Finding 2025-001 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Public and Indian Housing (Non-major Program) and Moving to Work Demonstration Programs Federal Assistance Listing Number: 14.850 and 14.881 Noncompliance – B. Allowable Costs/Cost Principles Non Compliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Allowable Costs/Cost Principles Criteria: The Authority's federal program expenditures must meet the requirements of 2 CFR Part 200 Subpart E Cost Principles and must be adequately documented. Condition: Based upon inspection of the Authority’s paid invoices and on discussion with management, there were costs that were determined to be unallowable. Context: The following costs were determined to be unallowable or not reasonable or necessary in the proper and efficient performance of the federal program: Meals and gifts (2 CFR section 200.438) Travel upgrades (2 CFR section 200.475) Known Questioned Costs: Amount is below threshold of $25,000. Cause: There is a significant deficiency in internal controls over the compliance for the allowable costs/cost principles type of compliance. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls that reasonably assures the program is in compliance with the allowable costs/cost principles requirements. Effect: The Public and Indian Housing and Moving to Work Demonstration Programs are in non-compliance with the allowable costs/cost principles type of compliance. Recommendation: We recommend the Authority design and implement internal control procedures that will reasonably assure compliance with the Uniform Guidance and the compliance supplement.
Finding 2025-001 Significant deficiency in internal control in internal control over compliance with allowable costs/cost principles requirements. Identification of the Federal Program Federal Agency All Program Title: All Assistance Listing Number: All Award Numbers: All Award Periods: All Criteria In accordance with 2 CFR Part 200, costs charged to a federal award must be necessary, reasonable, allowable under the cost principles, allocable, and adequately documented; entertainment costs are specifically unallowable per 2 CFR 200.438, and costs must be allocated consistently between federal awards and other activities, as inconsistent allocation is not permitted under the Uniform Guidance. Condition During our audit, two expenses totaling $2,917 of 25 tested expenses tested in the indirect allowable cost pool were identified in the indirect cost pool as unallowable costs as they were for meals associated with entertainment for staff morale. Questioned Costs N/A Cause Unallowable costs were charged as the Organization lacked adequate review procedures to ensure charges to the allowable indirect cost pool were in compliance with federal cost principles. Effect The indirect cost pool contained $2,917of known unallowable costs included in the indirect cost population. Repeat Finding No Recommendations We recommend that the Organization strengthen controls over the coding and approval od expenses allowable to the indirect cost pool.
Finding 2025-001: Material Weakness in Internal Control and Material Noncompliance, Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Assistance Listing Program Title and Number: Education Stablization Fund: COVID-19 American Rescue Plan - Elementary and Secondary School Emergency Relief (ARP ESSER) (84.425U) Federal Agency: U.S. Department of Education Pass-Through Entity: Illinois State Board of Education Award Year: 2024-2025 Award Number: 25-4998-C3 and 24-4998-E3 Criteria or Specific Requirement: Per 2 CFR §§ 200.403 and 200.438, costs charged to federal awards must be necessary, reasonable, and allowable under federal statutes, regulations, and the terms and conditions of the award. Costs for entertainment, gifts, or similar items are generally unallowable unless they serve a documented, programmatic purpose and are explicitly authorized. In addition, U.S. Department of Education guidance for the ARP ESSER program indicates that funds may not be used to provide direct monetary incentives, such as gift cards, to students or families to encourage attendance or participation, as such expenditures do not meet federal allowability requirements. Condition: During our testing of nine transactions totaling $428,326, we identified one transaction in the amount of $38,200 for the purchase and distribution of Amazon gift cards to students as incentives to improve attendance. Further inquiry of the District’s management and specific identification of all expenditures labeled as “prepaid gift cards” indicated that the District expended $113,200 of ARP ESSER funds during the fiscal year ended June 30, 2025 on prepaid gift cards for similar purposes. Cause: The condition was caused by inadequate design and implementation of controls over the review and approval of nonpayroll expenditures charged to federal awards, specifically the lack of procedures to evaluate allowability in accordance with federal regulations and program guidance prior to purchase. The District submitted an application for the use of funds and the pass through entity approved the submitted annual ESSER budget for the period ending June 30, 2025. Effect: District incurred unallowable costs and was not in compliance with federal requirements. As a result of the noncompliance, the District may be required to return the funds to the State. Additionally, the lack of effective controls increases the risk that additional unallowable expenditures could occur and not be detected in a timely manner. Context: The unallowable costs of $113,200 represented approximately 12% of the $915,106 in total expenditures reported for this award. The sample used was not a statistically valid sample. Questioned Costs: Questioned costs of $113,200 represent the total amount of ARP ESSER funds expended on prepaid gift cards identified through testing and follow-up procedures as unallowable. Repeat Finding: N/A Recommendation: We recommend the District strengthen internal controls over federal expenditures by implementing procedures to: • Evaluate and document allowability of expenditures prior to approval, • Require review of expenditures against Uniform Guidance and program-specific requirements, and • Provide training to relevant personnel regarding allowable and unallowable costs under federal programs. Views of Responsible Officials: The District's determination was based on its interpretation of available guidance and the approval of the related grant budget; however, the District acknowledges that additional reviews should have been performed to independently assess and document the allowability of the expenditures under federal requirements. However, the District recognizes that approval of a budget does not relieve the District of its responsibility to independently evaluate and document compliance with federal allowability requirements. The District will strengthen its review and approval procedures for expenditures charged to federal programs by providing additional training to personnel responsible for grant administration and implementing enhanced procedures to evaluate and document allowability before costs are incurred and charged to federal awards.
