Federal Program ALN 66.468 - Capitalization Grants for Drinking Water State Revolving Funds Name of Federal Agency U.S Environmental Protection Agency Pass-through Entity Puerto Rico Department of Health (DOH) Category Other matter Criteria 2 CFR § 200.465 - Rental costs of real property and equipment states that: “Rental costs are allowable to the extent that the rates are reasonable in light of such factors as costs of comparable rental properties; market conditions in the area; alternatives available; and the type, life expectancy, condition, and value of the property leased. Rental arrangements should be reviewed periodically to determine if circumstances have changed and if other options are available.” Condition Found When renewing the rental contract for the administration of the Revolving Fund, the DOH, as the Revolving Fund administrator, complied with statutory laws and procedures governing contract renewal. However, under the applicable regulations, if a contract renewal does not include a fee increase, there is no statutory requirement to evaluate comparable rental properties or conduct a periodic market study to assess potential changes in market conditions. As a result, the Revolving Fund lacks, within its existing processes and documentation, established policies and procedures for performing and documenting such assessments and did not conduct the evaluation required under 2 CFR § 200.465 in a timely manner. However, during discussions with the auditors, the required evaluation was performed, demonstrating that the rental costs remain reasonable in accordance with federal regulations. Cause The DOH, as administrator of the Revolving Fund, followed the statutory provisions of the Office of Management and Budget of Puerto Rico and the Revisory Board of the Real Property of Puerto Rico, governing the rent contract renewals, which do not require a periodic assessment of possible changes in market conditions. Effect The absence of policies and procedures for evaluating and documenting rental reasonableness may limit the Revolving Fund’s ability to demonstrate that rental costs remain aligned with market conditions over time. Without periodic assessments, there is a risk that rental agreements may not reflect the most cost-effective options available, potentially leading to inefficiencies in the use of funds. Establishing a formal process for conducting and documenting these evaluations would enhance transparency and support compliance with 2 CFR § 200.465. Questioned Cost None. No balance or reimbursement is owed to the U.S Environmental Protection Agency because of this finding. Context The Revolving Fund currently incurs an annual rental cost of $160,424, which includes rent, utilities, security services, maintenance and parking spaces, among other. Identification of a repeat finding This is not a repeated finding from the immediate previous audit. Views of responsible officials and planned corrective actions The management of the Revolving Fund agrees with this finding. Please refer to the corrective action plan section on pages 48-49. Recommendation We recommend implementing a periodic assessment of rental rates that could help ensure that the Revolving Fund continues to allocate resources efficiently and in alignment with 2 CFR § 200.465.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Program ALN 66.468 - Capitalization Grants for Drinking Water State Revolving Funds Name of Federal Agency U.S Environmental Protection Agency Pass-through Entity Puerto Rico Department of Health (DOH) Category Other matter Criteria 2 CFR § 200.465 - Rental costs of real property and equipment states that: “Rental costs are allowable to the extent that the rates are reasonable in light of such factors as costs of comparable rental properties; market conditions in the area; alternatives available; and the type, life expectancy, condition, and value of the property leased. Rental arrangements should be reviewed periodically to determine if circumstances have changed and if other options are available.” Condition Found When renewing the rental contract for the administration of the Revolving Fund, the DOH, as the Revolving Fund administrator, complied with statutory laws and procedures governing contract renewal. However, under the applicable regulations, if a contract renewal does not include a fee increase, there is no statutory requirement to evaluate comparable rental properties or conduct a periodic market study to assess potential changes in market conditions. As a result, the Revolving Fund lacks, within its existing processes and documentation, established policies and procedures for performing and documenting such assessments and did not conduct the evaluation required under 2 CFR § 200.465 in a timely manner. However, during discussions with the auditors, the required evaluation was performed, demonstrating that the rental costs remain reasonable in accordance with federal regulations. Cause The DOH, as administrator of the Revolving Fund, followed the statutory provisions of the Office of Management and Budget of Puerto Rico and the Revisory Board of the Real Property of Puerto Rico, governing the rent contract renewals, which do not require a periodic assessment of possible changes in market conditions. Effect The absence of policies and procedures for evaluating and documenting rental reasonableness may limit the Revolving Fund’s ability to demonstrate that rental costs remain aligned with market conditions over time. Without periodic assessments, there is a risk that rental agreements may not reflect the most cost-effective options available, potentially leading to inefficiencies in the use of funds. Establishing a formal process for conducting and documenting these evaluations would enhance transparency and support compliance with 2 CFR § 200.465. Questioned Cost None. No balance or reimbursement is owed to the U.S Environmental Protection Agency because of this finding. Context The Revolving Fund currently incurs an annual rental cost of $160,424, which includes rent, utilities, security services, maintenance and parking spaces, among other. Identification of a repeat finding This is not a repeated finding from the immediate previous audit. Views of responsible officials and planned corrective actions The management of the Revolving Fund agrees with this finding. Please refer to the corrective action plan section on pages 48-49. Recommendation We recommend implementing a periodic assessment of rental rates that could help ensure that the Revolving Fund continues to allocate resources efficiently and in alignment with 2 CFR § 200.465.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Criteria: Rents paid between the Agency and its subsidiary resulted in amounts charged to the program in amounts greater than the allowable amounts based on 2 CFR 200.465. Condition: The Agency leases office space from its subsidiary, Capital Area Community Action Agency Holdings, Inc. (Holdings). Rental payments are based on a set monthly rate. However, rental costs under less-than-arm's-length leases are allowable only up to the amount of actual costs incurred to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. Management calculation of rental costs included unallowable components such as loan principle, future planned repairs and maintenance, and the amortization of a future loan payment. These costs are not allowable under 2 CFR 200. Questioned Costs: $20,679 Effect: The Agency is out of compliance with the allowable costs principles concerning related party rental payments. Cause: Management's interpretation of the allowable costs principles included various other costs such as principal payments, future repairs, and the amortization of future principle payments. Recommendation: The Agency should review its lease agreement and reconcile payments made to Holdings for allowable expenditures and determine if any amounts are due back to the grantor. The Agency should also amend their lease agreement to include only allowable costs. Management's Response: See the Management's Response to Findings section for management's detailed response to item 2022-002.
