Title 2, Section 200.403, Code of Federal Regulations (CFR), provides that, for an expenditure to be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and must be adequately documented. Title 2, Section 200.431, CFR, provides that the costs of fringe benefits, including employee insurance, are allowable provided that the benefits are reasonable and required by law, District-employee agreement, or an established policy of the District. Condition - For the 2023-24 fiscal year, the District provided an employee health insurance program as an employee fringe benefit for program participants and the Board authorized District contributions for individual and family coverage, including contributions for Federally funded employees. The District recorded health insurance premium expenditures each pay period for each employee; however, several Federally funded employees did not participate in the health insurance program. Consequently, the Federal programs should not have incurred health insurance costs for those employees. Based on our discussions with District personnel and examination of District records, we found that the health insurance premium costs for Federally funded employees who did not participate in the health insurance program totaled $496,203. Cause - District personnel indicated that they did not monitor the health insurance program participants and related expenditures to ensure that the premium costs were only recorded for health insurance program participants. District personnel also agreed with the questioned costs calculations. Effect - The District did not comply with Federal regulations that require all Federal expenditures to represent reasonable and necessary charges. Consequently, the CNC incurred questioned costs totaling $306,926, the SEC incurred questioned costs totaling $108,444, and the Title I Program incurred questioned costs totaling $80,833. Recommendation - The District should establish effective procedures for monitoring the health insurance program participants and related expenditures to ensure that premium costs are only recorded for program participants. Also, the District should document to the respective grantors the allowability of the questioned costs totaling $496,203 or restore these moneys to the appropriate Federal programs. District Response - The District agrees with the finding. We will work with DOE and other district finance officers to ensure processes going forward are accurate and appropriate with no programs being overcharged.
Finding - The District charged Federal programs for health insurance program premium costs totaling $496,203 for several Federally funded employees who did not participate in the health insurance program, resulting in Federal program questioned costs of that amount. Criteria - Title 2, Section 200.403, Code of Federal Regulations (CFR), provides that, for an expenditure to be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and must be adequately documented. Title 2, Section 200.431, CFR, provides that the costs of fringe benefits, including employee insurance, are allowable provided that the benefits are reasonable and required by law, District-employee agreement, or an established policy of the District. Condition - For the 2023-24 fiscal year, the District provided an employee health insurance program as an employee fringe benefit for program participants and the Board authorized District contributions for individual and family coverage, including contributions for Federally funded employees. The District recorded health insurance premium expenditures each pay period for each employee; however, several Federally funded employees did not participate in the health insurance program. Consequently, the Federal programs should not have incurred health insurance costs for those employees. Based on our discussions with District personnel and examination of District records, we found that the health insurance premium costs for Federally funded employees who did not participate in the health insurance program totaled $496,203. Cause - District personnel indicated that they did not monitor the health insurance program participants and related expenditures to ensure that the premium costs were only recorded for health insurance program participants. District personnel also agreed with the questioned costs calculations. Effect - The District did not comply with Federal regulations that require all Federal expenditures to represent reasonable and necessary charges. Consequently, the CNC incurred questioned costs totaling $306,926, the SEC incurred questioned costs totaling $108,444, and the Title I Program incurred questioned costs totaling $80,833. Recommendation - The District should establish effective procedures for monitoring the health insurance program participants and related expenditures to ensure that premium costs are only recorded for program participants. Also, the District should document to the respective grantors the allowability of the questioned costs totaling $496,203 or restore these moneys to the appropriate Federal programs. District Response - The District agrees with the finding. We will work with DOE and other district finance officers to ensure processes going forward are accurate and appropriate with no programs being overcharged.
