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.
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.
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.
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.
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.
Assistance Listing Number(s): 10.912 Name of Federal Program or Cluster: Environmental Quality Incentives Program Name of Federal Agency: Department of Agriculture Award Periods: September 3, 2019 through July 31, 2024 and September 30, 2020 through September 30, 2025 Assistance Listing Number(s): 10.924 Name of Federal Program or Cluster: Conservation Stewardship Program Name of Federal Agency: Department of Agriculture Award Periods: September 3, 2019 through July 31, 2024 and September 30, 2020 through September 30, 2025 Criteria or Specific Requirement: Subparts D and E of 2 CFR Part 200 require a nonfederal entity to establish written policies, procedures, and standards of conduct, including procedures to implement the cash management requirements of 2 CFR section 200.305, procedures that comply with the procurement standards of 2 CFR sections 200.318 through 200.326, and procedures for determining the allowability of costs in accordance with Subpart E of 2 CFR Part 200. Specifically, 2 CFR sections 200.430, 200.431, and 200.475 require written policies. Condition: There are no written policies and procedures for allowable costs/cost principles, cash management, procurement and suspension and debarment requirements. Cause: The Organization does not have a process for reviewing their accounting policies and procedures manual on a regular basis to ensure written procedures conform to Uniform Guidance requirements. Effect or Potential Effect: A lack of written policies, procedures, and standards of conduct may result in noncompliance with the requirements of federal programs and/or disallowed costs. Repeat Finding: No Recommendation: We recommend the Organization’s written policies and procedures be reviewed and updated for compliance with Uniform Guidance. The organization should become familiar with the requirements of Subparts D and E of 2 CFR Part 200 and establish appropriate written policies, procedures, and standards of conduct. Views of Responsible Officials: Management agrees with the finding and they will evaluate our findings to determine an appropriate corrective action.
Assistance Listing Number(s): 10.912 Name of Federal Program or Cluster: Environmental Quality Incentives Program Name of Federal Agency: Department of Agriculture Award Periods: September 3, 2019 through July 31, 2024 and September 30, 2020 through September 30, 2025 Assistance Listing Number(s): 10.924 Name of Federal Program or Cluster: Conservation Stewardship Program Name of Federal Agency: Department of Agriculture Award Periods: September 3, 2019 through July 31, 2024 and September 30, 2020 through September 30, 2025 Criteria or Specific Requirement: Subparts D and E of 2 CFR Part 200 require a nonfederal entity to establish written policies, procedures, and standards of conduct, including procedures to implement the cash management requirements of 2 CFR section 200.305, procedures that comply with the procurement standards of 2 CFR sections 200.318 through 200.326, and procedures for determining the allowability of costs in accordance with Subpart E of 2 CFR Part 200. Specifically, 2 CFR sections 200.430, 200.431, and 200.475 require written policies. Condition: There are no written policies and procedures for allowable costs/cost principles, cash management, procurement and suspension and debarment requirements. Cause: The Organization does not have a process for reviewing their accounting policies and procedures manual on a regular basis to ensure written procedures conform to Uniform Guidance requirements. Effect or Potential Effect: A lack of written policies, procedures, and standards of conduct may result in noncompliance with the requirements of federal programs and/or disallowed costs. Repeat Finding: No Recommendation: We recommend the Organization’s written policies and procedures be reviewed and updated for compliance with Uniform Guidance. The organization should become familiar with the requirements of Subparts D and E of 2 CFR Part 200 and establish appropriate written policies, procedures, and standards of conduct. Views of Responsible Officials: Management agrees with the finding and they will evaluate our findings to determine an appropriate corrective action.
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.
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.
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.
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.
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.
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.
Assistance Listing Number(s): 10.912 Name of Federal Program or Cluster: Environmental Quality Incentives Program Name of Federal Agency: Department of Agriculture Award Periods: September 3, 2019 through July 31, 2024 and September 30, 2020 through September 30, 2025 Assistance Listing Number(s): 10.924 Name of Federal Program or Cluster: Conservation Stewardship Program Name of Federal Agency: Department of Agriculture Award Periods: September 3, 2019 through July 31, 2024 and September 30, 2020 through September 30, 2025 Criteria or Specific Requirement: Subparts D and E of 2 CFR Part 200 require a nonfederal entity to establish written policies, procedures, and standards of conduct, including procedures to implement the cash management requirements of 2 CFR section 200.305, procedures that comply with the procurement standards of 2 CFR sections 200.318 through 200.326, and procedures for determining the allowability of costs in accordance with Subpart E of 2 CFR Part 200. Specifically, 2 CFR sections 200.430, 200.431, and 200.475 require written policies. Condition: There are no written policies and procedures for allowable costs/cost principles, cash management, procurement and suspension and debarment requirements. Cause: The Organization does not have a process for reviewing their accounting policies and procedures manual on a regular basis to ensure written procedures conform to Uniform Guidance requirements. Effect or Potential Effect: A lack of written policies, procedures, and standards of conduct may result in noncompliance with the requirements of federal programs and/or disallowed costs. Repeat Finding: No Recommendation: We recommend the Organization’s written policies and procedures be reviewed and updated for compliance with Uniform Guidance. The organization should become familiar with the requirements of Subparts D and E of 2 CFR Part 200 and establish appropriate written policies, procedures, and standards of conduct. Views of Responsible Officials: Management agrees with the finding and they will evaluate our findings to determine an appropriate corrective action.
Assistance Listing Number(s): 10.912 Name of Federal Program or Cluster: Environmental Quality Incentives Program Name of Federal Agency: Department of Agriculture Award Periods: September 3, 2019 through July 31, 2024 and September 30, 2020 through September 30, 2025 Assistance Listing Number(s): 10.924 Name of Federal Program or Cluster: Conservation Stewardship Program Name of Federal Agency: Department of Agriculture Award Periods: September 3, 2019 through July 31, 2024 and September 30, 2020 through September 30, 2025 Criteria or Specific Requirement: Subparts D and E of 2 CFR Part 200 require a nonfederal entity to establish written policies, procedures, and standards of conduct, including procedures to implement the cash management requirements of 2 CFR section 200.305, procedures that comply with the procurement standards of 2 CFR sections 200.318 through 200.326, and procedures for determining the allowability of costs in accordance with Subpart E of 2 CFR Part 200. Specifically, 2 CFR sections 200.430, 200.431, and 200.475 require written policies. Condition: There are no written policies and procedures for allowable costs/cost principles, cash management, procurement and suspension and debarment requirements. Cause: The Organization does not have a process for reviewing their accounting policies and procedures manual on a regular basis to ensure written procedures conform to Uniform Guidance requirements. Effect or Potential Effect: A lack of written policies, procedures, and standards of conduct may result in noncompliance with the requirements of federal programs and/or disallowed costs. Repeat Finding: No Recommendation: We recommend the Organization’s written policies and procedures be reviewed and updated for compliance with Uniform Guidance. The organization should become familiar with the requirements of Subparts D and E of 2 CFR Part 200 and establish appropriate written policies, procedures, and standards of conduct. Views of Responsible Officials: Management agrees with the finding and they will evaluate our findings to determine an appropriate corrective action.