Criteria: Rents paid between the Agency and its subsidiary resulted in amounts charged to the program in amounts greater than the allowable amounts based on 2 CFR 200.465. Condition: The Agency leases office space from its subsidiary, Capital Area Community Action Agency Holdings, Inc. (Holdings). Rental payments are based on a set monthly rate. However, rental costs under less-than-arm's-length leases are allowable only up to the amount of actual costs incurred to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. Management calculation of rental costs included unallowable components such as loan principle, future planned repairs and maintenance, and the amortization of a future loan payment. These costs are not allowable under 2 CFR 200. Questioned Costs: $13,587. These costs were satisfied with the settlement agreement with the Florida Department of Commerce as described in note 15. Effect: The Agency is out of compliance with the allowable costs principles concerning related party rental payments. Cause: Management's interpretation of the allowable costs principles included various other costs such as principal payments, future repairs, and the amortization of future principle payments. Recommendation: The Agency should review its lease agreement and reconcile payments made to Holdings for allowable expenditures anddetermine if any amounts are due back to the grantor. The Agency should also amend their lease agreement to include only allowable costs. Management's Response: See the Management's Response to Findings section for management's detailed response to item 2022-003.
Criteria: Rents paid between the Agency and its subsidiary resulted in amounts charged to the program in amounts greater than the allowable amounts based on 2 CFR 200.465. Condition: The Agency leases office space from its subsidiary, Capital Area Community Action Agency Holdings, Inc. (Holdings). Rental payments are based on a set monthly rate. However, rental costs under less-than-arm's-length leases are allowable only up to the amount of actual costs incurred to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. Management calculation of rental costs included unallowable components such as loan principle, future planned repairs and maintenance, and the amortization of a future loan payment. These costs are not allowable under 2 CFR 200. Questioned Costs: $20,679 Effect: The Agency is out of compliance with the allowable costs principles concerning related party rental payments. Cause: Management's interpretation of the allowable costs principles included various other costs such as principal payments, future repairs, and the amortization of future principle payments. Recommendation: The Agency should review its lease agreement and reconcile payments made to Holdings for allowable expenditures and determine if any amounts are due back to the grantor. The Agency should also amend their lease agreement to include only allowable costs. Management's Response: See the Management's Response to Findings section for management's detailed response to item 2022-002.
Criteria: Rents paid between the Agency and its subsidiary resulted in amounts charged to the program in amounts greater than the allowable amounts based on 2 CFR 200.465. Condition: The Agency leases office space from its subsidiary, Capital Area Community Action Agency Holdings, Inc. (Holdings). Rental payments are based on a set monthly rate. However, rental costs under less-than-arm's-length leases are allowable only up to the amount of actual costs incurred to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. Management calculation of rental costs included unallowable components such as loan principle, future planned repairs and maintenance, and the amortization of a future loan payment. These costs are not allowable under 2 CFR 200. Questioned Costs: $13,587. These costs were satisfied with the settlement agreement with the Florida Department of Commerce as described in note 15. Effect: The Agency is out of compliance with the allowable costs principles concerning related party rental payments. Cause: Management's interpretation of the allowable costs principles included various other costs such as principal payments, future repairs, and the amortization of future principle payments. Recommendation: The Agency should review its lease agreement and reconcile payments made to Holdings for allowable expenditures anddetermine if any amounts are due back to the grantor. The Agency should also amend their lease agreement to include only allowable costs. Management's Response: See the Management's Response to Findings section for management's detailed response to item 2022-003.