Finding - The District charged Federal programs for health insurance program premium costs totaling $496,203 for several Federally funded employees who did not participate in the health insurance program, resulting in Federal program questioned costs of that amount. Criteria - Title 2, Section 200.403, Code of Federal Regulations (CFR), provides that, for an expenditure to be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and must be adequately documented. Title 2, Section 200.431, CFR, provides that the costs of fringe benefits, including employee insurance, are allowable provided that the benefits are reasonable and required by law, District-employee agreement, or an established policy of the District. Condition - For the 2023-24 fiscal year, the District provided an employee health insurance program as an employee fringe benefit for program participants and the Board authorized District contributions for individual and family coverage, including contributions for Federally funded employees. The District recorded health insurance premium expenditures each pay period for each employee; however, several Federally funded employees did not participate in the health insurance program. Consequently, the Federal programs should not have incurred health insurance costs for those employees. Based on our discussions with District personnel and examination of District records, we found that the health insurance premium costs for Federally funded employees who did not participate in the health insurance program totaled $496,203. Cause - District personnel indicated that they did not monitor the health insurance program participants and related expenditures to ensure that the premium costs were only recorded for health insurance program participants. District personnel also agreed with the questioned costs calculations. Effect - The District did not comply with Federal regulations that require all Federal expenditures to represent reasonable and necessary charges. Consequently, the CNC incurred questioned costs totaling $306,926, the SEC incurred questioned costs totaling $108,444, and the Title I Program incurred questioned costs totaling $80,833. Recommendation - The District should establish effective procedures for monitoring the health insurance program participants and related expenditures to ensure that premium costs are only recorded for program participants. Also, the District should document to the respective grantors the allowability of the questioned costs totaling $496,203 or restore these moneys to the appropriate Federal programs. District Response - The District agrees with the finding. We will work with DOE and other district finance officers to ensure processes going forward are accurate and appropriate with no programs being overcharged.
Finding - The District charged Federal programs for health insurance program premium costs totaling $496,203 for several Federally funded employees who did not participate in the health insurance program, resulting in Federal program questioned costs of that amount. Criteria - Title 2, Section 200.403, Code of Federal Regulations (CFR), provides that, for an expenditure to be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and must be adequately documented. Title 2, Section 200.431, CFR, provides that the costs of fringe benefits, including employee insurance, are allowable provided that the benefits are reasonable and required by law, District-employee agreement, or an established policy of the District. Condition - For the 2023-24 fiscal year, the District provided an employee health insurance program as an employee fringe benefit for program participants and the Board authorized District contributions for individual and family coverage, including contributions for Federally funded employees. The District recorded health insurance premium expenditures each pay period for each employee; however, several Federally funded employees did not participate in the health insurance program. Consequently, the Federal programs should not have incurred health insurance costs for those employees. Based on our discussions with District personnel and examination of District records, we found that the health insurance premium costs for Federally funded employees who did not participate in the health insurance program totaled $496,203. Cause - District personnel indicated that they did not monitor the health insurance program participants and related expenditures to ensure that the premium costs were only recorded for health insurance program participants. District personnel also agreed with the questioned costs calculations. Effect - The District did not comply with Federal regulations that require all Federal expenditures to represent reasonable and necessary charges. Consequently, the CNC incurred questioned costs totaling $306,926, the SEC incurred questioned costs totaling $108,444, and the Title I Program incurred questioned costs totaling $80,833. Recommendation - The District should establish effective procedures for monitoring the health insurance program participants and related expenditures to ensure that premium costs are only recorded for program participants. Also, the District should document to the respective grantors the allowability of the questioned costs totaling $496,203 or restore these moneys to the appropriate Federal programs. District Response - The District agrees with the finding. We will work with DOE and other district finance officers to ensure processes going forward are accurate and appropriate with no programs being overcharged.
Finding - The District charged Federal programs for health insurance program premium costs totaling $496,203 for several Federally funded employees who did not participate in the health insurance program, resulting in Federal program questioned costs of that amount. Criteria - Title 2, Section 200.403, Code of Federal Regulations (CFR), provides that, for an expenditure to be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and must be adequately documented. Title 2, Section 200.431, CFR, provides that the costs of fringe benefits, including employee insurance, are allowable provided that the benefits are reasonable and required by law, District-employee agreement, or an established policy of the District. Condition - For the 2023-24 fiscal year, the District provided an employee health insurance program as an employee fringe benefit for program participants and the Board authorized District contributions for individual and family coverage, including contributions for Federally funded employees. The District recorded health insurance premium expenditures each pay period for each employee; however, several Federally funded employees did not participate in the health insurance program. Consequently, the Federal programs should not have incurred health insurance costs for those employees. Based on our discussions with District personnel and examination of District records, we found that the health insurance premium costs for Federally funded employees who did not participate in the health insurance program totaled $496,203. Cause - District personnel indicated that they did not monitor the health insurance program participants and related expenditures to ensure that the premium costs were only recorded for health insurance program participants. District personnel also agreed with the questioned costs calculations. Effect - The District did not comply with Federal regulations that require all Federal expenditures to represent reasonable and necessary charges. Consequently, the CNC incurred questioned costs totaling $306,926, the SEC incurred questioned costs totaling $108,444, and the Title I Program incurred questioned costs totaling $80,833. Recommendation - The District should establish effective procedures for monitoring the health insurance program participants and related expenditures to ensure that premium costs are only recorded for program participants. Also, the District should document to the respective grantors the allowability of the questioned costs totaling $496,203 or restore these moneys to the appropriate Federal programs. District Response - The District agrees with the finding. We will work with DOE and other district finance officers to ensure processes going forward are accurate and appropriate with no programs being overcharged.