Finding 2023-002 Identification of the federal program: Research and Development (R&D) Cluster Federal Agency: U.S. Department of Health and Human Services Assistance Listing: 93.399 Award Numbers: 5UG1CA189830-09, 5UG1CA189830-10 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR Section 200.431 of the Uniform Guidance states: “Compensation—fringe benefits. (a) Fringe benefits are allowances and services provided by employers to their employees as compensation in addition to regular salaries and wages. Fringe benefits include, but are not limited to, the costs of leave (vacation, family-related, sick or military), employee insurance, pensions, and unemployment benefit plans. Except as provided elsewhere in these principles, the costs of fringe benefits are allowable provided that the benefits are reasonable and are required by law, non-Federal entity-employee agreement, or an established policy of the non-Federal entity.” Condition: Management calculated fringe expense charged to the R&D Cluster using the incorrect fringe cost rate. Cause: Management’s internal controls over the review and approval of fringe expense charged to the federal awards within the R&D Cluster were not sufficiently precise to identify that the incorrect fringe cost rate was used to calculate benefits charged. Effect or potential effect: Fringe expense charged to the R&D Cluster federal awards was overstated. Questioned costs: Questioned costs represent the difference between fringe expense calculated at the approved fringe rate versus the fringe rate used by management. Correct Amount to Be Recorded Original Amount Recorded Questioned Costs Correct Rate: 30% Incorrect Rate: 33% Fringe: $303,201 Fringe: $333,521 $ 30,320 AL # 93.399 NIH Award 5UG1CA189830-09: $25,688 AL # 93.399 NIH Award 5UG1CA189830-10: $4,632 Context: Management calculated and approved a fringe rate for 2023 of 30%; however, the fringe expense calculation used a fringe rate of 33%. We selected 13 fringe transactions to test compliance, and we identified that 100% of our selections were exceptions as the incorrect rate was used to calculate fringe. The total R&D Cluster expenditures reported on the Schedule of Expenditures of Federal Awards are $3,960,439 for the year ended September 30, 2023, which includes fringe costs of $303,201, which represents 7.7% of total R&D Cluster expenditures. Identification as a repeat finding, if applicable: Not a repeat finding. Recommendation: Management should design and implement effective internal controls over the review and approval of the monthly fringe calculation. Views of responsible officials: Management agrees with the finding. Management calculated and approved an annual fringe benefit rate to be used for its fiscal year 2023, but failed to update the rate on its internal calculation during fiscal year 2023 from the prior year rate. It was ultimately identified by management in early fiscal year 2024. Management has confirmed the $30,320 of questioned cost arising from the overstatement of fringe benefits would easily be replaced by unreimbursed grant-eligible direct labor costs. Therefore, management contends it still earned the grant awarded funds, despite the questioned costs. Additionally, management has provided re-education to grant personnel preparing and reviewing calculations to ensure an adequate understanding of the key calculation elements are identified and validated for the grant year.
Finding 2023-002 Identification of the federal program: Research and Development (R&D) Cluster Federal Agency: U.S. Department of Health and Human Services Assistance Listing: 93.399 Award Numbers: 5UG1CA189830-09, 5UG1CA189830-10 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR Section 200.431 of the Uniform Guidance states: “Compensation—fringe benefits. (a) Fringe benefits are allowances and services provided by employers to their employees as compensation in addition to regular salaries and wages. Fringe benefits include, but are not limited to, the costs of leave (vacation, family-related, sick or military), employee insurance, pensions, and unemployment benefit plans. Except as provided elsewhere in these principles, the costs of fringe benefits are allowable provided that the benefits are reasonable and are required by law, non-Federal entity-employee agreement, or an established policy of the non-Federal entity.” Condition: Management calculated fringe expense charged to the R&D Cluster using the incorrect fringe cost rate. Cause: Management’s internal controls over the review and approval of fringe expense charged to the federal awards within the R&D Cluster were not sufficiently precise to identify that the incorrect fringe cost rate was used to calculate benefits charged. Effect or potential effect: Fringe expense charged to the R&D Cluster federal awards was overstated. Questioned costs: Questioned costs represent the difference between fringe expense calculated at the approved fringe rate versus the fringe rate used by management. Correct Amount to Be Recorded Original Amount Recorded Questioned Costs Correct Rate: 30% Incorrect Rate: 33% Fringe: $303,201 Fringe: $333,521 $ 30,320 AL # 93.399 NIH Award 5UG1CA189830-09: $25,688 AL # 93.399 NIH Award 5UG1CA189830-10: $4,632 Context: Management calculated and approved a fringe rate for 2023 of 30%; however, the fringe expense calculation used a fringe rate of 33%. We selected 13 fringe transactions to test compliance, and we identified that 100% of our selections were exceptions as the incorrect rate was used to calculate fringe. The total R&D Cluster expenditures reported on the Schedule of Expenditures of Federal Awards are $3,960,439 for the year ended September 30, 2023, which includes fringe costs of $303,201, which represents 7.7% of total R&D Cluster expenditures. Identification as a repeat finding, if applicable: Not a repeat finding. Recommendation: Management should design and implement effective internal controls over the review and approval of the monthly fringe calculation. Views of responsible officials: Management agrees with the finding. Management calculated and approved an annual fringe benefit rate to be used for its fiscal year 2023, but failed to update the rate on its internal calculation during fiscal year 2023 from the prior year rate. It was ultimately identified by management in early fiscal year 2024. Management has confirmed the $30,320 of questioned cost arising from the overstatement of fringe benefits would easily be replaced by unreimbursed grant-eligible direct labor costs. Therefore, management contends it still earned the grant awarded funds, despite the questioned costs. Additionally, management has provided re-education to grant personnel preparing and reviewing calculations to ensure an adequate understanding of the key calculation elements are identified and validated for the grant year.
Federal Aid Policies Finding 2023-002 Condition: The Authority’s management has completely turned over and been restructured. However, the Authority’s policies for federal aid approved in 2021 have not been revised to update for the current management structure. The policies have also not been updated for changes in the 2 CFR 200 that have occurred. Criteria: The 2 CFR 200 requires the adoption of federal aid policies and that they are to be updated and maintained in accordance with the federal regulations. These policies include the following along with the 2 CFR 200 reference. a. Cash Management Procedure –200.302(b)(6) and 200.305 b. Cost Allowability Procedures –200.302(b)(7) c. Conflicts of Interest Policy –200.318(c) d. Procurement Procedures –200.318(a) and 200.319(d) e. Method for Conducting Technical Evaluations of Proposals and Selecting Recipients –200.320(b)(2)(ii) f. Travel Policy –200.475(a) g. Procedures for Managing Equipment –200.313(d) h. Employee Benefits –200.431 Cause: The Authority has experienced a high turnover of employees since 2021 when the policies were adopted and have not been reviewed since their adoption. Effect: The Authority is noncompliant with 2 CFR 200. Directive: We direct the Authority review and update all federal aid policies and implement procedures to ensure that they are being reviewed at least once a year for changes in the Authority’s management structure or changes that occur in the 2 CFR 200. Management’s Response--Corrective Action Plan: Contact person is Rufus Adams, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority will update their federal policies to comply with 2 CFR 200 and will review all policies on an annual basis going forward.
Federal Aid Policies Finding 2023-002 Condition: The Authority’s management has completely turned over and been restructured. However, the Authority’s policies for federal aid approved in 2021 have not been revised to update for the current management structure. The policies have also not been updated for changes in the 2 CFR 200 that have occurred. Criteria: The 2 CFR 200 requires the adoption of federal aid policies and that they are to be updated and maintained in accordance with the federal regulations. These policies include the following along with the 2 CFR 200 reference. a. Cash Management Procedure –200.302(b)(6) and 200.305 b. Cost Allowability Procedures –200.302(b)(7) c. Conflicts of Interest Policy –200.318(c) d. Procurement Procedures –200.318(a) and 200.319(d) e. Method for Conducting Technical Evaluations of Proposals and Selecting Recipients –200.320(b)(2)(ii) f. Travel Policy –200.475(a) g. Procedures for Managing Equipment –200.313(d) h. Employee Benefits –200.431 Cause: The Authority has experienced a high turnover of employees since 2021 when the policies were adopted and have not been reviewed since their adoption. Effect: The Authority is noncompliant with 2 CFR 200. Directive: We direct the Authority review and update all federal aid policies and implement procedures to ensure that they are being reviewed at least once a year for changes in the Authority’s management structure or changes that occur in the 2 CFR 200. Management’s Response--Corrective Action Plan: Contact person is Rufus Adams, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority will update their federal policies to comply with 2 CFR 200 and will review all policies on an annual basis going forward.