Finding 2024-002 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Public and Indian Housing (Non-major Program) and Section 8 Housing Choice Vouchers Programs Federal Assistance Listing Number: 14.850 and 14.871 Noncompliance – B. Allowable Costs/Cost Principles Non Compliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Allowable Costs/Cost Principles Criteria: The Authority's federal program expenditures must meet the requirements of 2 CFR Part 200 Subpart E Cost Principles and must be adequately documented. Condition: Based upon inspection of the Authority’s paid invoices and on discussion with management, there were costs that were determined to be unallowable. Context: The following costs were determined to be unallowable or not reasonable or necessary in the proper and efficient performance of the federal program: Meals and gifts (2 CFR section 200.438) Known Questioned Costs: Amount is below threshold of $25,000. Cause: There is a significant deficiency in internal controls over the compliance for the allowable costs/cost principles type of compliance. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls that reasonably assures the program is in compliance with the allowable costs/cost principles requirements. Effect: The Public and Indian Housing and Section 8 Housing Choice Voucher Programs is in non-compliance with the allowable costs/cost principles type of compliance. Recommendation: We recommend the Authority design and implement internal control procedures that will reasonably assure compliance with the Uniform Guidance and the compliance supplement.
Finding 2024-002 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Public and Indian Housing (Non-major Program) and Section 8 Housing Choice Vouchers Programs Federal Assistance Listing Number: 14.850 and 14.871 Noncompliance – B. Allowable Costs/Cost Principles Non Compliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Allowable Costs/Cost Principles Criteria: The Authority's federal program expenditures must meet the requirements of 2 CFR Part 200 Subpart E Cost Principles and must be adequately documented. Condition: Based upon inspection of the Authority’s paid invoices and on discussion with management, there were costs that were determined to be unallowable. Context: The following costs were determined to be unallowable or not reasonable or necessary in the proper and efficient performance of the federal program: Meals and gifts (2 CFR section 200.438) Known Questioned Costs: Amount is below threshold of $25,000. Cause: There is a significant deficiency in internal controls over the compliance for the allowable costs/cost principles type of compliance. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls that reasonably assures the program is in compliance with the allowable costs/cost principles requirements. Effect: The Public and Indian Housing and Section 8 Housing Choice Voucher Programs is in non-compliance with the allowable costs/cost principles type of compliance. Recommendation: We recommend the Authority design and implement internal control procedures that will reasonably assure compliance with the Uniform Guidance and the compliance supplement.
Finding 2024-002 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Public and Indian Housing (Non-major Program) and Section 8 Housing Choice Vouchers Programs Federal Assistance Listing Number: 14.850 and 14.871 Noncompliance – B. Allowable Costs/Cost Principles Non Compliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Allowable Costs/Cost Principles Criteria: The Authority's federal program expenditures must meet the requirements of 2 CFR Part 200 Subpart E Cost Principles and must be adequately documented. Condition: Based upon inspection of the Authority’s paid invoices and on discussion with management, there were costs that were determined to be unallowable. Context: The following costs were determined to be unallowable or not reasonable or necessary in the proper and efficient performance of the federal program: Meals and gifts (2 CFR section 200.438) Known Questioned Costs: Amount is below threshold of $25,000. Cause: There is a significant deficiency in internal controls over the compliance for the allowable costs/cost principles type of compliance. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls that reasonably assures the program is in compliance with the allowable costs/cost principles requirements. Effect: The Public and Indian Housing and Section 8 Housing Choice Voucher Programs is in non-compliance with the allowable costs/cost principles type of compliance. Recommendation: We recommend the Authority design and implement internal control procedures that will reasonably assure compliance with the Uniform Guidance and the compliance supplement.