Finding - The District charged Federal programs for health insurance program premium costs totaling $496,203 for several Federally funded employees who did not participate in the health insurance program, resulting in Federal program questioned costs of that amount. Criteria - Title 2, Section 200.403, Code of Federal Regulations (CFR), provides that, for an expenditure to be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and must be adequately documented. Title 2, Section 200.431, CFR, provides that the costs of fringe benefits, including employee insurance, are allowable provided that the benefits are reasonable and required by law, District-employee agreement, or an established policy of the District. Condition - For the 2023-24 fiscal year, the District provided an employee health insurance program as an employee fringe benefit for program participants and the Board authorized District contributions for individual and family coverage, including contributions for Federally funded employees. The District recorded health insurance premium expenditures each pay period for each employee; however, several Federally funded employees did not participate in the health insurance program. Consequently, the Federal programs should not have incurred health insurance costs for those employees. Based on our discussions with District personnel and examination of District records, we found that the health insurance premium costs for Federally funded employees who did not participate in the health insurance program totaled $496,203. Cause - District personnel indicated that they did not monitor the health insurance program participants and related expenditures to ensure that the premium costs were only recorded for health insurance program participants. District personnel also agreed with the questioned costs calculations. Effect - The District did not comply with Federal regulations that require all Federal expenditures to represent reasonable and necessary charges. Consequently, the CNC incurred questioned costs totaling $306,926, the SEC incurred questioned costs totaling $108,444, and the Title I Program incurred questioned costs totaling $80,833. Recommendation - The District should establish effective procedures for monitoring the health insurance program participants and related expenditures to ensure that premium costs are only recorded for program participants. Also, the District should document to the respective grantors the allowability of the questioned costs totaling $496,203 or restore these moneys to the appropriate Federal programs. District Response - The District agrees with the finding. We will work with DOE and other district finance officers to ensure processes going forward are accurate and appropriate with no programs being overcharged.
Program: AL 15.611 – Wildlife Restoration and Basic Hunter Education and Safety – Allowability & Subrecipient Monitoring Grant Number & Year: F22AF01344-00, July 1, 2022, through June 30, 2025 Federal Grantor Agency: U.S. Department of the Interior Criteria: For the Wildlife Restoration program, Title 50 CFR § 80.50(a)(6)(iii) (October 1, 2023) states, in part, “Grantees and subgrantees must follow the requirements at 2 CFR part 200 when acquiring equipment, goods, and services under an award[.]” 2 CFR § 200.332(d) (January 1, 2024) requires a pass-through entity to do the following: Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward[.] 2 CFR § 200.403 (January 1, 2024) requires costs to be necessary, reasonable, and adequately documented. 2 CFR § 200.430(i) (January 1, 2024) provides the following, in relevant part: (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE’s definition of IBS); * * * * (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: * * * * (C) The non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. 2 CFR § 200.431(b) (January 1, 2024) states, in relevant part: The cost of fringe benefits in the form of regular compensation paid to employees during periods of authorized absences from the job, such as for annual leave, family-related leave, sick leave, holidays, court leave, military leave, administrative leave, and other similar benefits, are allowable if all of the following criteria are met: (1) They are provided under established written leave policies; (2) The costs are equitably allocated to all related activities, including Federal awards; and, (3) The accounting basis (cash or accrual) selected for costing each type of leave is consistently followed by the non-Federal entity or specified grouping of employees. (i) When a non-Federal entity uses the cash basis of accounting, the cost of leave is recognized in the period that the leave is taken and paid for. Payments for unused leave when an employee retires or terminates employment are allowable in the year of payment. (ii) The accrual basis may be only used for those types of leave for which a liability as defined by GAAP exists when the leave is earned. When a non-Federal entity uses the accrual basis of accounting, allowable leave costs are the lesser of the amount accrued or funded. 