Federal Aid Policies Finding 2023-002 Condition: The Authority’s management has completely turned over and been restructured. However, the Authority’s policies for federal aid approved in 2021 have not been revised to update for the current management structure. The policies have also not been updated for changes in the 2 CFR 200 that have occurred. Criteria: The 2 CFR 200 requires the adoption of federal aid policies and that they are to be updated and maintained in accordance with the federal regulations. These policies include the following along with the 2 CFR 200 reference. a. Cash Management Procedure –200.302(b)(6) and 200.305 b. Cost Allowability Procedures –200.302(b)(7) c. Conflicts of Interest Policy –200.318(c) d. Procurement Procedures –200.318(a) and 200.319(d) e. Method for Conducting Technical Evaluations of Proposals and Selecting Recipients –200.320(b)(2)(ii) f. Travel Policy –200.475(a) g. Procedures for Managing Equipment –200.313(d) h. Employee Benefits –200.431 Cause: The Authority has experienced a high turnover of employees since 2021 when the policies were adopted and have not been reviewed since their adoption. Effect: The Authority is noncompliant with 2 CFR 200. Directive: We direct the Authority review and update all federal aid policies and implement procedures to ensure that they are being reviewed at least once a year for changes in the Authority’s management structure or changes that occur in the 2 CFR 200. Management’s Response--Corrective Action Plan: Contact person is Rufus Adams, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority will update their federal policies to comply with 2 CFR 200 and will review all policies on an annual basis going forward.
Federal Aid Policies Finding 2023-002 Condition: The Authority’s management has completely turned over and been restructured. However, the Authority’s policies for federal aid approved in 2021 have not been revised to update for the current management structure. The policies have also not been updated for changes in the 2 CFR 200 that have occurred. Criteria: The 2 CFR 200 requires the adoption of federal aid policies and that they are to be updated and maintained in accordance with the federal regulations. These policies include the following along with the 2 CFR 200 reference. a. Cash Management Procedure –200.302(b)(6) and 200.305 b. Cost Allowability Procedures –200.302(b)(7) c. Conflicts of Interest Policy –200.318(c) d. Procurement Procedures –200.318(a) and 200.319(d) e. Method for Conducting Technical Evaluations of Proposals and Selecting Recipients –200.320(b)(2)(ii) f. Travel Policy –200.475(a) g. Procedures for Managing Equipment –200.313(d) h. Employee Benefits –200.431 Cause: The Authority has experienced a high turnover of employees since 2021 when the policies were adopted and have not been reviewed since their adoption. Effect: The Authority is noncompliant with 2 CFR 200. Directive: We direct the Authority review and update all federal aid policies and implement procedures to ensure that they are being reviewed at least once a year for changes in the Authority’s management structure or changes that occur in the 2 CFR 200. Management’s Response--Corrective Action Plan: Contact person is Rufus Adams, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority will update their federal policies to comply with 2 CFR 200 and will review all policies on an annual basis going forward.
Federal Aid Policies Finding 2023-002 Condition: The Authority’s management has completely turned over and been restructured. However, the Authority’s policies for federal aid approved in 2021 have not been revised to update for the current management structure. The policies have also not been updated for changes in the 2 CFR 200 that have occurred. Criteria: The 2 CFR 200 requires the adoption of federal aid policies and that they are to be updated and maintained in accordance with the federal regulations. These policies include the following along with the 2 CFR 200 reference. a. Cash Management Procedure –200.302(b)(6) and 200.305 b. Cost Allowability Procedures –200.302(b)(7) c. Conflicts of Interest Policy –200.318(c) d. Procurement Procedures –200.318(a) and 200.319(d) e. Method for Conducting Technical Evaluations of Proposals and Selecting Recipients –200.320(b)(2)(ii) f. Travel Policy –200.475(a) g. Procedures for Managing Equipment –200.313(d) h. Employee Benefits –200.431 Cause: The Authority has experienced a high turnover of employees since 2021 when the policies were adopted and have not been reviewed since their adoption. Effect: The Authority is noncompliant with 2 CFR 200. Directive: We direct the Authority review and update all federal aid policies and implement procedures to ensure that they are being reviewed at least once a year for changes in the Authority’s management structure or changes that occur in the 2 CFR 200. Management’s Response--Corrective Action Plan: Contact person is Rufus Adams, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority will update their federal policies to comply with 2 CFR 200 and will review all policies on an annual basis going forward.
Item 2023‐002 Written policies, procedures, and standards of conduct COVID 19 – Coronavirus State and Local Fiscal Recovery Fund Assistance Listing Number 21.027 U.S. Department of Treasury Grant period: Year ended September 30, 2023 Questioned Costs – $0 Condition – The City does not have all of the written policies, procedures and standards of conduct required by UG. Criteria – 2 CFR 200.303 requires the non‐Federal entity to “(a) establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the non‐Federal entity is managing the Federal statutes, regulations, and the terms and conditions of the Federal award.” Grantees should have written policies, procedures, and standards of conduct as required by 2 CFR 200, Subparts D & E of the Uniform Guidance. 2 CFR 200, Subparts D & E requires the non‐ Federal entity to establish and maintain written policies, procedures, and standards of conduct including internal controls over the Federal awards that provides reasonable assurance that the non‐ Federal entity is managing the Federal statutes, regulations, and the terms and conditions of the Federal award. Specific requirements relate to the following: § 200.302 Financial management § 200.305 Payment § 200.319 Competition § 200.320 Methods of procurement to be followed § 200.430 Compensation—personal services § 200.431 Compensation—fringe benefits Cause of Condition – The City has failed to prepare written policies, procedures, and standards of conduct as required by 2 CFR 200, Subparts D & E of the Uniform Guidance. Potential Effect of Condition – Lack of written policies, procedures, and standards of conduct could result in noncompliance related to federal awards. Recommendation – We recommend that the City implement the required written policies and procedures. Management’s Response – Management agrees with the finding and will implement the necessary written policies to comply with the UG. Management anticipates completion by September 30, 2024.
Significant Deficiency in Internal Controls over Compliance (Allowable Costs), and Noncompliance with Laws and Regulations. Condition: Fringe benefits, including bonus distributions and increased Health Savings Account (HSA) and retirement contributions, were provided and charged to federal programs in the absence of adequate written policies and procedures. Programs Affected: Child Welfare Continuum of Care programs; Assistance Listing Numbers: 93.558, 93.658, 93.659, 93.667, 93.778. Criteria: 2 CFR 200.431(c) states that 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; pension plan costs; and other similar benefits are allowable, provided such benefits are granted under established written policies. Cause: Original policies and procedures for fringe benefits lacked necessary detail, and subsequent updates have not been made. Effect: Unallowed costs may have been charged to the grant. Questioned Costs: Unknown. Due to MDHHS’s funding methodology for the Continuum of Care grants, the total federal portion of fringe benefits cannot be determined. Context: Fringe benefit policies lacked specificity regarding the process by which benefits such as bonus distributions, and changes to other forms of compensation such as HSA and retirement contributions, were determined. The Organization performed various due diligence activities to support such determinations, including comparability studies and board approval of all decisions made, however written policies to reflect these activities did not exist. Recommendation: The Organization should establish a formal written policy that accurately reflects the fringe benefits charged to federal programs, including but not limited to the bonus structure, retirement contributions, and HSA contributions. Organization’s Response: The Organization agrees with the finding and will implement corrective action to address the condition.