Finding 2024-002 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Public and Indian Housing (Non-major Program) and Section 8 Housing Choice Vouchers Programs Federal Assistance Listing Number: 14.850 and 14.871 Noncompliance – B. Allowable Costs/Cost Principles Non Compliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Allowable Costs/Cost Principles Criteria: The Authority's federal program expenditures must meet the requirements of 2 CFR Part 200 Subpart E Cost Principles and must be adequately documented. Condition: Based upon inspection of the Authority’s paid invoices and on discussion with management, there were costs that were determined to be unallowable. Context: The following costs were determined to be unallowable or not reasonable or necessary in the proper and efficient performance of the federal program: Meals and gifts (2 CFR section 200.438) Known Questioned Costs: Amount is below threshold of $25,000. Cause: There is a significant deficiency in internal controls over the compliance for the allowable costs/cost principles type of compliance. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls that reasonably assures the program is in compliance with the allowable costs/cost principles requirements. Effect: The Public and Indian Housing and Section 8 Housing Choice Voucher Programs is in non-compliance with the allowable costs/cost principles type of compliance. Recommendation: We recommend the Authority design and implement internal control procedures that will reasonably assure compliance with the Uniform Guidance and the compliance supplement.
Finding 2024-002 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Section 8 Housing Choice Vouchers and Public and Indian Housing (Non-major Program) Programs Federal Assistance Listing Number: 14.850 and 14.871 Noncompliance – B. Allowable Costs/Cost Principles Noncompliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Allowable Costs/Cost Principles Criteria: The Authority's federal program expenditures must meet the requirements of 2 CFR Part 200 Subpart E Cost Principles and conflict of interest requirements of 24 CFR 982.161, and must be adequately documented. Condition: Based upon inspection of the Authority’s paid invoices and on discussion with management, there were costs that were determined to be unallowable. Additionally, reimbursements were made to employees in violation of the Authority's adopted personnel policy. There were excessive reimbursements to employees that would be considered outside the normal course of business of the Authority, and housing assistance payments were made to landlords that would be considered a conflict of interest as defined in 24 CFR 982.161. Context: The following costs were determined to be unallowable or not reasonable or necessary in the proper and efficient performance of the federal program: Meals and gifts (2 CFR section 200.438) Alcohol (2 CFR section 200.423) Professional service costs (2 CFR section 200.459) Travel (2 CFR section 200.475) Payments to landlords that represent a conflict of interest (24 CFR 982.161) Known Questioned Costs: $107,736 Cause: There is a significant deficiency in internal controls over the compliance for the allowable costs/cost principles type of compliance requirement. Housing assistance payments were made to landlords that are defined as a conflict of interest, and approval was granted to reimburse Authority personnel without properly considering the allowability of such costs in accordance with 2 CFR 200. Effect: The Public and Indian Housing and Section 8 Housing Choice Vouchers Programs expended federal funds for unallowable items and as such is in non-compliance with the allowable costs/cost principles type of compliance. Recommendation: We recommend the Authority design and implement internal control procedures that will reasonably assure compliance with the Uniform Guidance and the compliance supplement. This includes the proper internal control procedures to review invoices in accordance with program requirements, as well as compliance with the Authority's adopted personnel policy. Additionally, the Authority should establish internal controls related to the proper approval of these invoices for payment.