2 CFR § 200.431(c) (January 1, 2024) states the following: The cost of fringe benefits in the form of employer contributions or expenses for social security; employee life, health, unemployment, and worker’s compensation insurance (except as indicated in §200.447); pension plan costs (see paragraph (i) of this section); and other similar benefits are allowable, provided such benefits are granted under established written policies. Such benefits, must be allocated to Federal awards and all other activities in a manner consistent with the pattern of benefits attributable to the individuals or group(s) of employees whose salaries and wages are chargeable to such Federal awards and other activities, and charged as direct or indirect costs in accordance with the non-Federal entity’s accounting practices. A good internal control plan requires procedures to ensure that salaries and wages, as well as other costs charged to subawards, are documented properly. Condition: Adequate documentation was not on file to support a payment to a subrecipient. Repeat Finding: No Questioned Costs: $1,697 known Statistical Sample: No Context: We randomly selected 16 non-payroll documents to test. Our sample population included operating expenditures, capital outlay expenditures, and subrecipient reimbursements. One of 16 documents tested lacked adequate documentation to support that the costs were in accordance with Federal cost principles. The Agency paid $17,268 to a subrecipient that submitted an invoice for lodging and travel costs, payroll, and indirect costs for one employee. The employee’s base rate of $35.82 per hour for 378.5 hours worked on the grant was calculated according to the following: a pay rate of $24.76 per hour; a charge of 18% for paid time off; 22.6% for employer taxes and benefits; and 26.2% for indirect costs. However, the subrecipient provided no documentation, such as payroll records or bank statements, to support the payroll costs, totaling $17,110. After the APA requested support, the Agency provided paystubs and detailed payroll records from the subrecipient’s accounting system; however, based on the support provided, the wages, benefits, taxes, and indirect costs allocable to the grant totaled $15,413. As a result, we questioned the variance of $1,697 between the support provided and the amount charged to the grant for the payroll costs. Federal payment errors noted for the sample tested were $1,697. The total Federal sample tested was $300,860, and the total sample population was $10,649,122. Based on the sample tested, the case error rate was 6.25% (1/16). The dollar error rate was 0.56% ($1,697/$300,860), which estimates the potential dollars at risk for fiscal year 2024 to be $59,635 (dollar error rate multiplied by the population). Cause: Inadequate subrecipient monitoring procedures. Effect: Without adequate subrecipient monitoring procedures and supporting documentation on file, there is an increased risk for not only misuse of Federal funds but also payments not complying with State and Federal requirements. Recommendation: We recommend the Agency improve subrecipient monitoring to ensure both the allowability of costs and adherence to Federal regulations. Management Response: NGPC disagrees with the questioned costs identified by the APA. Our subrecipient policy includes the ability to ask for detailed records for any expense at any time. Accounting records, invoices, and paystubs were provided to substantiate the total invoice amount. The subrecipient has been audited and there were no issues with their financial systems. Explanations and calculations were provided to include the benefits and taxes paid out by the subrecipient, which matched the accounting records. Per their latest audit, these expenses are allocated on the basis of time and effort which complies with 2 CFR § 200.431(c). Performance reports were received and activity monitored by NGPC staff. NGPC works closely with the subrecipient which is considered a low-risk entity as demonstrated by the information provided for the audit. APA Response: Documentation provided to the auditors was inadequate to support the full amount charged to the grant. Documentation was not provided to support that the paid time off charged to the grant was reasonable, and no support was provided for Federal and State unemployment taxes, workers’ compensation costs, retirement plan fees, and other benefit costs.