Significant Deficiency in Internal Controls over Compliance (Allowable Costs), and Noncompliance with Laws and Regulations. Condition: Fringe benefits, including bonus distributions and increased Health Savings Account (HSA) and retirement contributions, were provided and charged to federal programs in the absence of adequate written policies and procedures. Programs Affected: Child Welfare Continuum of Care programs; Assistance Listing Numbers: 93.558, 93.658, 93.659, 93.667, 93.778. Criteria: 2 CFR 200.431(c) states that 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; pension plan costs; and other similar benefits are allowable, provided such benefits are granted under established written policies. Cause: Original policies and procedures for fringe benefits lacked necessary detail, and subsequent updates have not been made. Effect: Unallowed costs may have been charged to the grant. Questioned Costs: Unknown. Due to MDHHS’s funding methodology for the Continuum of Care grants, the total federal portion of fringe benefits cannot be determined. Context: Fringe benefit policies lacked specificity regarding the process by which benefits such as bonus distributions, and changes to other forms of compensation such as HSA and retirement contributions, were determined. The Organization performed various due diligence activities to support such determinations, including comparability studies and board approval of all decisions made, however written policies to reflect these activities did not exist. Recommendation: The Organization should establish a formal written policy that accurately reflects the fringe benefits charged to federal programs, including but not limited to the bonus structure, retirement contributions, and HSA contributions. Organization’s Response: The Organization agrees with the finding and will implement corrective action to address the condition.
Significant Deficiency in Internal Controls over Compliance (Allowable Costs), and Noncompliance with Laws and Regulations. Condition: Fringe benefits, including bonus distributions and increased Health Savings Account (HSA) and retirement contributions, were provided and charged to federal programs in the absence of adequate written policies and procedures. Programs Affected: Child Welfare Continuum of Care programs; Assistance Listing Numbers: 93.558, 93.658, 93.659, 93.667, 93.778. Criteria: 2 CFR 200.431(c) states that 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; pension plan costs; and other similar benefits are allowable, provided such benefits are granted under established written policies. Cause: Original policies and procedures for fringe benefits lacked necessary detail, and subsequent updates have not been made. Effect: Unallowed costs may have been charged to the grant. Questioned Costs: Unknown. Due to MDHHS’s funding methodology for the Continuum of Care grants, the total federal portion of fringe benefits cannot be determined. Context: Fringe benefit policies lacked specificity regarding the process by which benefits such as bonus distributions, and changes to other forms of compensation such as HSA and retirement contributions, were determined. The Organization performed various due diligence activities to support such determinations, including comparability studies and board approval of all decisions made, however written policies to reflect these activities did not exist. Recommendation: The Organization should establish a formal written policy that accurately reflects the fringe benefits charged to federal programs, including but not limited to the bonus structure, retirement contributions, and HSA contributions. Organization’s Response: The Organization agrees with the finding and will implement corrective action to address the condition.
Significant Deficiency in Internal Controls over Compliance (Allowable Costs), and Noncompliance with Laws and Regulations. Condition: Fringe benefits, including bonus distributions and increased Health Savings Account (HSA) and retirement contributions, were provided and charged to federal programs in the absence of adequate written policies and procedures. Programs Affected: Child Welfare Continuum of Care programs; Assistance Listing Numbers: 93.558, 93.658, 93.659, 93.667, 93.778. Criteria: 2 CFR 200.431(c) states that 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; pension plan costs; and other similar benefits are allowable, provided such benefits are granted under established written policies. Cause: Original policies and procedures for fringe benefits lacked necessary detail, and subsequent updates have not been made. Effect: Unallowed costs may have been charged to the grant. Questioned Costs: Unknown. Due to MDHHS’s funding methodology for the Continuum of Care grants, the total federal portion of fringe benefits cannot be determined. Context: Fringe benefit policies lacked specificity regarding the process by which benefits such as bonus distributions, and changes to other forms of compensation such as HSA and retirement contributions, were determined. The Organization performed various due diligence activities to support such determinations, including comparability studies and board approval of all decisions made, however written policies to reflect these activities did not exist. Recommendation: The Organization should establish a formal written policy that accurately reflects the fringe benefits charged to federal programs, including but not limited to the bonus structure, retirement contributions, and HSA contributions. Organization’s Response: The Organization agrees with the finding and will implement corrective action to address the condition.
Significant Deficiency in Internal Controls over Compliance (Allowable Costs), and Noncompliance with Laws and Regulations. Condition: Fringe benefits, including bonus distributions and increased Health Savings Account (HSA) and retirement contributions, were provided and charged to federal programs in the absence of adequate written policies and procedures. Programs Affected: Child Welfare Continuum of Care programs; Assistance Listing Numbers: 93.558, 93.658, 93.659, 93.667, 93.778. Criteria: 2 CFR 200.431(c) states that 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; pension plan costs; and other similar benefits are allowable, provided such benefits are granted under established written policies. Cause: Original policies and procedures for fringe benefits lacked necessary detail, and subsequent updates have not been made. Effect: Unallowed costs may have been charged to the grant. Questioned Costs: Unknown. Due to MDHHS’s funding methodology for the Continuum of Care grants, the total federal portion of fringe benefits cannot be determined. Context: Fringe benefit policies lacked specificity regarding the process by which benefits such as bonus distributions, and changes to other forms of compensation such as HSA and retirement contributions, were determined. The Organization performed various due diligence activities to support such determinations, including comparability studies and board approval of all decisions made, however written policies to reflect these activities did not exist. Recommendation: The Organization should establish a formal written policy that accurately reflects the fringe benefits charged to federal programs, including but not limited to the bonus structure, retirement contributions, and HSA contributions. Organization’s Response: The Organization agrees with the finding and will implement corrective action to address the condition.
Significant Deficiency in Internal Controls over Compliance (Allowable Costs), and Noncompliance with Laws and Regulations. Condition: Fringe benefits, including bonus distributions and increased Health Savings Account (HSA) and retirement contributions, were provided and charged to federal programs in the absence of adequate written policies and procedures. Programs Affected: Child Welfare Continuum of Care programs; Assistance Listing Numbers: 93.558, 93.658, 93.659, 93.667, 93.778. Criteria: 2 CFR 200.431(c) states that 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; pension plan costs; and other similar benefits are allowable, provided such benefits are granted under established written policies. Cause: Original policies and procedures for fringe benefits lacked necessary detail, and subsequent updates have not been made. Effect: Unallowed costs may have been charged to the grant. Questioned Costs: Unknown. Due to MDHHS’s funding methodology for the Continuum of Care grants, the total federal portion of fringe benefits cannot be determined. Context: Fringe benefit policies lacked specificity regarding the process by which benefits such as bonus distributions, and changes to other forms of compensation such as HSA and retirement contributions, were determined. The Organization performed various due diligence activities to support such determinations, including comparability studies and board approval of all decisions made, however written policies to reflect these activities did not exist. Recommendation: The Organization should establish a formal written policy that accurately reflects the fringe benefits charged to federal programs, including but not limited to the bonus structure, retirement contributions, and HSA contributions. Organization’s Response: The Organization agrees with the finding and will implement corrective action to address the condition.
Significant Deficiency in Internal Controls over Compliance (Allowable Costs), and Noncompliance with Laws and Regulations. Condition: Fringe benefits, including bonus distributions and increased Health Savings Account (HSA) and retirement contributions, were provided and charged to federal programs in the absence of adequate written policies and procedures. Programs Affected: Child Welfare Continuum of Care programs; Assistance Listing Numbers: 93.558, 93.658, 93.659, 93.667, 93.778. Criteria: 2 CFR 200.431(c) states that 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; pension plan costs; and other similar benefits are allowable, provided such benefits are granted under established written policies. Cause: Original policies and procedures for fringe benefits lacked necessary detail, and subsequent updates have not been made. Effect: Unallowed costs may have been charged to the grant. Questioned Costs: Unknown. Due to MDHHS’s funding methodology for the Continuum of Care grants, the total federal portion of fringe benefits cannot be determined. Context: Fringe benefit policies lacked specificity regarding the process by which benefits such as bonus distributions, and changes to other forms of compensation such as HSA and retirement contributions, were determined. The Organization performed various due diligence activities to support such determinations, including comparability studies and board approval of all decisions made, however written policies to reflect these activities did not exist. Recommendation: The Organization should establish a formal written policy that accurately reflects the fringe benefits charged to federal programs, including but not limited to the bonus structure, retirement contributions, and HSA contributions. Organization’s Response: The Organization agrees with the finding and will implement corrective action to address the condition.