Finding 2024-002 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Section 8 Housing Choice Vouchers and Public and Indian Housing (Non-major Program) Programs Federal Assistance Listing Number: 14.850 and 14.871 Noncompliance – B. Allowable Costs/Cost Principles Noncompliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Allowable Costs/Cost Principles Criteria: The Authority's federal program expenditures must meet the requirements of 2 CFR Part 200 Subpart E Cost Principles and conflict of interest requirements of 24 CFR 982.161, and must be adequately documented. Condition: Based upon inspection of the Authority’s paid invoices and on discussion with management, there were costs that were determined to be unallowable. Additionally, reimbursements were made to employees in violation of the Authority's adopted personnel policy. There were excessive reimbursements to employees that would be considered outside the normal course of business of the Authority, and housing assistance payments were made to landlords that would be considered a conflict of interest as defined in 24 CFR 982.161. Context: The following costs were determined to be unallowable or not reasonable or necessary in the proper and efficient performance of the federal program: Meals and gifts (2 CFR section 200.438) Alcohol (2 CFR section 200.423) Professional service costs (2 CFR section 200.459) Travel (2 CFR section 200.475) Payments to landlords that represent a conflict of interest (24 CFR 982.161) Known Questioned Costs: $107,736 Cause: There is a significant deficiency in internal controls over the compliance for the allowable costs/cost principles type of compliance requirement. Housing assistance payments were made to landlords that are defined as a conflict of interest, and approval was granted to reimburse Authority personnel without properly considering the allowability of such costs in accordance with 2 CFR 200. Effect: The Public and Indian Housing and Section 8 Housing Choice Vouchers Programs expended federal funds for unallowable items and as such is in non-compliance with the allowable costs/cost principles type of compliance. Recommendation: We recommend the Authority design and implement internal control procedures that will reasonably assure compliance with the Uniform Guidance and the compliance supplement. This includes the proper internal control procedures to review invoices in accordance with program requirements, as well as compliance with the Authority's adopted personnel policy. Additionally, the Authority should establish internal controls related to the proper approval of these invoices for payment.
Finding 2024-002 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Section 8 Housing Choice Vouchers and Public and Indian Housing (Non-major Program) Programs Federal Assistance Listing Number: 14.850 and 14.871 Noncompliance – B. Allowable Costs/Cost Principles Noncompliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Allowable Costs/Cost Principles Criteria: The Authority's federal program expenditures must meet the requirements of 2 CFR Part 200 Subpart E Cost Principles and conflict of interest requirements of 24 CFR 982.161, and must be adequately documented. Condition: Based upon inspection of the Authority’s paid invoices and on discussion with management, there were costs that were determined to be unallowable. Additionally, reimbursements were made to employees in violation of the Authority's adopted personnel policy. There were excessive reimbursements to employees that would be considered outside the normal course of business of the Authority, and housing assistance payments were made to landlords that would be considered a conflict of interest as defined in 24 CFR 982.161. Context: The following costs were determined to be unallowable or not reasonable or necessary in the proper and efficient performance of the federal program: Meals and gifts (2 CFR section 200.438) Alcohol (2 CFR section 200.423) Professional service costs (2 CFR section 200.459) Travel (2 CFR section 200.475) Payments to landlords that represent a conflict of interest (24 CFR 982.161) Known Questioned Costs: $107,736 Cause: There is a significant deficiency in internal controls over the compliance for the allowable costs/cost principles type of compliance requirement. Housing assistance payments were made to landlords that are defined as a conflict of interest, and approval was granted to reimburse Authority personnel without properly considering the allowability of such costs in accordance with 2 CFR 200. Effect: The Public and Indian Housing and Section 8 Housing Choice Vouchers Programs expended federal funds for unallowable items and as such is in non-compliance with the allowable costs/cost principles type of compliance. Recommendation: We recommend the Authority design and implement internal control procedures that will reasonably assure compliance with the Uniform Guidance and the compliance supplement. This includes the proper internal control procedures to review invoices in accordance with program requirements, as well as compliance with the Authority's adopted personnel policy. Additionally, the Authority should establish internal controls related to the proper approval of these invoices for payment.