2024-007. FINDING (Noncompliance with Activities Allowed or Unallowed and Allowable Costs and Cost Principles Requirements) Federal Department: U.S. Department of Education Assistance Listing Number: 84.425D Cluster Name: Education Stabilization Fund Program Name: Elementary and Secondary School Emergency Relief Fund Award Number: S425D210041 Questioned Cost: None Program Expenditures: $1,222,010 Cluster Expenditures: $1,466,030 Governors State University (University) did not comply with activities allowed or unallowed and allowable costs and cost principles requirements. CONDITION During our review of the Illinois Tutoring Initiative program under the Elementary and Secondary School Emergency Relief (ESSER) Fund which had total expenditures of $1,222,010, we identified 1 of 25 (4%) expenditures was inappropriately charged to the grant. The University inadvertently charged Central Management Services (CMS) insurance of $414 for an employee who did not work on the program. The sample was not intended to be, and was not, a statistically valid sample. CRITERIA The Code of Federal Regulations (2 CFR 200.431(c)) requires the University to allocate fringe benefits to federal awards and all other activities in a manner consistent with the pattern of benefits attributable to the individuals or group(s) of employees whose salaries and wages are chargeable to such federal awards and other activities, and charged as direct or indirect costs following the University's accounting practices. Additionally, the Uniform Guidance (2 CFR 200.303(a)) requires nonfederal entities receiving federal awards to establish and maintain effective internal control designed to reasonably ensure compliance with federal laws, statutes, regulations, and the terms and conditions of the federal award. CAUSE University officials stated the charge was meant for a different federal grant, but was inadvertently assigned to the ESSER grant due to a formula error in the supporting spreadsheet. EFFECT Failure to accurately charge the correct grant may result in disallowance of federal expenditures and questioned costs, and could jeopardize future federal funding. (Finding Code No. 2024-007) RECOMMENDATION We recommend the University improve its procedures to ensure fringe benefits allocated to the grant align consistently with the salaries and wages charged to the grant. UNIVERSITY RESPONSE The University agrees with this finding and accepts the recommendation. More stringent review procedures have been implemented to prevent the recurrence of this issue.
Criteria Part 2, CFR Part 200.430 notes “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed”. The document continues to state that documentation must “Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.” Additionally, Part 200.431 states “The cost of fringe benefits in the form of regular compensation paid to employees during periods of authorized absences from the job, such as for annual leave, family-related leave, sick leave, holidays, court leave, military leave, administrative leave, and other similar benefits, are allowable is all of the following criteria are met:”. The criteria include that “the costs are equitably allocated to all related activities, including Federal awards.” Condition While performing tests of NBCC’s internal controls over payroll transactions, we noted the Organization had incorrectly allocated time for 8 of the 50 selections. Additionally, we noted that the Organization had allocated time for leave based on pre-determined budgets, rather than actual hours worked in the pay period, for 27 of the 50 selections. Cause NBCC has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Repeat Finding No. Effect Noncompliance may impact future funding from Federal awards. Recommendation We recommend NBCC implement proper internal control procedures to document hours worked, by employee and by grant; and maintain the documentation to support charges allocated to each Federal award.
Criteria Part 2, CFR Part 200.430 notes “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed”. The document continues to state that documentation must “Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.” Additionally, Part 200.431 states “The cost of fringe benefits in the form of regular compensation paid to employees during periods of authorized absences from the job, such as for annual leave, family-related leave, sick leave, holidays, court leave, military leave, administrative leave, and other similar benefits, are allowable is all of the following criteria are met:”. The criteria include that “the costs are equitably allocated to all related activities, including Federal awards.” Condition While performing tests of NBCC’s internal controls over payroll transactions, we noted the Organization had incorrectly allocated time for 8 of the 50 selections. Additionally, we noted that the Organization had allocated time for leave based on pre-determined budgets, rather than actual hours worked in the pay period, for 27 of the 50 selections. Cause NBCC has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Repeat Finding No. Effect Noncompliance may impact future funding from Federal awards. Recommendation We recommend NBCC implement proper internal control procedures to document hours worked, by employee and by grant; and maintain the documentation to support charges allocated to each Federal award.