2023-002: Allocable Costs/Cost Principles - Reporting of PTO Time. Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 93.696, Certified Community Behavioral Health Clinic Expansion Grant Federal Award Identification Number and Year: 1H79SM086680-01, Program Grant Period 09/29/2022-09/29/2023 Pass-through Entity: N/A Type: Material weakness in internal controls and material noncompliance with laws and regulations Repeat Finding: No Criteria: Per 2 CFR 200.431, Leave time is an allowable cost if, among other requirements, the costs are equitably allocated to all related activities. Condition: Accrued PTO time was adjusted as of September 30, 2023, however certain employees were transferred over to the grant program that had accrued PTO as of September 30, 2022 that was not taken into account. As a result, the grant was charged PTO time for amounts that had been accrued in prior years in other programs and activities. Identification of How Likely Questioned Costs Were Computed: Based on the accrued PTO schedules as of September 30, 2023 and 2022 Known Questioned Costs: $22,971 Context: There were five employees transferred over to the new grant program, reviewed all five transferred employees PTO accrual. Cause/Effect: This was just an oversight. A schedule was prepared but did not take into account the PTO time the employees had earned prior to transfer to the new grant program. Recommendation: We recommend that the schedule be revised to take into account the PTO time employees have prior to being transferred into the grant activities. View of Responsible Officials and Planned Corrective Action Plan: See attached corrective action plan.
Finding 2023-002 Identification of the federal program: Research and Development (R&D) Cluster Federal Agency: U.S. Department of Health and Human Services Assistance Listing: 93.399 Award Numbers: 5UG1CA189830-09, 5UG1CA189830-10 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR Section 200.431 of the Uniform Guidance states: “Compensation—fringe benefits. (a) Fringe benefits are allowances and services provided by employers to their employees as compensation in addition to regular salaries and wages. Fringe benefits include, but are not limited to, the costs of leave (vacation, family-related, sick or military), employee insurance, pensions, and unemployment benefit plans. Except as provided elsewhere in these principles, the costs of fringe benefits are allowable provided that the benefits are reasonable and are required by law, non-Federal entity-employee agreement, or an established policy of the non-Federal entity.” Condition: Management calculated fringe expense charged to the R&D Cluster using the incorrect fringe cost rate. Cause: Management’s internal controls over the review and approval of fringe expense charged to the federal awards within the R&D Cluster were not sufficiently precise to identify that the incorrect fringe cost rate was used to calculate benefits charged. Effect or potential effect: Fringe expense charged to the R&D Cluster federal awards was overstated. Questioned costs: Questioned costs represent the difference between fringe expense calculated at the approved fringe rate versus the fringe rate used by management. Correct Amount to Be Recorded Original Amount Recorded Questioned Costs Correct Rate: 30% Incorrect Rate: 33% Fringe: $303,201 Fringe: $333,521 $ 30,320 AL # 93.399 NIH Award 5UG1CA189830-09: $25,688 AL # 93.399 NIH Award 5UG1CA189830-10: $4,632 Context: Management calculated and approved a fringe rate for 2023 of 30%; however, the fringe expense calculation used a fringe rate of 33%. We selected 13 fringe transactions to test compliance, and we identified that 100% of our selections were exceptions as the incorrect rate was used to calculate fringe. The total R&D Cluster expenditures reported on the Schedule of Expenditures of Federal Awards are $3,960,439 for the year ended September 30, 2023, which includes fringe costs of $303,201, which represents 7.7% of total R&D Cluster expenditures. Identification as a repeat finding, if applicable: Not a repeat finding. Recommendation: Management should design and implement effective internal controls over the review and approval of the monthly fringe calculation. Views of responsible officials: Management agrees with the finding. Management calculated and approved an annual fringe benefit rate to be used for its fiscal year 2023, but failed to update the rate on its internal calculation during fiscal year 2023 from the prior year rate. It was ultimately identified by management in early fiscal year 2024. Management has confirmed the $30,320 of questioned cost arising from the overstatement of fringe benefits would easily be replaced by unreimbursed grant-eligible direct labor costs. Therefore, management contends it still earned the grant awarded funds, despite the questioned costs. Additionally, management has provided re-education to grant personnel preparing and reviewing calculations to ensure an adequate understanding of the key calculation elements are identified and validated for the grant year.
Finding 2023-002 Identification of the federal program: Research and Development (R&D) Cluster Federal Agency: U.S. Department of Health and Human Services Assistance Listing: 93.399 Award Numbers: 5UG1CA189830-09, 5UG1CA189830-10 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR Section 200.431 of the Uniform Guidance states: “Compensation—fringe benefits. (a) Fringe benefits are allowances and services provided by employers to their employees as compensation in addition to regular salaries and wages. Fringe benefits include, but are not limited to, the costs of leave (vacation, family-related, sick or military), employee insurance, pensions, and unemployment benefit plans. Except as provided elsewhere in these principles, the costs of fringe benefits are allowable provided that the benefits are reasonable and are required by law, non-Federal entity-employee agreement, or an established policy of the non-Federal entity.” Condition: Management calculated fringe expense charged to the R&D Cluster using the incorrect fringe cost rate. Cause: Management’s internal controls over the review and approval of fringe expense charged to the federal awards within the R&D Cluster were not sufficiently precise to identify that the incorrect fringe cost rate was used to calculate benefits charged. Effect or potential effect: Fringe expense charged to the R&D Cluster federal awards was overstated. Questioned costs: Questioned costs represent the difference between fringe expense calculated at the approved fringe rate versus the fringe rate used by management. Correct Amount to Be Recorded Original Amount Recorded Questioned Costs Correct Rate: 30% Incorrect Rate: 33% Fringe: $303,201 Fringe: $333,521 $ 30,320 AL # 93.399 NIH Award 5UG1CA189830-09: $25,688 AL # 93.399 NIH Award 5UG1CA189830-10: $4,632 Context: Management calculated and approved a fringe rate for 2023 of 30%; however, the fringe expense calculation used a fringe rate of 33%. We selected 13 fringe transactions to test compliance, and we identified that 100% of our selections were exceptions as the incorrect rate was used to calculate fringe. The total R&D Cluster expenditures reported on the Schedule of Expenditures of Federal Awards are $3,960,439 for the year ended September 30, 2023, which includes fringe costs of $303,201, which represents 7.7% of total R&D Cluster expenditures. Identification as a repeat finding, if applicable: Not a repeat finding. Recommendation: Management should design and implement effective internal controls over the review and approval of the monthly fringe calculation. Views of responsible officials: Management agrees with the finding. Management calculated and approved an annual fringe benefit rate to be used for its fiscal year 2023, but failed to update the rate on its internal calculation during fiscal year 2023 from the prior year rate. It was ultimately identified by management in early fiscal year 2024. Management has confirmed the $30,320 of questioned cost arising from the overstatement of fringe benefits would easily be replaced by unreimbursed grant-eligible direct labor costs. Therefore, management contends it still earned the grant awarded funds, despite the questioned costs. Additionally, management has provided re-education to grant personnel preparing and reviewing calculations to ensure an adequate understanding of the key calculation elements are identified and validated for the grant year.
Federal Aid Policies Finding 2023-002 Condition: The Authority’s management has completely turned over and been restructured. However, the Authority’s policies for federal aid approved in 2021 have not been revised to update for the current management structure. The policies have also not been updated for changes in the 2 CFR 200 that have occurred. Criteria: The 2 CFR 200 requires the adoption of federal aid policies and that they are to be updated and maintained in accordance with the federal regulations. These policies include the following along with the 2 CFR 200 reference. a. Cash Management Procedure –200.302(b)(6) and 200.305 b. Cost Allowability Procedures –200.302(b)(7) c. Conflicts of Interest Policy –200.318(c) d. Procurement Procedures –200.318(a) and 200.319(d) e. Method for Conducting Technical Evaluations of Proposals and Selecting Recipients –200.320(b)(2)(ii) f. Travel Policy –200.475(a) g. Procedures for Managing Equipment –200.313(d) h. Employee Benefits –200.431 Cause: The Authority has experienced a high turnover of employees since 2021 when the policies were adopted and have not been reviewed since their adoption. Effect: The Authority is noncompliant with 2 CFR 200. Directive: We direct the Authority review and update all federal aid policies and implement procedures to ensure that they are being reviewed at least once a year for changes in the Authority’s management structure or changes that occur in the 2 CFR 200. Management’s Response--Corrective Action Plan: Contact person is Rufus Adams, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority will update their federal policies to comply with 2 CFR 200 and will review all policies on an annual basis going forward.