Finding 2024-002 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Section 8 Housing Choice Vouchers and Public and Indian Housing (Non-major Program) Programs Federal Assistance Listing Number: 14.850 and 14.871 Noncompliance – B. Allowable Costs/Cost Principles Noncompliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Allowable Costs/Cost Principles Criteria: The Authority's federal program expenditures must meet the requirements of 2 CFR Part 200 Subpart E Cost Principles and conflict of interest requirements of 24 CFR 982.161, and must be adequately documented. Condition: Based upon inspection of the Authority’s paid invoices and on discussion with management, there were costs that were determined to be unallowable. Additionally, reimbursements were made to employees in violation of the Authority's adopted personnel policy. There were excessive reimbursements to employees that would be considered outside the normal course of business of the Authority, and housing assistance payments were made to landlords that would be considered a conflict of interest as defined in 24 CFR 982.161. Context: The following costs were determined to be unallowable or not reasonable or necessary in the proper and efficient performance of the federal program: Meals and gifts (2 CFR section 200.438) Alcohol (2 CFR section 200.423) Professional service costs (2 CFR section 200.459) Travel (2 CFR section 200.475) Payments to landlords that represent a conflict of interest (24 CFR 982.161) Known Questioned Costs: $107,736 Cause: There is a significant deficiency in internal controls over the compliance for the allowable costs/cost principles type of compliance requirement. Housing assistance payments were made to landlords that are defined as a conflict of interest, and approval was granted to reimburse Authority personnel without properly considering the allowability of such costs in accordance with 2 CFR 200. Effect: The Public and Indian Housing and Section 8 Housing Choice Vouchers Programs expended federal funds for unallowable items and as such is in non-compliance with the allowable costs/cost principles type of compliance. Recommendation: We recommend the Authority design and implement internal control procedures that will reasonably assure compliance with the Uniform Guidance and the compliance supplement. This includes the proper internal control procedures to review invoices in accordance with program requirements, as well as compliance with the Authority's adopted personnel policy. Additionally, the Authority should establish internal controls related to the proper approval of these invoices for payment.
Significant deficiency in internal control over compliance with allowable costs and cost allocation under the requirements of 2 CFR Part 200. Federal Agency: Department of Health and Human Services Program Title: Social Services Research and Demonstration Program Assistance Listing Number: 93.647 Project Number: 90XP0459-01-00 Award Period: August 31, 2022 – August 30, 2023 Criteria In accordance with 2 CFR Part 200, costs charged to a federal award must be necessary, reasonable, allowable under the cost principles, allocable, and adequately documented; entertainment costs are specifically unallowable per 2 CFR 200.438, and costs must be allocated consistently between federal awards and other activities, as inconsistent allocation is not permitted under the Uniform Guidance. Condition Unallowable costs were charged to federal programs, and the Organization was unable to substantiate the allocation percentages used for nonpayroll costs during our testing. Cause Unallowable costs were charged because the Organization lacked adequate review procedures to ensure compliance with federal cost principles, and was unable to substantiate allocation percentages used in the allocation of nonpayroll costs during our testing. Effect or Potential Effect The absence of review of charge resulted in $138 of unallowable costs charged to the Federal Program. In addition, our testing of 6 out of 40 selections, adequate supporting documentation was not present to support the allocation of nonpayroll costs. Questioned Costs $4,185 Recommendation We recommend that management develop and implement enhanced review procedures and formal written policies for allocating shared costs to ensure all costs charged to federal awards are allowable under Uniform Guidance, provide training to staff responsible for approving expenditures on federal cost principles, and periodically review allocations for consistency and compliance with federal requirements.
2023-002 (Significant Deficiency) – Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Program: AL 21.027 Coronavirus State and Local Fiscal Recovery Funds Criteria: Per Uniform Guidance 2 CFR section 200.438, costs for entertainment including social activities and any associated costs are unallowable. The “Basic Guidelines” section of 2 CFR Part 230, Attachment B Paragraph 8 requires charges to grants for salaries and wages to be based on documented payrolls approved by the Organization. Condition: Food for an employee Christmas Party was included in the population of expenses allocated to the grant. One payroll timesheet tested was missing the approval signature. Cause: Management oversight Effect: The Organization charged unallowable expenses and a payroll expense that was missing approval documentation to the grant. Context: As part of the single audit testing, 40 transactions were selected for testing. One invoice tested was for food costs for a Christmas Party. This is considered unallowable costs as it is costs for a social activity. One payroll timesheet tested was missing the approval signature. Questioned Costs: Immaterial Repeat Finding: No Recommendation: The Organization should review their policies and procedures for allocating expenses to grants and only charge allowable expenses and ensure that all expenses charged are properly approved and the approval documentation is maintained. View of Responsible Officials: Management agrees with the recommendation and will review their procedures for allocating expenses to grants to ensure only allowable expenses are charged to the grant and all expenses are properly approved and the approval documentation is maintained.