Criteria Part 2, CFR Part 200.430 notes “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed”. The document continues to state that documentation must “Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.” Additionally, Part 200.431 states “The cost of fringe benefits in the form of regular compensation paid to employees during periods of authorized absences from the job, such as for annual leave, family-related leave, sick leave, holidays, court leave, military leave, administrative leave, and other similar benefits, are allowable is all of the following criteria are met:”. The criteria include that “the costs are equitably allocated to all related activities, including Federal awards.” Condition While performing tests of NBCC’s internal controls over payroll transactions, we noted the Organization had incorrectly allocated time for 8 of the 50 selections. Additionally, we noted that the Organization had allocated time for leave based on pre-determined budgets, rather than actual hours worked in the pay period, for 27 of the 50 selections. Cause NBCC has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Repeat Finding No. Effect Noncompliance may impact future funding from Federal awards. Recommendation We recommend NBCC implement proper internal control procedures to document hours worked, by employee and by grant; and maintain the documentation to support charges allocated to each Federal award.
Criteria Part 2, CFR Part 200.430 notes “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed”. The document continues to state that documentation must “Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.” Additionally, Part 200.431 states “The cost of fringe benefits in the form of regular compensation paid to employees during periods of authorized absences from the job, such as for annual leave, family-related leave, sick leave, holidays, court leave, military leave, administrative leave, and other similar benefits, are allowable is all of the following criteria are met:”. The criteria include that “the costs are equitably allocated to all related activities, including Federal awards.” Condition While performing tests of NBCC’s internal controls over payroll transactions, we noted the Organization had incorrectly allocated time for 8 of the 50 selections. Additionally, we noted that the Organization had allocated time for leave based on pre-determined budgets, rather than actual hours worked in the pay period, for 27 of the 50 selections. Cause NBCC has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Repeat Finding No. Effect Noncompliance may impact future funding from Federal awards. Recommendation We recommend NBCC implement proper internal control procedures to document hours worked, by employee and by grant; and maintain the documentation to support charges allocated to each Federal award.
2024-002: Healthy Start Fringe Rate Grantor: Department of Health and Human Services Program Title: Healthy Start Initiative Award Name: Healthy Start Initiative‐Eliminating Racial/Ethnic Disparities Award Number: H4927805 Assistance Listing Title: Healthy Start Initiative Assistance Listing Number: 93.926 Award Year: April 1, 2023 – August 31, 2024 Passthrough Entity: None Criteria Per 2 CFR 200.431(c), the cost of fringe benefits are allowable provided that the benefits are reasonable. Condition Per the Johns Hopkins All Children's Hospital, Inc. Hospital Rate Agreement dated 12/23/2022, the agreedupon fringe rate was 27% for the period 7/1/2022 to 6/30/2026. JHHS charged costs for fringe benefits to the award at the rate of 29% during the 2024 fiscal year. Cause Since the Notice of Award #4H49MC27805-10-05 stated that up to 25% of the total approved budget may be reallocated within the approved categories without prior approval, management believed they were allowed to charge fringe costs at a rate higher than the agreed-upon negotiated rate if the difference in cost did not exceed 25% of the budget. Effect JHHS charged $5,906 of additional fringe costs to the award in excess of the agreed-upon negotiated rate. Questioned Costs The $5,906 of additional fringe charged to this award in excess of agreed-upon fringe rate is a questioned cost. Recommendation JHHS should establish a process to ensure that the appropriate or agreed-upon negotiated fringe rate is being used, unless the award agreement allows for any modification of the negotiated rate or prior agency approval is obtained. Management’s Views and Corrective Action Plan Refer to Management’s View’s and Corrective Action Plan at the end of the report.
Assistance Listing Number: 21.027 Program Title: Coronavirus State and Local Fiscal Recovery Funds Federal Award Number: N/A Federal Award Year: 2023/2024 Pass Through Entity: Chicago Cook Workforce Partnership Criteria: In accordance with 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. Condition: The Organization is either lacking or has nonconforming written policies and procedures for the following administrative functions, required by0 the Uniform Guidance: 1. Financial management - 2 CFR 200.302(b)(6) - spacing 2. Allowable Costs - 2 CFR 200.302(b)(7) 3. Federal payment - 2 CFR 200.305(b)(1) 4. Procurement - 2 CFR 200.318(a) and 2 CFR 200.318(c)(1) 5. Competition - 2 CFR 200.319(d) 6. Methods of procurement to be followed - 2 CFR 200.320 7. Compensation (Personal Services) - 2 CFR 200.430(a)(1) 8. Compensation (Fringe Benefits - Leave) - 2 CFR 200.431(b)(1) 9. Relocation costs of employees - 2 CFR 200.464(a)(2) 10. Travel costs - 2 CFR 200.474 Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our review of the Organization’s policies and procedures, which were found to be not in accordance with Uniform Guidance. Cause: The Organization was not aware of the specific Uniform Guidance requirements for certain written policies and procedures. Effect: The Organization did not have these policies and procedures in place to reasonably ensure that program functions are achieved effectively, efficiently and in compliance with Federal statutes, regulations, and the terms and conditions of the award. The Organization was not in compliance with the administrative requirements set forth in the Uniform Guidance. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization design procedures and implement internal control procedures to ensure that the Uniform Guidance administrative requirements are met. Views of Responsible Officials and Corrective Action Plan: See corrective action plan attached to financial statements.