Federal Aid Policies Finding 2023-002 Condition: The Authority’s management has completely turned over and been restructured. However, the Authority’s policies for federal aid approved in 2021 have not been revised to update for the current management structure. The policies have also not been updated for changes in the 2 CFR 200 that have occurred. Criteria: The 2 CFR 200 requires the adoption of federal aid policies and that they are to be updated and maintained in accordance with the federal regulations. These policies include the following along with the 2 CFR 200 reference. a. Cash Management Procedure –200.302(b)(6) and 200.305 b. Cost Allowability Procedures –200.302(b)(7) c. Conflicts of Interest Policy –200.318(c) d. Procurement Procedures –200.318(a) and 200.319(d) e. Method for Conducting Technical Evaluations of Proposals and Selecting Recipients –200.320(b)(2)(ii) f. Travel Policy –200.475(a) g. Procedures for Managing Equipment –200.313(d) h. Employee Benefits –200.431 Cause: The Authority has experienced a high turnover of employees since 2021 when the policies were adopted and have not been reviewed since their adoption. Effect: The Authority is noncompliant with 2 CFR 200. Directive: We direct the Authority review and update all federal aid policies and implement procedures to ensure that they are being reviewed at least once a year for changes in the Authority’s management structure or changes that occur in the 2 CFR 200. Management’s Response--Corrective Action Plan: Contact person is Rufus Adams, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority will update their federal policies to comply with 2 CFR 200 and will review all policies on an annual basis going forward.
Federal Aid Policies Finding 2023-002 Condition: The Authority’s management has completely turned over and been restructured. However, the Authority’s policies for federal aid approved in 2021 have not been revised to update for the current management structure. The policies have also not been updated for changes in the 2 CFR 200 that have occurred. Criteria: The 2 CFR 200 requires the adoption of federal aid policies and that they are to be updated and maintained in accordance with the federal regulations. These policies include the following along with the 2 CFR 200 reference. a. Cash Management Procedure –200.302(b)(6) and 200.305 b. Cost Allowability Procedures –200.302(b)(7) c. Conflicts of Interest Policy –200.318(c) d. Procurement Procedures –200.318(a) and 200.319(d) e. Method for Conducting Technical Evaluations of Proposals and Selecting Recipients –200.320(b)(2)(ii) f. Travel Policy –200.475(a) g. Procedures for Managing Equipment –200.313(d) h. Employee Benefits –200.431 Cause: The Authority has experienced a high turnover of employees since 2021 when the policies were adopted and have not been reviewed since their adoption. Effect: The Authority is noncompliant with 2 CFR 200. Directive: We direct the Authority review and update all federal aid policies and implement procedures to ensure that they are being reviewed at least once a year for changes in the Authority’s management structure or changes that occur in the 2 CFR 200. Management’s Response--Corrective Action Plan: Contact person is Rufus Adams, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority will update their federal policies to comply with 2 CFR 200 and will review all policies on an annual basis going forward.
Federal Aid Policies Finding 2023-002 Condition: The Authority’s management has completely turned over and been restructured. However, the Authority’s policies for federal aid approved in 2021 have not been revised to update for the current management structure. The policies have also not been updated for changes in the 2 CFR 200 that have occurred. Criteria: The 2 CFR 200 requires the adoption of federal aid policies and that they are to be updated and maintained in accordance with the federal regulations. These policies include the following along with the 2 CFR 200 reference. a. Cash Management Procedure –200.302(b)(6) and 200.305 b. Cost Allowability Procedures –200.302(b)(7) c. Conflicts of Interest Policy –200.318(c) d. Procurement Procedures –200.318(a) and 200.319(d) e. Method for Conducting Technical Evaluations of Proposals and Selecting Recipients –200.320(b)(2)(ii) f. Travel Policy –200.475(a) g. Procedures for Managing Equipment –200.313(d) h. Employee Benefits –200.431 Cause: The Authority has experienced a high turnover of employees since 2021 when the policies were adopted and have not been reviewed since their adoption. Effect: The Authority is noncompliant with 2 CFR 200. Directive: We direct the Authority review and update all federal aid policies and implement procedures to ensure that they are being reviewed at least once a year for changes in the Authority’s management structure or changes that occur in the 2 CFR 200. Management’s Response--Corrective Action Plan: Contact person is Rufus Adams, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority will update their federal policies to comply with 2 CFR 200 and will review all policies on an annual basis going forward.
Federal Aid Policies Finding 2023-002 Condition: The Authority’s management has completely turned over and been restructured. However, the Authority’s policies for federal aid approved in 2021 have not been revised to update for the current management structure. The policies have also not been updated for changes in the 2 CFR 200 that have occurred. Criteria: The 2 CFR 200 requires the adoption of federal aid policies and that they are to be updated and maintained in accordance with the federal regulations. These policies include the following along with the 2 CFR 200 reference. a. Cash Management Procedure –200.302(b)(6) and 200.305 b. Cost Allowability Procedures –200.302(b)(7) c. Conflicts of Interest Policy –200.318(c) d. Procurement Procedures –200.318(a) and 200.319(d) e. Method for Conducting Technical Evaluations of Proposals and Selecting Recipients –200.320(b)(2)(ii) f. Travel Policy –200.475(a) g. Procedures for Managing Equipment –200.313(d) h. Employee Benefits –200.431 Cause: The Authority has experienced a high turnover of employees since 2021 when the policies were adopted and have not been reviewed since their adoption. Effect: The Authority is noncompliant with 2 CFR 200. Directive: We direct the Authority review and update all federal aid policies and implement procedures to ensure that they are being reviewed at least once a year for changes in the Authority’s management structure or changes that occur in the 2 CFR 200. Management’s Response--Corrective Action Plan: Contact person is Rufus Adams, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority will update their federal policies to comply with 2 CFR 200 and will review all policies on an annual basis going forward.
Item 2023‐002 Written policies, procedures, and standards of conduct COVID 19 – Coronavirus State and Local Fiscal Recovery Fund Assistance Listing Number 21.027 U.S. Department of Treasury Grant period: Year ended September 30, 2023 Questioned Costs – $0 Condition – The City does not have all of the written policies, procedures and standards of conduct required by UG. Criteria – 2 CFR 200.303 requires the non‐Federal entity to “(a) establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the non‐Federal entity is managing the Federal statutes, regulations, and the terms and conditions of the Federal award.” Grantees should have written policies, procedures, and standards of conduct as required by 2 CFR 200, Subparts D & E of the Uniform Guidance. 2 CFR 200, Subparts D & E requires the non‐ Federal entity to establish and maintain written policies, procedures, and standards of conduct including internal controls over the Federal awards that provides reasonable assurance that the non‐ Federal entity is managing the Federal statutes, regulations, and the terms and conditions of the Federal award. Specific requirements relate to the following: § 200.302 Financial management § 200.305 Payment § 200.319 Competition § 200.320 Methods of procurement to be followed § 200.430 Compensation—personal services § 200.431 Compensation—fringe benefits Cause of Condition – The City has failed to prepare written policies, procedures, and standards of conduct as required by 2 CFR 200, Subparts D & E of the Uniform Guidance. Potential Effect of Condition – Lack of written policies, procedures, and standards of conduct could result in noncompliance related to federal awards. Recommendation – We recommend that the City implement the required written policies and procedures. Management’s Response – Management agrees with the finding and will implement the necessary written policies to comply with the UG. Management anticipates completion by September 30, 2024.