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Public and Indian Housing Program Federal Assistance Listing Number: 14.850 Noncompliance – B. Allowable Costs/Cost Principles Non Compliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Allowable Costs/Cost Principles Criteria: The Authority's federal program expenditures must meet the requirements of 2 CFR Part 200 Subpart E Cost Principles and must be adequately documented. Condition: Based upon inspection of the Authority’s paid invoices and on discussion with management, there were costs that were determined to be unallowable. Context: The following costs were determined to be unallowable or not reasonable or necessary in the proper and efficient performance of the federal program: Alcoholic beverages (2 CFR section 200.423) Meals (2 CFR section 200.438) Known Questioned Costs: $1,260 Cause: There is a significant deficiency in internal controls over the compliance for the allowable costs/cost principles type of compliance. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls that reasonably assures the program is in compliance with the allowable costs/cost principles requirements. Effect: The Public and Indian Housing Program is in non-compliance with the allowable costs/cost principles type of compliance. Recommendation: We recommend the Authority design and implement internal control procedures that will reasonably assure compliance with the Uniform Guidance and the compliance supplement.
2023-002 (Significant Deficiency) – Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Program: AL 21.027 Coronavirus State and Local Fiscal Recovery Funds Criteria: Per Uniform Guidance 2 CFR section 200.438, costs for entertainment including social activities and any associated costs are unallowable. The “Basic Guidelines” section of 2 CFR Part 230, Attachment B Paragraph 8 requires charges to grants for salaries and wages to be based on documented payrolls approved by the Organization. Condition: Food for an employee Christmas Party was included in the population of expenses allocated to the grant. One payroll timesheet tested was missing the approval signature. Cause: Management oversight Effect: The Organization charged unallowable expenses and a payroll expense that was missing approval documentation to the grant. Context: As part of the single audit testing, 40 transactions were selected for testing. One invoice tested was for food costs for a Christmas Party. This is considered unallowable costs as it is costs for a social activity. One payroll timesheet tested was missing the approval signature. Questioned Costs: Immaterial Repeat Finding: No Recommendation: The Organization should review their policies and procedures for allocating expenses to grants and only charge allowable expenses and ensure that all expenses charged are properly approved and the approval documentation is maintained. View of Responsible Officials: Management agrees with the recommendation and will review their procedures for allocating expenses to grants to ensure only allowable expenses are charged to the grant and all expenses are properly approved and the approval documentation is maintained.
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Public and Indian Housing Program Federal Assistance Listing Number: 14.850 Noncompliance – B. Allowable Costs/Cost Principles Non Compliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Allowable Costs/Cost Principles Criteria: The Authority's federal program expenditures must meet the requirements of 2 CFR Part 200 Subpart E Cost Principles and must be adequately documented. Condition: Based upon inspection of the Authority’s paid invoices and on discussion with management, there were costs that were determined to be unallowable. Context: The following costs were determined to be unallowable or not reasonable or necessary in the proper and efficient performance of the federal program: Alcoholic beverages (2 CFR section 200.423) Meals (2 CFR section 200.438) Known Questioned Costs: $1,260 Cause: There is a significant deficiency in internal controls over the compliance for the allowable costs/cost principles type of compliance. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls that reasonably assures the program is in compliance with the allowable costs/cost principles requirements. Effect: The Public and Indian Housing Program is in non-compliance with the allowable costs/cost principles type of compliance. Recommendation: We recommend the Authority design and implement internal control procedures that will reasonably assure compliance with the Uniform Guidance and the compliance supplement.