Finding 2023-001 – Allocation of Fringe Benefits Federal Agency: U.S. Department of Health and Human Services Major Program: AL# 93.104 Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) Type of Finding: Significant deficiency in Internal Control over Compliance (Allowable Costs) Criteria: Per guidance: 2CFR 200.431 Compensation—fringe benefits.(i) (1) … Costs of severance pay are allowable only to the extent that in each case, it is required by (i) Law; (ii) Employer-employee agreement; (iii) Established policy that constitutes, in effect, an implied agreement on the non-Federal entity's part; or (iv) Circumstances of the particular employment. In accordance with 2 CFR 200.430(i), payroll costs charged to federal awards must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: The Organization allocates fringe costs to grants based on budget while capturing actual costs in a fringe cost pool. During the audit we found that the fringe cost pool contained severance pay that exceeded the organization policy and thus unallowable. The removal of these costs resulted in the overcharging of fringe benefits to all projects. Questioned Costs: None Cause: Management does not have sufficient internal controls to ensure fringe benefits are allowable and that estimated fringe allocations represent with actual costs. Effect: Expenditures that are not properly identified within the accounting system or supported by underlying documentation are at risk of being owed back to the funding source. Recommendation: Management and those charged with governance should consider increasing controls around ensuring costs charged to the fringe pool are allowable under Uniform Guidance cost principles. The fringe allocation percentage for reimbursement should be reviewed and approved to ensure it represents actual direct costs incurred. This review should be documented and performed monthly (quarterly at minimum). Management’s Response: Management’s response to the finding is discussed in the attached Corrective Action Plan.
Criteria: In accordance with 2 CFR Section 200.431.8(d), fringe benefits may be assigned to cost objectives by identifying specific benefits to specific individuals or by allocating on the basis of entity-wide salaries and wages of the employees receiving the benefits. When the allocation method is used, separate allocations must be made to selective groupings of employees, unless the non-Federal entity demonstrates that costs in relationships to salaries and wages do not differ significantly for different groups of employees. Condition: During our testing of fringe benefits expenses, we noted that all 174 sampled transactions did not have adequate supporting documentation. Charges to the Federal award for fringe benefits were based on an anticipated fringe benefit cost, for which the Corporation did not maintain an assignment of cost objectives calculation and its related requirements. Cause: The Corporation did not have formal process and policies to demonstrate adherence to the fringe benefits cost objectives of 2 CFR Section 200.431.8(d). Effect or Potential Effect: We were unable to determine whether charges to Federal awards for fringe benefits reflect specific time worked or amounts allocated to specific Federal programs, even though the charges are not in excess of amounts approved for the grant period. Questioned costs: Unknown Context: We selected 174 fringe benefit transactions charged to the Federal programs to test controls over allowable costs. Each fringe benefit transaction was calculated by applying a fringe benefit cost rate to actual salaries and wages of each employee tested. The fringe benefit cost rate was based on anticipated fringe benefit cost rate which was neither supported by an actual calculation nor analysis of the related group of employees used in such calculation. This is a condition identified per review of the Corporation’s compliance with specified requirements using a statistically valid sample. Repeat finding: This is a repeat finding from prior year. This was reported as finding 2022-006 in the 2022 report. Recommendation: We recommend the Corporation develop and incorporate internal controls and policies to demonstrate adherence to the fringe benefits cost objectives of 2 CFR Section 200.431.8(d). View of Responsible Officials: Due to turnover of several key financial executives and personnel, the Corporation did not maintain evidence of assignment of cost objectives calculations.