Significant Deficiency in Internal Controls over Compliance (Allowable Costs), and Noncompliance with Laws and Regulations. Condition: Fringe benefits, including bonus distributions and increased Health Savings Account (HSA) and retirement contributions, were provided and charged to federal programs in the absence of adequate written policies and procedures. Programs Affected: Child Welfare Continuum of Care programs; Assistance Listing Numbers: 93.558, 93.658, 93.659, 93.667, 93.778. Criteria: 2 CFR 200.431(c) states that 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; pension plan costs; and other similar benefits are allowable, provided such benefits are granted under established written policies. Cause: Original policies and procedures for fringe benefits lacked necessary detail, and subsequent updates have not been made. Effect: Unallowed costs may have been charged to the grant. Questioned Costs: Unknown. Due to MDHHS’s funding methodology for the Continuum of Care grants, the total federal portion of fringe benefits cannot be determined. Context: Fringe benefit policies lacked specificity regarding the process by which benefits such as bonus distributions, and changes to other forms of compensation such as HSA and retirement contributions, were determined. The Organization performed various due diligence activities to support such determinations, including comparability studies and board approval of all decisions made, however written policies to reflect these activities did not exist. Recommendation: The Organization should establish a formal written policy that accurately reflects the fringe benefits charged to federal programs, including but not limited to the bonus structure, retirement contributions, and HSA contributions. Organization’s Response: The Organization agrees with the finding and will implement corrective action to address the condition.
Significant Deficiency in Internal Controls over Compliance (Allowable Costs), and Noncompliance with Laws and Regulations. Condition: Fringe benefits, including bonus distributions and increased Health Savings Account (HSA) and retirement contributions, were provided and charged to federal programs in the absence of adequate written policies and procedures. Programs Affected: Child Welfare Continuum of Care programs; Assistance Listing Numbers: 93.558, 93.658, 93.659, 93.667, 93.778. Criteria: 2 CFR 200.431(c) states that 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; pension plan costs; and other similar benefits are allowable, provided such benefits are granted under established written policies. Cause: Original policies and procedures for fringe benefits lacked necessary detail, and subsequent updates have not been made. Effect: Unallowed costs may have been charged to the grant. Questioned Costs: Unknown. Due to MDHHS’s funding methodology for the Continuum of Care grants, the total federal portion of fringe benefits cannot be determined. Context: Fringe benefit policies lacked specificity regarding the process by which benefits such as bonus distributions, and changes to other forms of compensation such as HSA and retirement contributions, were determined. The Organization performed various due diligence activities to support such determinations, including comparability studies and board approval of all decisions made, however written policies to reflect these activities did not exist. Recommendation: The Organization should establish a formal written policy that accurately reflects the fringe benefits charged to federal programs, including but not limited to the bonus structure, retirement contributions, and HSA contributions. Organization’s Response: The Organization agrees with the finding and will implement corrective action to address the condition.
Significant Deficiency in Internal Controls over Compliance (Allowable Costs), and Noncompliance with Laws and Regulations. Condition: Fringe benefits, including bonus distributions and increased Health Savings Account (HSA) and retirement contributions, were provided and charged to federal programs in the absence of adequate written policies and procedures. Programs Affected: Child Welfare Continuum of Care programs; Assistance Listing Numbers: 93.558, 93.658, 93.659, 93.667, 93.778. Criteria: 2 CFR 200.431(c) states that 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; pension plan costs; and other similar benefits are allowable, provided such benefits are granted under established written policies. Cause: Original policies and procedures for fringe benefits lacked necessary detail, and subsequent updates have not been made. Effect: Unallowed costs may have been charged to the grant. Questioned Costs: Unknown. Due to MDHHS’s funding methodology for the Continuum of Care grants, the total federal portion of fringe benefits cannot be determined. Context: Fringe benefit policies lacked specificity regarding the process by which benefits such as bonus distributions, and changes to other forms of compensation such as HSA and retirement contributions, were determined. The Organization performed various due diligence activities to support such determinations, including comparability studies and board approval of all decisions made, however written policies to reflect these activities did not exist. Recommendation: The Organization should establish a formal written policy that accurately reflects the fringe benefits charged to federal programs, including but not limited to the bonus structure, retirement contributions, and HSA contributions. Organization’s Response: The Organization agrees with the finding and will implement corrective action to address the condition.
Significant Deficiency in Internal Controls over Compliance (Allowable Costs), and Noncompliance with Laws and Regulations. Condition: Fringe benefits, including bonus distributions and increased Health Savings Account (HSA) and retirement contributions, were provided and charged to federal programs in the absence of adequate written policies and procedures. Programs Affected: Child Welfare Continuum of Care programs; Assistance Listing Numbers: 93.558, 93.658, 93.659, 93.667, 93.778. Criteria: 2 CFR 200.431(c) states that 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; pension plan costs; and other similar benefits are allowable, provided such benefits are granted under established written policies. Cause: Original policies and procedures for fringe benefits lacked necessary detail, and subsequent updates have not been made. Effect: Unallowed costs may have been charged to the grant. Questioned Costs: Unknown. Due to MDHHS’s funding methodology for the Continuum of Care grants, the total federal portion of fringe benefits cannot be determined. Context: Fringe benefit policies lacked specificity regarding the process by which benefits such as bonus distributions, and changes to other forms of compensation such as HSA and retirement contributions, were determined. The Organization performed various due diligence activities to support such determinations, including comparability studies and board approval of all decisions made, however written policies to reflect these activities did not exist. Recommendation: The Organization should establish a formal written policy that accurately reflects the fringe benefits charged to federal programs, including but not limited to the bonus structure, retirement contributions, and HSA contributions. Organization’s Response: The Organization agrees with the finding and will implement corrective action to address the condition.
Significant Deficiency in Internal Controls over Compliance (Allowable Costs), and Noncompliance with Laws and Regulations. Condition: Fringe benefits, including bonus distributions and increased Health Savings Account (HSA) and retirement contributions, were provided and charged to federal programs in the absence of adequate written policies and procedures. Programs Affected: Child Welfare Continuum of Care programs; Assistance Listing Numbers: 93.558, 93.658, 93.659, 93.667, 93.778. Criteria: 2 CFR 200.431(c) states that 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; pension plan costs; and other similar benefits are allowable, provided such benefits are granted under established written policies. Cause: Original policies and procedures for fringe benefits lacked necessary detail, and subsequent updates have not been made. Effect: Unallowed costs may have been charged to the grant. Questioned Costs: Unknown. Due to MDHHS’s funding methodology for the Continuum of Care grants, the total federal portion of fringe benefits cannot be determined. Context: Fringe benefit policies lacked specificity regarding the process by which benefits such as bonus distributions, and changes to other forms of compensation such as HSA and retirement contributions, were determined. The Organization performed various due diligence activities to support such determinations, including comparability studies and board approval of all decisions made, however written policies to reflect these activities did not exist. Recommendation: The Organization should establish a formal written policy that accurately reflects the fringe benefits charged to federal programs, including but not limited to the bonus structure, retirement contributions, and HSA contributions. Organization’s Response: The Organization agrees with the finding and will implement corrective action to address the condition.