ACTIVITIES ALLOWED OR UNALLOWED, ALLOWABLE COSTS/COST PRINCIPLES - VARIOUS Partial repeat of finding 2022-005 Finding Type: Material Weakness in Internal Controls over Compliance, Material Noncompliance ALN/CSFA and Program Title: 93.676 - Unaccompanied Alien Children Program Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Liberty Wilderness Crossroads Camp Contract Number: 90ZU0362 (direct), 90ZU0501 Criteria: Under 2 CFR Part 200 of the Uniform Guidance, costs should be allocated in the accounting system among grants and should be properly supported. Per the Organization's policies and procedures, certain costs that benefit all programs should be allocated using allocation percentages that are calculated semi-annually. Under 2 CFR 200.438 of the Uniform Guidance, "Costs of entertainment, including amusement, diversion, and social activities and any associated costs (such as gifts), are unallowable unless they have a specific and direct programmatic purpose and are included in a federal award." Additionally, 2 CFR 200.303(a) of the Uniform Guidance requires non-federal entities to establish and maintain effective internal control over federal awards that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: The auditor tested 60 program expenses and noted the following: 1. For 5 expenses, the wrong allocation percentages were used to allocate costs for the period or the Organization was unable to provide support or replicate how costs were allocated. 2. For 6 credit card expenses, the Organization did not have adequate supporting documentation. 3. For 4 credit card expenses, the total of the charges identified by the Organization do not agree to the expense recorded. 4. For 2 expenses, the costs are considered to be unallowable entertainment costs. This was not a statistically valid sample. Cause: 1. Inadequate management review of allocations used for the costs and/or inadequate support for the allocation of the costs. 2. Management approval of credit card charges that are not supported by receipts or other documentation, or the Organization not maintaining the supporting documentation. 3. Difficulties with the credit card company where the Organization could not reconcile the costs in the statement to those that the employees were coding, and differences were typically coded to travel expenses. 4. Inadequate management review of costs that are allowable vs. unallowable for the program. Effect: Incorrectly allocated, unsupported, and unallowable costs were charged to the program, which could result in the grantor requiring repayment. Questioned Costs: Known questioned costs total $21,240, determined by calculating the difference between the costs allocated to the program and the costs that should have been allocated to the program using the allocation percentages in effect at the time the expenses occurred, and by totaling unsupported and unallowable costs. Likely questioned costs total $172,742, determined by dividing the known questioned costs by the total of the sample and applying the error rate to the population of expenditures. Recommendation: We recommend management more specifically review the allocations used when reviewing costs that are allocated among programs, that management ensure all credit card charges are adequately supported and not charge unsupported costs to federal awards, and that management gain a better understanding of allowable and unallowable costs for the program and ensure unallowable costs are not charged to the program. Views of Responsible Officials and Planned Corrective Actions: See management's response and Corrective Action Plan on page 57.
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Public and Indian Housing Program Federal Assistance Listing Number: 14.850 Noncompliance ? B. Allowable Costs/Cost Principles Non Compliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Allowable Costs/Cost Principles Criteria: The Authority's federal program expenditures must meet the requirements of 2 CFR Part 200 Subpart E Cost Principles and must be adequately documented. Condition: Based upon inspection of the Authority?s paid invoices and on discussion with management, there were costs that were determined to be unallowable. Context: The following costs were determined to be unallowable or not reasonable or necessary in the proper and efficient performance of the federal program: ? Alcoholic beverages (2 CFR section 200.423) ? Training and education costs for a non-employee (2 CFR section 200.473) ? Meals (2 CFR section 200.438) Known Questioned Costs: $3,118 Cause: There is a significant deficiency in internal controls over the compliance for the allowable costs/cost principle type of compliance. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls that reasonably assures the program is in compliance with the allowable costs/cost principle requirements. Effect: The Public and Indian Housing Program is in non-compliance with the allowable costs/cost principle type of compliance. Recommendation: We recommend the Authority design and implement internal control procedures that will reasonably assure compliance with the Uniform Guidance and the compliance supplement. Authority Response: The Authority accepts the recommendation of the auditor. The Authority will increase oversight in the Public and Indian Housing Program to ensure that established internal control policies are being followed on a timely basis.
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Public and Indian Housing Program Federal Assistance Listing Number: 14.850 Noncompliance ? B. Allowable Costs/Cost Principles Non Compliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Allowable Costs/Cost Principles Criteria: The Authority's federal program expenditures must meet the requirements of 2 CFR Part 200 Subpart E Cost Principles and must be adequately documented. Condition: Based upon inspection of the Authority?s paid invoices and on discussion with management, there were costs that were determined to be unallowable. Context: The following costs were determined to be unallowable or not reasonable or necessary in the proper and efficient performance of the federal program: ? Alcoholic beverages (2 CFR section 200.423) ? Training and education costs for a non-employee (2 CFR section 200.473) ? Meals (2 CFR section 200.438) Known Questioned Costs: $3,118 Cause: There is a significant deficiency in internal controls over the compliance for the allowable costs/cost principle type of compliance. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls that reasonably assures the program is in compliance with the allowable costs/cost principle requirements. Effect: The Public and Indian Housing Program is in non-compliance with the allowable costs/cost principle type of compliance. Recommendation: We recommend the Authority design and implement internal control procedures that will reasonably assure compliance with the Uniform Guidance and the compliance supplement. Authority Response: The Authority accepts the recommendation of the auditor. The Authority will increase oversight in the Public and Indian Housing Program to ensure that established internal control policies are being followed on a timely basis.