Significant Deficiency in Internal Controls over Compliance (Allowable Costs), and Noncompliance with Laws and Regulations. Condition: Fringe benefits, including bonus distributions and increased Health Savings Account (HSA) and retirement contributions, were provided and charged to federal programs in the absence of adequate written policies and procedures. Programs Affected: Child Welfare Continuum of Care programs; Assistance Listing Numbers: 93.558, 93.658, 93.659, 93.667, 93.778. Criteria: 2 CFR 200.431(c) states that 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; pension plan costs; and other similar benefits are allowable, provided such benefits are granted under established written policies. Cause: Original policies and procedures for fringe benefits lacked necessary detail, and subsequent updates have not been made. Effect: Unallowed costs may have been charged to the grant. Questioned Costs: Unknown. Due to MDHHS’s funding methodology for the Continuum of Care grants, the total federal portion of fringe benefits cannot be determined. Context: Fringe benefit policies lacked specificity regarding the process by which benefits such as bonus distributions, and changes to other forms of compensation such as HSA and retirement contributions, were determined. The Organization performed various due diligence activities to support such determinations, including comparability studies and board approval of all decisions made, however written policies to reflect these activities did not exist. Recommendation: The Organization should establish a formal written policy that accurately reflects the fringe benefits charged to federal programs, including but not limited to the bonus structure, retirement contributions, and HSA contributions. Organization’s Response: The Organization agrees with the finding and will implement corrective action to address the condition.
Significant Deficiency in Internal Controls over Compliance (Allowable Costs), and Noncompliance with Laws and Regulations. Condition: Fringe benefits, including bonus distributions and increased Health Savings Account (HSA) and retirement contributions, were provided and charged to federal programs in the absence of adequate written policies and procedures. Programs Affected: Child Welfare Continuum of Care programs; Assistance Listing Numbers: 93.558, 93.658, 93.659, 93.667, 93.778. Criteria: 2 CFR 200.431(c) states that 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; pension plan costs; and other similar benefits are allowable, provided such benefits are granted under established written policies. Cause: Original policies and procedures for fringe benefits lacked necessary detail, and subsequent updates have not been made. Effect: Unallowed costs may have been charged to the grant. Questioned Costs: Unknown. Due to MDHHS’s funding methodology for the Continuum of Care grants, the total federal portion of fringe benefits cannot be determined. Context: Fringe benefit policies lacked specificity regarding the process by which benefits such as bonus distributions, and changes to other forms of compensation such as HSA and retirement contributions, were determined. The Organization performed various due diligence activities to support such determinations, including comparability studies and board approval of all decisions made, however written policies to reflect these activities did not exist. Recommendation: The Organization should establish a formal written policy that accurately reflects the fringe benefits charged to federal programs, including but not limited to the bonus structure, retirement contributions, and HSA contributions. Organization’s Response: The Organization agrees with the finding and will implement corrective action to address the condition.
2023-002: Allocable Costs/Cost Principles - Reporting of PTO Time. Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 93.696, Certified Community Behavioral Health Clinic Expansion Grant Federal Award Identification Number and Year: 1H79SM086680-01, Program Grant Period 09/29/2022-09/29/2023 Pass-through Entity: N/A Type: Material weakness in internal controls and material noncompliance with laws and regulations Repeat Finding: No Criteria: Per 2 CFR 200.431, Leave time is an allowable cost if, among other requirements, the costs are equitably allocated to all related activities. Condition: Accrued PTO time was adjusted as of September 30, 2023, however certain employees were transferred over to the grant program that had accrued PTO as of September 30, 2022 that was not taken into account. As a result, the grant was charged PTO time for amounts that had been accrued in prior years in other programs and activities. Identification of How Likely Questioned Costs Were Computed: Based on the accrued PTO schedules as of September 30, 2023 and 2022 Known Questioned Costs: $22,971 Context: There were five employees transferred over to the new grant program, reviewed all five transferred employees PTO accrual. Cause/Effect: This was just an oversight. A schedule was prepared but did not take into account the PTO time the employees had earned prior to transfer to the new grant program. Recommendation: We recommend that the schedule be revised to take into account the PTO time employees have prior to being transferred into the grant activities. View of Responsible Officials and Planned Corrective Action Plan: See attached corrective action plan.
Corporation for National and Community Services Assistance Listing Numbers 94.006 – AmeriCorps State and National Compliance and Significant Deficiency over Activities Allowed or Unallowed and Allowable Costs/Cost Principle (Payroll) Repeat Finding: No Condition: The Organization was unable to provide applicable payroll documentation for the period August 1, 2022 through July 31, 2023 in order to validate compliance and internal controls over Activities Allowed and Allowable Costs/Cost Principles as it relates to payroll charges to the Federal grant. Management charged payroll to the program based on budget. Criteria: The Uniform Guidance requires that non-Federal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal statutes, regulations, and terms and conditions of the Federal award. The characteristics of internal controls are presented in the context of the components of internal controls discussed in Internal Control-Integrated Framework (COSO Report), published by the Committee of Sponsoring Organizations of the Treadway Commission. The COSO Report provides a framework for organizations to design, implement, and evaluate control that will facilitate compliance with the requirements of Federal laws, regulations, and program compliance requirements. Per AmeriCorps general terms and conditions, the recipient must maintain financial management systems that comply with 2 CFR § 200.302(b). The recipient’s financial management systems must be capable of distinguishing expenditures attributable to this award from expenditures not attributable to this award. The systems must be able to identify costs by program year and by budget category, and to differentiate between direct and indirect costs. For all recipient’s financial management requirements and responsibilities, refer to Subparts D and E of 2 CFR Part 200. Per 2 CFR section 200.430(a)(3)(i): (a) General. Compensation for personal services includes all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and salaries. Compensation for personal services may also include fringe benefits which are addressed in §200.431 Compensation—fringe benefits. 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) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Cause: The Organization did not have adequate controls over the time and effort process, therefore recording and retention of supporting documentation was not properly adhered to in accordance with Uniform Guidance. Effect or Potential Effect: Salaries and wages were not properly supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Salary and wage charges were not able to be reconciled to the time distribution records. Questioned Costs: Unknown. Recommendation: We recommend that the Organization implement policies and procedures to track, calculate and document adjustments from budget salary charges to actual after-the-fact charges that should be charged to the Federal award based on the employee time distribution records. This needs to be performed at least on an annual basis.
Corporation for National and Community Services Assistance Listing Numbers 94.006 – AmeriCorps State and National Compliance and Significant Deficiency over Activities Allowed or Unallowed and Allowable Costs/Cost Principle (Payroll) Repeat Finding: No Condition: The Organization was unable to provide applicable payroll documentation for the period August 1, 2022 through July 31, 2023 in order to validate compliance and internal controls over Activities Allowed and Allowable Costs/Cost Principles as it relates to payroll charges to the Federal grant. Management charged payroll to the program based on budget. Criteria: The Uniform Guidance requires that non-Federal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal statutes, regulations, and terms and conditions of the Federal award. The characteristics of internal controls are presented in the context of the components of internal controls discussed in Internal Control-Integrated Framework (COSO Report), published by the Committee of Sponsoring Organizations of the Treadway Commission. The COSO Report provides a framework for organizations to design, implement, and evaluate control that will facilitate compliance with the requirements of Federal laws, regulations, and program compliance requirements. Per AmeriCorps general terms and conditions, the recipient must maintain financial management systems that comply with 2 CFR § 200.302(b). The recipient’s financial management systems must be capable of distinguishing expenditures attributable to this award from expenditures not attributable to this award. The systems must be able to identify costs by program year and by budget category, and to differentiate between direct and indirect costs. For all recipient’s financial management requirements and responsibilities, refer to Subparts D and E of 2 CFR Part 200. Per 2 CFR section 200.430(a)(3)(i): (a) General. Compensation for personal services includes all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and salaries. Compensation for personal services may also include fringe benefits which are addressed in §200.431 Compensation—fringe benefits. 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) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Cause: The Organization did not have adequate controls over the time and effort process, therefore recording and retention of supporting documentation was not properly adhered to in accordance with Uniform Guidance. Effect or Potential Effect: Salaries and wages were not properly supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Salary and wage charges were not able to be reconciled to the time distribution records. Questioned Costs: Unknown. Recommendation: We recommend that the Organization implement policies and procedures to track, calculate and document adjustments from budget salary charges to actual after-the-fact charges that should be charged to the Federal award based on the employee time distribution records. This needs to be performed at least on an annual basis.